Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. THE HUMAN SIDE OF PLANNING: DECISION MAKING AND CRITICAL THINKING Chapter 6 6–1

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 1.What Is Decision Making?  The process by which managers respond to opportunities and threats that confront them by analyzing options and making determinations about specific organizational goals and courses of action. Decision Making Defined 6–2

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Programmed Decisions  Routine, virtually automatic process  Occur When Things Are Working Well  Decisions have been made so many times in the past that managers have developed rules or guidelines to be applied when certain situations inevitably occur Types of Decisions 1.What Is Decision Making? 6–3

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Nonprogrammed Decisions  Not Routine  Infrequent  Rules do not exist because the situation is unexpected or uncertain and managers/leaders lack the information they would need to develop rules to cover it Types of Decisions 1.What Is Decision Making? 6–4

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 2.How Do Cognitive and Emotional Processes Affect Decision Making?  Schemas--An abstract knowledge structure stored in memory that allows people to organize and interpret information about a person, event, or situation  New information  Accommodation  Assimilation Reason and Logic in Decision Making 6–5

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Defined  Often Apply to People  Automatic Stereotypes The Halo Effect  Defined  Subconscious 2.How Do Cognitive and Emotional Processes Affect Decision Making? 6–6

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall.  Feelings/ Emotions Decisions are affected by…  Intuition 2.How Do Cognitive and Emotional Processes Affect Decision Making? 6–7

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 3.How Can You Apply a Systematic Approach to Making Decisions?  Decision-making process Introduction 6–8

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 4.How Can People Make Good Decisions with Incomplete Information?  Defined– an approach to decision making that accepts that all decisions are made under conditions of constraints that limit rationality such as  Information will never be complete or completely accurate  We cannot always evaluate the quality of information  Impossible to rationally evaluate all information  People are not purely rational: emotions and biases are always present  We simply don’t have the time to make decisions to follow the rational decision making process in its purest form Bounded Rationality 6–9

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 4.How Can People Make Good Decisions with Incomplete Information?  Defined—Information is incomplete because of risk and uncertainty, ambiguity, and time constraints Incomplete Information 6–10

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Why Information Is Incomplete 6-11 Figure 7.2

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Causes of Incomplete Information  Risk └ Is present when managers know the possible outcomes of a particular course of action and can assign probabilities to them  Uncertainty └ the probabilities of alternative outcomes cannot be determined and future outcomes are unknown 6-12

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Causes of Incomplete Information  Ambiguous Information └ Information that can be interpreted in multiple and often conflicting ways 6-13 Figure 7.3 Young Woman or Old Woman

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Causes of Incomplete Information  Time constraints and information costs └ managers have neither the time nor money to search for all possible alternatives and evaluate potential consequences  Satisficing └ Searching for and choosing an acceptable, or satisfactory response to problems and opportunities, rather than trying to make the best decision 6-14

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Six Steps in Decision Making Figure

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 6.What Can HR Do to Support Critical Thinking and Decision Making?  Group decision making Introduction 6–16

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Group Decision Making  Superior to individual making  Choices less likely to fall victim to bias  Able to draw on combined skills of group members  Improve ability to generate feasible alternatives 6-17

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. Group Decision Making  Potential Disadvantages └ Can take much longer than individuals to make decisions └ Can be difficult to get two or more managers to agree because of different interests and preferences └ Can be undermined by biases 6-18

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 6.What Can HR Do to Support Critical Thinking and Decision Making?  Process of Generating a List of Ideas  Process Group of Interested Individuals Critique and Prioritize  The Delphi Technique  Panel of experts  Process Focus group of experts Forecasts and justifications Brainstorming 6–19

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall. 6.What Can HR Do to Support Critical Thinking and Decision Making?  The Delphi Technique  A decision-making technique in which group members do not meet face-to-face but respond in writing to questions posed by the group leader Brainstorming 6–20