1. Decision Making by Individuals and Groups
Decision Making by Individuals and Groups
Chapter 10 Organizational Behavior Nelson & Quick, 6th edition

2. The Decision-Making Process
Programmed Decision - a simple, routine matter for which a manager has an established decision rule
Nonprogrammed Decision - a new, complex decision that requires a creative solution 2

3. The Decision- Making Process
Recognize the problem and the need for a decision
The Decision- Making Process
Identify the objective of the decision
Gather and evaluate data
and diagnose the situation
List and evaluate
alternatives 3

4. The Decision- Making Process
Select the best
course of action
The Decision- Making Process
Implement
the decision
Gather feedback
Follow up 4

5. Models of Decision-Making
Effective Decision - a timely decision that meets a desired objective and is acceptable to those individuals affected by it
Photos courtesy of Clips Online ©2008 Microsoft Corporation 5

6. Rational Model
Rationality - a logical, step-by-step approach to decision making, with a thorough analysis of alternatives and their consequences
1. The outcome will be completely rational
2. The decision maker uses a consistent system of preferences to choose the best alternative
3. The decision maker is aware of all alternatives
4. The decision maker can calculate the probability of success for each alternative 6

7. Bounded Rationality Model
Bounded Rationality - a theory that suggests that there are limits upon how rational a decision maker can actually be
Satisfice – to select the first alternative that is “good enough,” because the costs in time and effort are too great to optimize
Managers suggest the first satisfactory alternative 7

8. Bounded Rationality Model
Managers recognize that their conception of the world is simple
Managers are comfortable making decisions without determining all the alternatives
Heuristics – shortcuts in decision making that save mental activity
Managers make decisions by rules of thumb or heuristics 7

9. Garbage Can Model Garbage Can Model -
Problems
Participants
Solutions
Choice
opportunities
Garbage Can Model
Garbage Can Model -
a theory that contends that decisions in organizations are random and unsystematic
SOURCE: From M.D. Cohen, J.G. March, and J.P. Olsen in Administrative Science Quarterly 17 (March 1972) Reprinted by permission of the Administrative Science Quarterly 8

10. Risk and the Manager
Risk Aversion - the tendency to choose options that entail fewer risks and less uncertainty
Risk takers
Accept greater potential for loss
Tolerate greater uncertainty
More likely to make risky decisions
Often lead the group discussions
Evidence: Successful Managers Take Risks 9

11. Escalation of Commitment
Escalation of Commitment
Escalation of Commitment - The tendency to continue to commit resources to a failing course of action
Why it occurs
humans dislike inconsistency
optimism
control
sunk costs
How to deal with it
split responsibility for decisions
provide individuals with a graceful exit
have groups make the initial decision 10

12. Cognitive Style
Cognitive Style - an individual’s preference for gathering information and evaluating alternatives
Cognitive Style
Individual’s Perceiving Style
Individual’s Sensing Style + =

13. Cognitive Style
Jungian theory offers a way of understanding and appreciating differences among individuals.
Photos courtesy of Clips Online ©2008 Microsoft Corporation

14. Jung’s 4 Cognitive Styles
Style
Ideal Organization ST
Sensing/thinking
Facts Impersonal analysis SF
Sensing/feeling
Facts and organizational relationships NT
Intuiting/thinking
Broad issues Impersonal and ideal NF
Intuiting/feeling
Serve humankind General values

15. Z Problem-Solving Model
Look at
the facts
and details
What
alternatives
do the facts
suggest?
Sensing Intuition
What impact
will it have
on those
involved?
Can it be
analyzed
objectively?
Thinking Feeling
SOURCE: Excerpted from Type Talk at Work by Otto Kroeger and Janet M. Thuesen, 1992,
Delacorte Press. Reprinted by permission Otto Kroeger Associates.

16. Two Brains, Two Cognitive Styles
Two Brains, Two Cognitive Styles
Left Hemisphere
Verbal
Sequential, temporal, digital
Logical, analytic
Rational
Western thought
Right Hemisphere
Nonverbal, visuospatial
Simultaneous, spatial,
analogical
Gestalt, synthetic
Intuitive
Eastern thought
Ideal = “brain-lateralized” making use of
either or both sides, depending on situation
SOURCE: Created based on ideas from Left Brain, Right Brain by Springer and Deutsch, p.272. © 1993 by Sally Springer and Georg Deutsch. (New York: W.H. Freeman and Company, 1993).

17. Influences on Decision-Making
Intuition - fast, positive force in decision making utilized at a level below consciousness and involves learned patterns of information
Creativity - a process influenced by individual and organizational factors that results in the production of novel and useful ideas, products, or both

18. Four Stages of the Creative Process
Four Stages of the Creative Process
Preparation
experience/
opportunity
to build
knowledge
base
Incubation
reflective thought,
often
unconscious
Illumination
insight into
solving
a problem
Verification
thinking,
sharing,
testing the
decision

19. Influences on Creativity
Individual examples
Cognitive Processes
Divergent thinking
Associational abilities
Unconscious processes
Personality Factors
Intellectual, artistic values
Breadth of interests
High energy
Self-confidence
Organizational examples
Autonomous feelings
Diverse team skills
Quality, supportive relationships with supervisors
Flexible organization structure
Participative decision making

20. Four Types of Creativity
Creativity Type
Presented or Discovered
Internal or External Trigger
Responsive
You respond to problems
Because it is expected of you
Contributory
Because you want to be creative
Expected
You discover problems
Proactive

21. Participation in Decision Making
Participative Decision Making - Individuals who are affected by decisions influence the making of those decisions
Photos courtesy of Clips Online ©2008 Microsoft Corporation

22. Foundations for Participation and Empowerment
Foundations for Participation and Empowerment
Organizational Foundations
Participative, supportive organizational culture
Team-oriented work design
Individual Prerequisites
Capability to become psychologically involved in participative activities
Motivation to act autonomously
Capacity to see the relevance of participation for one’s own well-being

23. Group Decision-Making
Role of synergy - a positive force that occurs in groups when group members stimulate new solutions to problems through the process of mutual influence and encouragement in the group
Role of social decision schemes - simple rules used to determine final group decisions
Two-thirds Majority
Majority Wins
First-shift
Truth Wins

24. Group Decision Making Advantages Disadvantages
Advantages
1. More knowledge through pooling of group member resources
2. Increased acceptance and commit-
ment to decisions (had a voice)
3. Greater understanding due to
involvement in decision stages
Disadvantages
1. Pressure in groups to conform
2. Domination by one forceful member or dominant clique
3. Amount of time required, because group is slower than individual to make a decision

25. Group Phenomenon
Groupthink - a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressures
Photos courtesy of Clips Online ©2008 Microsoft Corporation

26. Conditions Favoring Groupthink
High cohesiveness
Group homogeneity
Decision with high consequences
Time constraints
Photos courtesy of Clips Online ©2008 Microsoft Corporation

27. Symptoms of Groupthink
Illusions of invulnerability
Illusions of group morality
Illusions of unanimity
Rationalization
Stereotyping the enemy
Self-censorship
Peer pressure
Mindguards
SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission.
Photos courtesy of Clips Online
©2008 Microsoft Corporation

28. Preventing Groupthink
Ask each group member to act as critical evaluator
Have the leader avoid stating his opinion prior to the group decision
Create several groups to work simultaneously
Appoint a devil’s advocate
Evaluate the competition carefully
After consensus, encourage rethinking the position
SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission.

29. Group Polarization
Group Polarization - the tendency for group discussion to produce shifts toward more extreme attitudes among members
Photos courtesy of Clips Online ©2008 Microsoft Corporation

30. Group Decision Making Techniques
Brainstorming
Self-Managed
Teams
Nominal
Group
Technique (NGT)
Group
Decision
Techniques G
Quality Circles
and
Quality Teams
Delphi
Technique
Devil’s
Advocacy
Dialectical
Inquiry 24

31. Diversity and Culture in Decision Making
Racially dissimilar groups
More open information sharing
Dissenting perspectives encouraged
Better decision making
Functionally dissimilar groups
Engage in greater debate
Better financial performance $ $ $
Photos courtesy of Clips Online ©2008 Microsoft Corporation

32. Technological Aids to Decision-Making
Technological Aids to Decision-Making
Expert Systems - a programmed decision tool set up using decision rules
Decision Support Systems - computer and communication systems that process incoming data and synthesize pertinent information
Group Decision Support Systems - systems that use computer software and communication facilities to support group decision-making processes (face-to-face meetings or dispersed)

33. Decision Making in the Virtual Workplace
Decision Making in the Virtual Workplace
Desktop video conferencing systems
Tools for Virtual Teams
Group decision support systems
Internet/Intranet systems
Agent-based modeling

34. Ethics Check    Is it legal? Does it violate law
Is it legal?
Does it violate law
Does it violate company policy
Is it balanced?
Is it fair to all
Does it promote win-win relationships
How will it make me feel about myself?  

35. Chapter 10: Reflect & Discuss
Dr. Seuss’ How the Grinch Stole Christmas Video Clip
What to Watch for and Ask Yourself
What are the Grinch’s decision alternatives or options?
What decision criteria does the Grinch use to choose from the alternatives?
Describe the steps in the Grinch’s decision-making process.
Dr. Seuss’ How the Grinch Stole Christmas
Readers and lovers of the Dr. Seuss original tale may feel put off by Ron Howard’s loose adaptation of the story. Who-ville, a magical, mythical land, features the Whos who love Christmas and the Grinch (Jim Carrey) who hates it. Cindy Lou Who (Taylor Momsen) tries to bring the Grinch back to the Yuletide celebrations, an effort that backfires on all involved. Sparkling special effects will dazzle most viewers and likely distract them from the film’s departures from the original story.
The selected scene is an edited version of the “Second Thoughts” sequence early in the film. Just before this scene, fearless Cindy Lou entered the Grinch’s lair to invite him to be the Holiday Cheermeister at the Whobilation One-thousand celebration. In typical Grinch fashion, he pulls the trap door on Cindy Lou, who unceremoniously slides out of his lair to land on a snowy Who-ville street. The Grinch now must decide whether to accept the invitation. The film continues with the Cheer­meister award ceremony.
What to Watch for and Ask Yourself
What are the Grinch’s decision alternatives or options?
What decision criteria does the Grinch use to choose from the alternatives?
Describe the steps in the Grinch’s decision-making process.