2. Chapter Ten
Making Decisions

3. Chapter Ten Outline Models of Decision Making
The Rational Model
Simon’s Normative Model
Dynamics of Decision Making
Contingency Model of Decision Making
Improving Decision Making
General Decision-Making Styles
Escalation of Commitment
Creativity

4. Chapter Ten Outline (continued)
Group Decision Making
Advantages and Disadvantages of Group-Aided Decision Making
Participative Management
When to Have Groups Participate in Decision Making: The Vroom/Yetton/Jago Model
Group Problem-Solving Techniques

5. The Rational Model of Decision Making
9-2
The Rational Model of Decision Making
Consists of a structured four-step sequence * identifying the problem * generating alternative solutions * selecting a solution * implementing and evaluating the solution

6. Simon’s Normative Model of Decision Making
Based on the notion of bounded rationality, i.e. decision makers face a variety of constraints
Decision making is characterized by * limited information processing * use of judgmental heuristics (rules, shortcuts) * satisficing

7. Judgmental Heuristics
Availability Heuristic: A decision maker’s tendency to base decisions on information that is readily available in memory.
Representativeness Heuristic: The tendency to assess the likelihood of an event occurring based on one’s impressions about similar occurrences.

8. Judgmental Heuristics (cont)
Satisficing: Choosing a solution that meets a minimum standard of acceptance

9. Improving Decision Making Through Effective Knowledge Management
Systems and practices that increase the sharing of knowledge and information
Types of knowledge
Tacit knowledge – intuition, experience, natural abilities
Explicit knowledge
Explicit knowledge requires access to large amounts of information; tacit knowledge is obtained through observation, mentoring, collaboration, etc.

10. General Decision Making Styles
Based on how one perceives and comprehends stimuli and chooses to respond
Value orientation – task and technical concerns or people and social concerns
Tolerance for ambiguity – need of structure or control

11. Decision Making Styles
Analytical
Conceptual
Directive
Behavioral
Tasks and Technical Concerns
People and Social Concerns
Value Orientation
Low
High
Tolerance for Ambiguity

12. What is Your Decision Making Style?
Hands on Exercise
What is Your Decision Making Style?
Which of the four styles best represents your decision-making style? Which is least reflective of your style?
How do your scores compare with the following norms: directive (75), analytical (90), conceptual (80), and behavioral (55)?
What are the advantages and disadvantages of your decision-making style?

13. Escalation of Commitment
Tendency to stick to a course of action even when it is associated with and unlikely to reverse a bad situation. Why?
Psychological and social
Bias facts to support a decision
“Recover losses” more attractive than achieve gains
Ego
Organizational inertia
Characteristics of project – long-term returns
Contextual determinants – outside organization

14. 9-9
Skills and Best Practices: Recommendations to Reduce Escalation of Commitment
Set minimum targets for performance, and have decision makers compare their performance with these targets.
Have different individuals make the initial and subsequent decisions about a project.
Encourage decision makers to become less ego-involved with a project.
Provide more frequent feedback about project completion and costs.
Reduce the risk of penalties of failure.
Make decision makers aware of the costs of persistence.

15. Stages Underlying the Creative Process
9-10
Stages Underlying the Creative Process
Preparation: Reflects the notion that creativity starts from a base of knowledge.
Concentration: Where an individual concentrates on the problem at hand.
Incubation: Done unconsciously. During this stage, people engage in daily activities while their minds simultaneously mull over information and make remote associations.
Illumination: Remote associations from the incubation stage are ultimately generated.
Verification: Entails going through the entire process to verify, modify, or try out the new idea.

16. Group decision-making
Data suggests that innovative groups possessed high levels of both minority dissent and participation in decision making
Note four requirements of effective decision making in a group:
Focus on process
Understand requirements for an effective choice
Assess positive qualities of alternative solutions
Assess negative qualities of alternative solutions
Suggests openness, acceptance of dissent?

17. Advantages and Disadvantages of Group-Aided Decision Making
9-11
Table 9-2
Advantages and Disadvantages of Group-Aided Decision Making
Advantages Disadvantages
1. Greater pool of knowledge 1. Social pressure
2. Different perspectives 2. Minority domination
3. Greater comprehension 3. Logrolling
4. Increased acceptance 4. Goal displacement
5. Training ground 5. “Groupthink”

18. Group Problem Solving Techniques
Definition of consensus – reached when all members can say they either agree Or have had their “day in court” and were unable to convince the others of their viewpoint. In the final analysis, everyone agrees to support the outcome

19. Group Problem Solving Techniques
Other approaches to a group decision
Unanimity
A minority or one decides

20. More Formal Group Problem Solving Techniques
Brainstorming - disciplined process
Silent idea (optional)
Ideas/opinions solicited and written on a board, disallowing criticisms, allowing piggy-backing on ideas, clarification
Delphi technique is another, more formal form of brainstorming. Involves several rounds of questionnaire, feedback, etc. Useful in cases where participants are not in the same place.

21. More Formal Group Problem Solving Techniques
Nominal Group Technique – used to narrow down options through voting
Computer-aided Decision Making
Uses computers to manage brainstorming or delphi questioning

22. If time permits . . .
Discuss question on p. 248