1. Ch. 12 Learning Objectives
Compare the rational model of decision making, and the non-rational models which are: Simon’s normative model, and the garbage can model.
Discuss decision making biases.
Discuss dynamics of decision making.
Explain decision-making styles of groups.
Explain creativity in decision making.
Objective 1 identifies two decision-making models. Objectives 2 through 5 examine the dynamics of decision making.

2. Decision Making
Decision making – Identifying and choosing solutions that lead to a desired end result
Everyone makes decisions everyday – in personal and professional life
Decision making involves identifying and then choosing from a number of alternatives. So first you have to think about the variety of responses or actions you could take to alleviate the problem or improve the process. Then you need to choose the best one based on some pre-determined criteria.
Let’s talk about this decision-making process and the factors affect the quality of decisions that are made.

3. Models of Decision Making p. 337-340
Rational Model logical four-step approach
Identifying the problem
Generating alternative solutions
Selecting solution
Implementing and evaluating the solution
*this is how decisions should be made
Let’s examine the four steps of the first of two models we’ll be studying, the rational decision-making model.
Step 1: Identify the problem
At this stage, we must differentiate fact from opinion; objective data should be considered not perceptions.
In addition, we must specify the underlying causes by distinguishing symptoms from the causes of the problem.
Let’s consider this example: the owner of an office building was getting complaints from tenants who said “the elevator is too slow.” Some threatened to move out if nothing was done about the slow elevator. Replacing the elevator would be expensive. Rather than accept the problem as the tenants defined it, the owner hired a consultant to look into the problem. The consultant defined the problem differently “tenants are bored while waiting for the elevator.” His recommended solution was not a new expensive elevator; rather it was to place mirrors next to the elevators so that the tenants could look at themselves while waiting. The owner put up the mirrors, and the complaints stopped. By properly defining the problem, through distinguishing symptoms from the cause of the problem, the owner saved a substantial amount of money. A new faster elevator may not have stopped the complaints.
Step 2: Generate alternative solutions by matching solutions to goals, getting solutions from everyone involved, building on others’ ideas, specifying short- and long-term solutions, and postponing evaluating alternatives.
Step 3: Select a solution. At this stage, it is important to evaluate main effects and side effects: For example, if you have difficulty scheduling as many games as there is demand for on the fields, you may consider making the games shorter to have more games. Possible side effects are the impact on the field, meeting standard regulations, and parking overlap problems. These could all be side effects of the decision to correct the main effect.
Step 4: Implement and follow up on the solution. Points to remember at this stage are to implement at the proper time and in the right sequence, provide feedback opportunities, engender acceptance, establish an ongoing monitoring system, and evaluate based on how well the problem was solved.
Let’s discuss on the next slide some research findings of this model.

4. Non-Rational Models p. 340-342
Based on premise that decision making is not rational – this is how decisions are made
Assume that:
Decision making is uncertain
Not all information is available or known
Making optimal decisions is difficult
Simon’s Normative Model
Garbage Can Model
Nonrational models of decision making are based on premise that decision making is not rational
These models assume that:
Decision making is uncertain
Not all information is available or known
Making optimal decisions is difficult
Two nonrational models include: Simon’s Normative Model and the Garbage Can Model

5. Simon’s Normative Model of Decision Making p. 340
Decision making is characterized by
Limited information processing
Satisficing
Choosing a standard that meets a minimum standard of acceptance
this solution is “good enough”
In the late 1970s, Herbert Simon put forth a more realistic decision-making model called the Normative Model.
This is based on the assumption that decision making is not rational because people are guided by bounded rationality, or the constraints that restrict decision making, such as time, limitations of the human mind, and the complexity of the situation.
The model suggests that decision making is characterized by:
Limited information processing – There is a limit to the quantity of information managers can process resulting in the tendency to acquire manageable rather than optimal amounts of information. So the reality is that managers are not evaluating all potential alternatives to choose the best one.
Satisficing - Satisficing consists of choosing a solution that meets some minimum standard of acceptance. Satisficing occurs because people do not have the time, information, or ability to handle the complexity associated with the rational process and, therefore, stop seeking alternatives when they find one that is good enough.

6. Garbage Can Model p. 340-341 Does not follow any orderly steps
Based on premise that decision making is sloppy and haphazard
Decisions are made as a result of the interaction between:
Problems, solutions, participants, and choice opportunities
Does not follow any orderly steps
The garbage can model is based on premise that decision making is sloppy and haphazard and that
decisions are made as a result of the interaction between:
Problems, solutions, participants, and choice opportunities
In other words, solutions and problems are matched often by chance rather than through a step-by-step process.
What are the implications of the Garbage Can model?
Decisions are often made because of the presence of a salient opportunity
Political motives frequently guide the decision-making process
As the number of problems increases and time is scarce, less problems get solved
Important problems are more likely to be solved than unimportant ones.

7. Garbage Can Model of Organizational Decision-Making
Problems
Solutions
Participants
Choice opportunities
Problems
Solutions
Participants
Choice opportunities
Problems
Solutions
Participants
Choice opportunities
Notes:
Topic Covered: Organizational Decision-Making
Garbage Can Model
Holds that decision making is sloppy and hazardous.
According to the Garbage Can Model, decisions result from a complex interaction between four independent streams of event: problems, solutions, participants, and choice opportunities.
A similar type of process occurs in your kitchen garbage can: we randomly discard our trash and it gets mashed together based on chance interactions.
The garbage can model assumes that the decision maker does not follow an orderly set of events but instead attractive solutions get matched up with whatever handy problems exist at a given point I time or people get assigned to projects because their work load is low at that moment.
Streams of Events
Problems problems represent a gap between an actual situation and a desired condition. Problems are independent from alternatives and solutions. The problem may or may not lead to a solution
Solutions are answers looking for questions. They represent ideas constantly flowing through the organization. Solutions are used to formulate problems rather than vice versa. Predicted to occur because managers often do not know what they want until they have some idea of what they can get
Participants are the organizational members who come and go throughout the organization. They bring different values, attitudes, and experiences to a decision-making situation. Time pressures limit the extent to which participants are involved in decision making.
Choice opportunities occasion where an organization is expected to make a decision. While some opportunities such as hiring and promoting employees occur regularly, others do not because they result from some type of crisis or unique situation.
Interactions among the Streams of Events
Because of the independent nature of streams of events, they interact in a random fashion. This implies that decision making is more a function of chance encounters than a rational process.
Thus the organization is a “garbage can” in which problems, solutions, participants, and choice opportunities are all mixed together.
Only when the four streams happen to connect (such as point A in the slide above) is a decision made.
Because these connections randomly occur among countless combinations of streams of events, decision quality generally depends on timing.
Good decisions are made when these streams of events interact at the proper time.
Why some problems do not necessarily relate to solutions (point B) and why solutions do not always solve problems.
Source: R Kreitner and A Kinicki Organizational Behavior 5th ed. (Burr Ridge, IL: Irwin/McGraw-Hill, 2001) pp B

8. Decision Making Biases p.342-245
Availability heuristic – use information readily available in memory
Representativeness heuristic – using similar situations to predict the occurrence of an event
Confirmation bias – decide before investigating then seek confirming evidence
Anchoring bias – decisions are influenced by initial information, data, stereotypes
The availability heuristic is the decision maker’s tendency to base decisions on information that is readily available in memory. So events that happened that are salient or recent may disproportionately influence a decision.
The representativeness heuristic occurs when people compare a current event or situation to previous situations that they know about. If these situations are not really comparable or if the decision makers knowledge about them is not accurate, it may lead to an inaccurate decision.
The confirmation bias occurs when people pre-judge a situation and then seek information that confirms their decision or belief.
The anchoring bias affects people’s decision making by the influence of initial information, impressions, data, feedback or stereotypes that anchor subsequent decisions or judgments.

9. Decision Making Biases p. 342-345
Overconfidence bias – tendency to be overconfident about estimates or forecasts
Hindsight bias – knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlier
Framing bias – tendency to consider risks about gains differently than risks about losses
Escalation of commitment bias – tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed
Overconfidence bias – tendency to be overconfident about estimates or forecasts
Hindsight bias – knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlier
Framing bias – tendency to consider risks about gains differently than risks about losses
Escalation of commitment bias – tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed
Factors affecting escalation of commitment include:
Psychological and social determinants. We have pressure in our society to stay consistent and once we make a decision we are wedded to it. We become so ego-involved that if the idea doesn’t work we feel it reflects on us as a person. Clearly, we saw in the 2004 elections that being painted as a “flip-flopper” had a negative effect on John Kerry.
Organizational determinants. Organizations that don’t have robust communication channels or processes in place to get feedback may continue on courses of action that are no longer appropriate.
Project characteristics. When projects don’t have clearly defined goals, people tend to think that obstacles in the course of the project can be overcome with more resources and that the results will be worth it in the end.
Contextual determinants. Pressures from outside sources, competitors, and stakeholders who are influential may cause a company to continue down a path that may not reap many benefits.

10. Question for today
Identify a time when you had to make an important decision.
Tell me what process you used.
Did you accidentally (or purposefully) used a decision-making bias?
Were you satisfied with the outcome?

11. Dynamics of Decision Making p. 345-346
Knowledge Management
Implementing systems and practices that increase the sharing of knowledge and information throughout an organization.
Knowledge comes in many forms:
Tacit knowledge – info gained from experience
Explicit knowledge – info gained from scholarly or reputable sources
On this and the next several slides, we will examine three dynamics of decision making: knowledge management, decision-making styles, and the problem of escalation of commitment.
What specific actions can organizations take to facilitate knowledge management?
Having a culture of collaborative decision making, flattening organizational structures, and helping people establish social networks throughout the organization through, for example, mentoring and job rotation programs.
Better organizations have knowledge management systems because it improves the quality of their decisions.

12. When to Use Groups for Decision Making p. 354-360
If additional information would increase the quality of the decision
If acceptance is important
If people can be developed through their participation
This slide describes three situations when it is best to use groups for decision making.
As an aside, it’s interesting to note that the benefits of group decision making provided the impetus for a movement called Participative Management that is embraced by many organizations today.

13. Brainstorming p. 358
Brainstorming process to generate a quantity of ideas
Quantity is more important than quality
Criticism is withheld
Build on others ideas
Create status-free environment
Decisions come later
We’ll turn our attention now to a discussion of several group problem-solving techniques: brainstorming, the nominal group technique, and the Delphi technique.
Brainstorming is used to help groups generate multiple ideas and alternatives for solving problems.
Brainstorming involves convening the group; reviewing the problem, silently generating ideas; soliciting ideas, and writing them for all to see.
When brainstorming, freewheeling is encouraged, criticism is discouraged, quantity of ideas is encouraged, and seniority is ignored.
Although effective for generating ideas, brainstorming is not appropriate for evaluating alternatives or selecting solutions.

14. Question for today
With a classmate, brainstorm as many ideas as possible to solve this problem:
Too many homeless pets exist in America. Shelters and “the pound” are over-run with unwanted animals –dogs, cats, rabbits, birds, etc. Too many animals have litters, and those litters end up at the pound or end up homeless in the community.
Quantity is more important than quality!