1. Types of Decisions 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. Recognize the problem and the need for a decision Gather and evaluate data and diagnose the situation Identify the objective of the decision List and evaluate alternatives Decision Making Process

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

4. Rationality a logical, step-by-step approach to decision making, with a thorough analysis of alternatives and their consequences

5. Models of Decision Making Effective Decision a timely decision that meets a desired objective and is acceptable to those individuals affected by it

6. 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 Rational Model

7. Bounded Rationality a theory that suggests that there are constraints that force a decision maker to be less than completely rational

8. 1. Managers select the first alternative that is satisfactory 2. Managers recognize that their conception of the world is simple 3. Managers are comfortable making decisions without determining all the alternatives 4. Managers make decisions by rules of thumb or heuristics Bounded Rationality Model

9.  Assumes that managers satisfice – select the first alternative that is “good enough”  Assumes that managers develop heuristics, short cuts, to make decisions in order to make decisions to save mental activity. Bounded Rationality Model

10. Garbage Can Model a theory that contends that decisions in organizations are random and unsystematic Problems Participants Solutions Choice opportunities Beyond the Book:

11. Z Problem-Solving Model

12. Escalation of Commitment the tendency to continue to commit resources to a failing course of action

13. Escalation of Commitment  Why it occurs –people dislike inconsistency –overly optimistic –illusion of control –sunk costs  How to deal with it –split responsibility for decisions –closely monitor decision makers –provide individuals with a graceful exit –have groups make the initial decision

14. Cognitive Style an individual’s preference for gathering information and evaluating alternatives

15. Risk Aversion the tendency to choose options that entail fewer risks and less uncertainty

16. Risk and the Manager  Many decisions involve some element of risk.  Individuals differ in terms of risk aversion.  Risk aversion is determined by individual tendencies and organizational factors.  To encourage risk taking, must view failure as “enlightened trial and error.”

17. Personality, Attitudes, and Values

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

19. Influences on Creativity  Individual: –Cognitive Processes  Divergent Thinking  Associational Abilities  Unconscious Processes –Personality Factors  breadth of interests  high energy  self-confidence  Organizational: –Flexible organization structure –Participative decision making –Quality, supportive relationships with supervisors Creative performance is highest when there is a match or fit between the individual and organizational influences.

20. Four Types of Creativity Responsive ExpectedContributory Proactive

21. Can you think of new solutions to these common organizational problems? Employees’ productivity declines sharply the day after the Super Bowl. Your organization has been in deficit for three consecutive quarters. Where do you make cuts in the budget? You learn that the company can no longer afford to provide lunch to employees. How would you maintain morale? Beyond the Book: Be Creative!

22. Group Decision Making  Synergy – occurs when group members stimulate new solutions to problems through the process of mutual influence and encouragement within the group.  Social decision schemes – simple rules used to determine final group decisions Majority Wins Truth Wins Two-thirds Majority First-shift

23. Group Decision Making 1. more knowledge through pooling of group resources 2. increased acceptance and commitment due to voice in decisions 3. greater understanding due to involvement in decision stages Advantages 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 Disadvantages

24. Limits of Group Decision Making Groupthink – a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressures Group Polarization – the tendency for group discussion to produce shifts toward more extreme attitudes among members

25. 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

26. Self-Managed Teams Dialectical Inquiry Brainstorming Devil’s Advocacy Delphi Technique Nominal Group Technique Quality Circles and Quality Teams Group Decision Techniques

27. Special Decision-Making Groups  Quality circles – small groups that meet voluntarily to address work- related problems.  Quality teams – a team that is part of an organization, empowered to act on its decisions regarding quality  Self-managed teams – more broadly focused than above two types

28. Hofstede’s Dimensions  Styles of decision making vary by culture  Many of Hofstede’s dimensions have implication for how people deploy the decision- making process

29. Beyond the Book: Decisions in Japan “Teamwork” and “Collaboration” look much different in Japan than in the United States. In Japanese firms, workers (especially lower level) tend to remain silent during meetings, avoid sitting next to upper management, and rigorously avoid using their boss’ first name. Upper management, meanwhile, steer clears of direct feedback or delivering the “hard truth.” At all levels, harmony and restraint, rather than independence and risk-taking, are prized values.

30. Decision Making in the Virtual Workplace Decision Making in the Virtual Workplace Desktop Videoconferencing Systems Internet/Intranet Systems Tools for Virtual Teams Group Decision Support Systems

31. Beyond the Book: Ethics Check Beyond the Book: Ethics Check  Is it legal? –Does it violate law –Does it violate company policy company policy  Is it balanced? –Is it fair to all –Does it promote win–win relationships  How will it make me feel about myself?