1. Decision Making, Creativity, and Ethics12
Decision Making, Creativity, and Ethics

2. Chapter Outline How Should Decisions Be Made?
The Rational Decision-Making Process
How Do Individuals Actually Make Decisions?
Bounded Rationality in Considering Alternatives
Intuition
Judgment Shortcuts
Improving Decision Making Through Knowledge Management
Group Decision Making
Group vs. the Individual
Groupthink and Groupshift
Group Decision-Making Techniques
Material pertinent to this discussion is found under “SnapShot Summary” at the end of the chapter.

3. Chapter Outline Creativity in Organizational Decision Making
Creative Potential
Three-Component Model of Creativity
Organizational Factors That Affect Creativity
What About Ethics in Decision Making?
Four Ethical Decision Criteria
Factors that Influence Ethical Decision-Making Behaviour
Making Ethical Decisions
Corporate Social Responsibility
Material pertinent to this discussion is found under “SnapShot Summary” at the end of the chapter.

4. Learning Outcomes Is there a right way to make decisions?
How do people actually make decisions?
How can knowledge management improve decision making?
What factors affect group decision making?
How can we get more creative decisions?
What is ethics, and how can it be used for better decision making?
What is corporate social responsibility?
This material is found at the beginning of the chapter.

5. How Should Decisions Be Made?
Rational Decision-Making
Makes consistent, value-maximizing choices within specified constraints
Six step decision-making process
Material pertinent to this discussion is found under “How Should Decisions Be Made?”
It’s likely that decision makers identify and select problems that are visible to people in power in organizations, and for which they will receive some acknowledgment and reward for having done work on solving problems.

6. Exhibit 12-1 Steps in the Rational Decision-Making Model
Material pertinent to this discussion is found under “How Should Decisions Be Made?”
This model assumes that the problem is clear and unambiguous, that the decision maker has complete information; that the decision maker can identify all relevant criteria; that there will be clear and constant preferences among the criteria and alternatives, that there are no time or cost constraints; and that the rational decision maker will choose the alternative with maximum payoff.
A brief discussion with students will lead them to realize that these conditions are rarely, if ever, fully met! You might want to get them to consider how they chose their college major, or what school to attend after high school.

7. Assumptions of the Rational Decision-Making Model
Problem clarity
The problem is clear and unambiguous.
Known options
The decision maker can identify all relevant criteria and viable alternatives.
Clear preferences
Rationality assumes that the criteria and alternatives can be ranked and weighted.
Material pertinent to this discussion is found under “How Should Decisions Be Made?”

8. Assumptions of the Rational Decision-Making Model
Constant preferences
Specific decision criteria are constant and the weights assigned to them are stable over time.
No time or cost constraints
Full information is available because there are no time or cost constraints.
Maximum payoff
The choice alternative will yield the highest perceived value.
Material pertinent to this discussion is found under “How Should Decisions Be Made?”

9. How Do Individuals Actually Make Decisions?
Bounded Rationality
Limitations on one’s ability to interpret, process, and act on information.
Satisficing
Identifying a solution that is “good enough.”
The first acceptable option rather than the optimal one
Intuition
A non-conscious process created from distilled experience that results in quick decisions
Relies on holistic associations
Affectively charged – engaging the emotions
Material pertinent to this discussion is found under “How Do Individuals Actually Make Decisions?”

10. Judgment Shortcuts: Common Biases in Decision Making
Overconfidence Bias
Believing too much in our own ability to make good decisions – especially when outside of own expertise
Anchoring Bias
Using early, first received information as the basis for making subsequent judgments
Confirmation Bias
Selecting and using only facts that support our decision
Availability Bias
Emphasizing information that is most readily at hand
Recent
Vivid
Material pertinent to this discussion is found under “How Do Individuals Actually Make Decisions?”

11. Judgment Shortcuts: Common Biases in Decision Making
Escalation of Commitment
Increasing commitment to a decision in spite of evidence that it is wrong – especially if responsible for the decision!
Randomness Error
Creating meaning out of random events - superstitions
Risk Aversion
tendency to prefer a sure thing over a risky outcome
Hindsight Bias
After an outcome is already known, believing it could have been accurately predicted beforehand
Material pertinent to this discussion is found under “How Do Individuals Actually Make Decisions?”

12. Knowledge Management
The process of organizing and distributing an organization’s collective wisdom so the right information gets to the right people at the right time.
Why it’s important:
Organizations can use it to “outsmart” their competition.
Baby boomers are taking their knowledge with them when leaving the workforce.
A well-designed KM system reduces redundancy and makes the organization more efficient.
Material pertinent to this discussion is found under “Improving Decision Making Through Knowledge Management.”

13. Knowledge Management Recording knowledge and expertise:
Develop computer databases of pertinent information that employees can readily access.
Create a culture that promotes, values, and rewards sharing knowledge.
Develop mechanisms that allow employees who have built up valuable expertise and insights to share them with others.
Material pertinent to this discussion is found under “Improving Decision Making Through Knowledge Management.”

14. Strengths of Group Decision Making Weaknesses of Group Decision Making
More complete information and knowledge.
Increased diversity of views.
Generates higher-quality decisions.
Leads to increased acceptance of a solution.
Weaknesses of Group Decision Making
More time consuming.
Conformity pressures in groups.
Discussion can be dominated by one or a few members.
Decisions suffer from ambiguous responsibility.
Material pertinent to this discussion is found under “Group Decision Making.”

15. Exhibit 12-2 Group vs. Individual Decision Making
Material pertinent to this discussion is found under “Group Decision Making.”

16. Effectiveness and Efficiency
Measures of Effectiveness
Accuracy
Speed
Creativity
Acceptance
Efficiency
groups almost always stack up as a poor second to the individual decision maker
With few exceptions, group decision making consumes more work hours than if an individual were to tackle the same problem alone.
Material pertinent to this discussion is found under “Group Decision Making.”
Accuracy: group decisions are generally more accurate than the decisions of the average individual in a group, but they are less accurate than the judgments of the most accurate group member.
Speed; individuals are superior.
Creativity: groups tend to be more effective than individuals.
Acceptance: the nod again goes to the group.
But effectiveness cannot be considered without also assessing efficiency.
In terms of efficiency, groups almost always stack up as a poor second to the individual decision maker. With few exceptions, group decision making consumes more work hours than if an individual were to tackle the same problem alone. The exceptions tend to be the instances in which, to achieve comparable quantities of diverse input, the single decision maker must spend a great deal of time reviewing files and talking to people. Because groups can include members from diverse areas, the time spent searching for information can be reduced. However, as we noted, these advantages in efficiency tend to be the exception.
Groups are generally less efficient than individuals. In deciding whether to use groups, then, consideration should be given to assessing whether increases in effectiveness are more than enough to offset the reductions in efficiency.

17. Groupthink and Groupshift
Phenomenon in which the norm for consensus overrides the realistic appraisal of alternative courses of action.
Groupshift
Phenomenon in which the initial positions of individual members of a group are exaggerated toward a more extreme position.
Material pertinent to this discussion is found under “Group Decision Making.”

18. Symptoms of Groupthink
Illusion of invulnerability
Assumption of morality
Rationalized resistance
Peer pressure
Minimized doubts
Illusion of unanimity
Material pertinent to this discussion is found under “Group Decision Making.”
Rationalized Resistance: Group members rationalize any resistance to the assumptions they have made. No matter how strongly the evidence may contradict their basic assumptions, members behave so as to reinforce those assumptions continually.
Peer Pressure: Members apply direct pressures on those who momentarily express doubts about any of the group’s shared views or who question the validity of arguments supporting the alternative favoured by the majority.
Minimized Doubts: Those members who have doubts or hold differing points of view seek to avoid deviating from what appears to be group consensus by keeping silent about misgivings and even minimizing to themselves the importance of their doubts.
Illusion of Unanimity: There appears to be an illusion of unanimity. If someone doesn’t speak, it’s assumed that he or she is in full accord. In other words, abstention becomes viewed as a “Yes” vote.

19. Minimizing Groupthink
Monitor group size
Encourage group leaders to play an impartial role.
Appoint one group member to play the role of devil’s advocate.
Stimulate active discussion of diverse alternatives to encourage dissenting views and more objective evaluations
Material pertinent to this discussion is found under “Group Decision Making.”
Encourage group leaders to play an impartial role. Leaders should actively seek input from all members and avoid expressing their own opinions, especially in the early stages of deliberation.
Appoint one group member to play the role of devil’s advocate. This member’s role is to overtly challenge the majority position and offer divergent perspectives.
Stimulate active discussion of diverse alternatives to encourage dissenting views and more objective evaluations.

20. What Causes Groupshift?
Discussion creates familiarization among group members.
Group discussion motivates individuals to take risks.
Group diffuses responsibility.
Material pertinent to this discussion is found under “Group Decision Making.”

21. Group Decision-Making Techniques
Interacting Groups
Brainstorming
Nominal Group Technique
Electronic Meetings
Material pertinent to this discussion is found under “Group Decision Making.”
Interacting Groups: Members meet face-to-face and rely on both verbal and nonverbal interaction to communicate with each other.
Brainstorming: An idea-generation process that specifically encourages any and all alternatives, while withholding any criticism of those alternatives.
Nominal Group Technique: A group decision-making method in which individual members meet face-to-face to pool their judgments in a systematic but independent fashion.
Electronic Meeting: A meeting where members interact on computers, allowing for anonymity of comments and aggregating of votes.

22. Exhibit 12-3 Nominal Group Technique
Material pertinent to this discussion is found under “Group Decision Making.”

23. Exhibit 12-4 Evaluating Group Effectiveness
Material pertinent to this discussion is found under “Group Decision Making.”

24. Creativity in Organizational Decision Making
The process of creating products, ideas, or procedures that are novel or original, and are potentially relevant or useful to an organization.
Creativity is important because
It allows the decision maker to more fully understand and appraise the problem
Material pertinent to this discussion is found under “Creativity in Organizational Decision Making.”

25. Creative Potential Who has the greatest creative potential?
Those people who
Are intelligent
Score high in Openness to Experience (Chapter 2
Are independent
Have high self-confidence
Are risk-takers
Have a positive core self-evaluation
Are tolerant of ambiguity
Have a low need for structure
Are able and willing to persevere
Material pertinent to this discussion is found under “Creativity in Organizational Decision Making.”

26. Three-Component Model of Creativity
Expertise
potential for creativity is enhanced when individuals have abilities, knowledge, proficiencies, and similar expertise in their field of endeavour.
Creative-thinking skills
encompasses personality characteristics associated with creativity, the ability to use analogies, and the talent to see the familiar in a different light.
Moods impact creativity
Intrinsic task motivation
desire to work on something because it’s interesting, involving, exciting, satisfying, or personally challenging.
Material pertinent to this discussion is found under “Creativity in Organizational Decision Making.”

27. Moods and Creativity Positive moods increase creativity
Moods such as happiness that encourage interaction with the world are more conducive to creativity than passive moods such as calm.
Avoidance-oriented negative moods affect creativity
Fear and anxiety decrease creativity
Feeling threatened reduces your desire to try new activities
Risk aversion increases when you are scared
Active-negative moods affect creativity
anger appears to enhance creativity, especially if you are taking your task seriously.
Material pertinent to this discussion is found under “Creativity in Organizational Decision Making.”

28. Exhibit 12-5 The Three Components of Creativity
Material pertinent to this discussion is found under “Creativity in Organizational Decision Making.”

29. Creativity Blocks Expected evaluation Surveillance External motivators
Competition
Constrained choice
Material pertinent to this discussion is found under “Creativity in Organizational Decision Making.”
Expected Evaluation: Focusing on how your work will be evaluated rather than focusing on the purpose of your work.
Surveillance: Being watched while you are working.
External Motivators: Emphasizing external, tangible rewards rather than intrinsic rewards.
Competition: Facing a win-lose situation with other people rather than being able to simply do your best.
Constrained Choice: Being given limits on how you can do your work rather than being encouraged to do your very best work.

30. Four Criterion for Making Ethical Choices
Utilitarian criterion
A decision focused on outcomes or consequences that emphasize the greatest good for the greatest number of people.
Rights criterion
Decisions consistent with fundamental liberties and privileges as set forth in documents like the Canadian Charter of Rights and Freedoms.
Protects whistle-blowers
Justice criterion
Decisions that impose and enforce rules fairly and impartially so there is an equitable distribution of benefits and costs.
Care criterion
Decisions “…that expresses care in protecting the special relationships that individuals have with each other.”
Material pertinent to this discussion is found under “What About Ethics in Decision Making?”
Three Ethical Decision Criteria that one can use include:
Utilitarianism, in which decisions are made solely on the basis of their outcomes or consequences;
Rights, which calls on individuals to make decisions consistent with fundamental liberties and privileges; and
Justice, which requires individuals to impose and enforce rules fairly and impartially so there is an equitable distribution of benefits and costs.
These criteria should be helpful in resolving ethical dimensions of decision making in an organized manner, but it should be recognized that each has advantages and liabilities.
A good discussion can stem from posing the question: “Suppose a manager knows she will have to get some workers to do overtime on the weekend. Describe the decision-making process based on utilitarianism, rights, and justice.”

31. Exhibit 12-6 Factors Affecting Ethical Decision-Making Behaviour
Material pertinent to this discussion is found under “What About Ethics in Decision Making?”

32. Exhibit 12-7 Stages of Moral Development
Material pertinent to this discussion is found under “What About Ethics in Decision Making?”

33. Exhibit 12-8 Is a Decision Ethical?
Material pertinent to this discussion is found under “What About Ethics in Decision Making?”
This is a simple framework for helping one determine whether a decision is ethical.

34. Corporate Social Responsibility
An organization’s responsibility to consider the impact of its decisions on society.
45 percent of Canadians believe individual shareholders, not the company, should make personal decisions about giving to charity.
35 percent of Canadians, however, felt corporations should donate to charities.
Material pertinent to this discussion is found under “What About Ethics in Decision Making?”
Economist Milton Friedman remarked in Capitalism and Freedom that “few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.”
Joel Bakan, professor of law at the University of British Columbia, author of The Corporation, and co-director of the documentary of the same name, finds that current laws support troubling corporate behaviour. Bakan suggests that today’s corporations have many of the same characteristics as a psychopathic personality (e.g., self-interested, lacking empathy, manipulative, and reckless in their disregard of others).
MBA response to CSR:
At the start of their program, 40 percent reported that one of the primary responsibilities of a company is to produce useful, high quality goods and services.
By the time the students graduated, only 30 percent of them thought this was a valuable corporate goal; 75 percent suggested that a company’s primary responsibility was to maximize shareholder value.

35. Global Implications
Cultural background can have a significant influence on decision making. Cultures differ:
in their time orientation
the importance of rationality
their belief in the ability of people to solve problems
their preference for collective decision making.
No global ethical standards
Material pertinent to this discussion is found under “What About Ethics in Decision Making?”
Economist Milton Friedman remarked in Capitalism and Freedom that “few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible.”
Joel Bakan, professor of law at the University of British Columbia, author of The Corporation, and co-director of the documentary of the same name, finds that current laws support troubling corporate behaviour. Bakan suggests that today’s corporations have many of the same characteristics as a psychopathic personality (e.g., self-interested, lacking empathy, manipulative, and reckless in their disregard of others).
MBA response to CSR:
At the start of their program, 40 percent reported that one of the primary responsibilities of a company is to produce useful, high quality goods and services.
By the time the students graduated, only 30 percent of them thought this was a valuable corporate goal; 75 percent suggested that a company’s primary responsibility was to maximize shareholder value.

36. Summary and Implications
Is there a right way to make decisions?
The rational decision making model describes six steps: define the problem, identify the criteria, allocate weights to the criteria, develop alternatives, evaluate alternatives, select the best alternative.
How do people actually make decisions?
Decision makers may rely on bounded rationality, satisficing, and intuition. There are also shortcuts that are used.
How can knowledge management improve decision making?
By electronically storing information that employees have, organizations make it possible to share collective wisdom.
What factors affect group decision making?
Group decisions are time-consuming, lead to conformity pressures, can be dominated by one or few members, and suffer from ambiguous responsibility.
Material pertinent to this discussion is found at the end of the chapter.

37. Summary and Implications
How can we get more creative decisions?
Employees are more creative when they are motivated by intrinsic interest, challenge, task satisfaction, and self-set goals.
What is ethics and how can it be used for better decision making?
Ethics is the study of moral value or principles that guide our behaviour and inform us whether actions are right or wrong.
What is corporate responsibility?
Is defined as an organization’s responsibility to consider the impact of its decision on society.
Material pertinent to this discussion is found at the end of the chapter.

38. OB at Work: For Review
What is the rational decision-making model? Under what conditions is it applicable?
Describe organizational factors that might constrain decision makers.
What role does intuition play in effective decision making?
Describe three judgment shortcuts.
What is groupthink? What is its effect on decision-making quality?
Material pertinent to this discussion is found at the end of the chapter.

39. OB at Work: For Review
What is groupshift? What is its effect on decision-making quality?
Identify five organizational factors that block creativity at work.
Describe the four criteria that individuals can use in making ethical decisions.
Are unethical decisions more a function of the individual decision maker or the decision maker’s work environment? Explain.
What is corporate social responsibility?
Material pertinent to this discussion is found at the end of the chapter.

40. OB at Work: For Critical Thinking
1. “For the most part, individual decision making in organizations is an irrational process.” Do you agree or disagree? Discuss.
What factors do you think differentiate good decision makers from poor ones? Relate your answer to the six-step rational decision-making model.
3. Have you ever increased your commitment to a failed course of action? If so, analyze the follow-up decision to increase your commitment and explain why you behaved as you did.
4. If group decisions are of consistently better quality than individual decisions, how did the phrase “a camel is a horse designed by a committee” become so popular and ingrained in our culture?
Material pertinent to this discussion is found at the end of the chapter.

41. Breakout Group Exercises
Form small groups to discuss the following:
1. Apply the rational decision-making model to deciding where your group might eat dinner this evening. How closely were you able to follow the rational model in making this decision?
2. The company that makes your favourite snack product has been accused of being weak in its social responsibility efforts. What impact will this have on your purchase of any more products from that company?
3. You’ve seen a classmate cheat on an exam or an assignment. Do you do something about this or ignore it?
Material pertinent to this discussion is found at the end of the chapter.

42. Ethical Dilemmas: What Would You Do?
You are negotiating a contract with a potentially very large customer whose representative has hinted that you could almost certainly be assured of getting his business if you gave him and his wife an all-expenses-paid cruise to the Caribbean. You know the representative’s employer would not approve of such a “payoff,” but you have the discretion to authorize such an expenditure. What would you do?
Material pertinent to this discussion is found at the end of the chapter.
Discussion: This size of a gift is clearly a bribe, and most corporations have specific policies limiting such behaviour. In Canada, in general, such lavish “gifts” are not seen as appropriate. In other countries, however, a great deal of business gets greased by lavish gifts.

43. Ethical Dilemmas: What Would You Do?
You have an autographed CD by Drake and put it up for sale on eBay. So far, the highest bid is $ A friend has offered you $100 for the CD, commenting that he could get $150 for it on eBay in a year. You know this is highly unlikely. Should you sell your friend the CD for what he offered ($100)? Do you have an obligation to tell your friend you have listed your CD on eBay?
Material pertinent to this discussion is found at the end of the chapter. .
Discussion: No! This is a moral as well as a legal and ethical dilemma. Students should conclude that stealing is illegal, immoral, and highly unethical.

44. Ethical Dilemmas: What Would You Do?
Your company policy on reimbursement for meals while travelling on company business is that you will be repaid for your out-of-pocket costs, which are not to exceed $50 a day. You don’t need receipts for these expenses—the company will take your word. When travelling, you tend to eat at fast-food places and rarely spend in excess of $15 a day. Most of your colleagues submit reimbursement requests in the range of $40 to $45 a day regardless of what their actual expenses are. How much would you request for your meal reimbursements?
Material pertinent to this discussion is found at the end of the chapter.
Discussion: The actual cost of the meals should probably be put in for reimbursement. In some corporations, however, the accounting and travel reimbursement personnel do not want the traveller to request amounts that vary from the standard $50. The per diem rate simplifies the amount of accounting transactions and is thus considered more effective for company practices. It is also possible that your company’s culture may allow the full amount to compensate for various incidental expenses that are not explicitly covered by the policy.

45. Ethical Dilemmas: What Would You Do?
You are the manager at a gaming company, and you are responsible for hiring a group to outsource the production of a highly anticipated new game. Because your company is a giant in the industry, numerous companies are trying to get the bid. One of them offers you some kickbacks if you give that firm the bid, but ultimately, it is up to your bosses to decide on the company. You don’t mention the incentive, but you push upper management to give the bid to the company that offered you the kickback. Is withholding the truth as bad as lying? Why or why not?
Material pertinent to this discussion is found at the end of the chapter.
Discussion: It is tempting for students to feel that a little bit of equivocation is nothing like lying. The question that they must ask themselves is why are they pushing the product and why keep it a secret if there is nothing wrong with the practice?.

46. Ethical Dilemmas: What Would You Do?
You have discovered that one of your closest friends at work has stolen a large sum of money from the company. Would you do nothing? Go directly to an executive to report the incident before talking about it with the offender? Confront the individual before taking action? Make contact with the individual with the goal of persuading that person to return the money?
Material pertinent to this discussion is found at the end of the chapter.
Discussion: Arguments can be made for almost all of the listed options except the “do nothing” option. If you believe that the employee would accept responsibility for correcting his or her own action, everyone might be best served by your going to him or her. If you believe that the employee would threaten you or in some way further harm the company, you would probably want to go to an executive.