Decision Making, Creativity, and Ethics

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Chapter 11

• Decision Making, Creativity, and Ethics

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Chapter Outline

• The Link Between Perception and Individual
  Decision Making
• How Should Decisions Be Made?
• How Are Decisions Actually Made in
  Organizations?
• Constraints Affecting the Decision Choice
• Group Decision Making
• The Influence of the Leader on Group Decision
  Making
• Creativity in Organizational Decision Making
• What About Ethics in Decision Making?

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Decision Making, Creativity, and Ethics

• Who should make decisions individuals or groups?
• How does one increase creativity in
  organizations?
• How difficult is it to make ethical decisions?

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Exhibit 11-1 CEOs Describe Difficult Decisions
of 1998
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Exhibit 11-2Steps in the Rational
Decision-Making Model

• Define the Problem
• Identify the Decision Criteria
• Allocate Weights to the Criteria
• Develop the Alternatives
• Evaluate the Alternatives
• Select the Best Alternative

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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
• 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

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How Do Decision-Makers Identify Select Problems

• Problems that are visible tend to have a higher
  probability of being selected than ones that are
  important. Why?
• It is easier to recognize visible problems
• Decision-makers want to appear competent and
  on-top of problems
• Decision-makers self-interest affects problem
  selection because it is usually in the
  Decision-makers best interest to address
  problems of high visibility and high payoff.
  This demonstrates an ability to perceive and
  attack problems

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Bounded Rationality

• Bounded Rationality
• individuals make decisions by constructing
  simplified models that extract the essential
  features from problems without capturing all
  their complexity
• Satisficing
• identifying a solution that is good enough

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Intuitive Decision Making

• Intuitive Decision Making
• An subconscious process created out of distilled
  experience
• When used
• when a high level of uncertainty exists
• when there is little precedent to draw on
• when variables are less scientifically
  predictable
• when facts are limited
• when facts dont clearly point the way to go
• when analytical data are of little use
• when there are several plausible alternative
  solutions to choose from, with good arguments for
  each
• when time is limited and there is pressure to
  come up with the right decision.

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Heuristics or Judgment Shortcuts

• Framing The selective use of perspective
• Statistical Regression to the Mean Failure to
  recognize that performances tend towards the
  average, rather than extremes
• Availability Heuristic The tendency of people to
  base their judgments on information readily
  available to them
• Representative Heuristic The tendency to assess
  the likelihood of an occurrence by trying to
  match it with a preexisting category
• Ignoring the Base Rate Ignoring the statistical
  likelihood of an event when making a decision
• Escalation of Commitment An increased commitment
  to a previous decision in spite of negative
  information

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Exhibit 11-3 Examples of Decision Biases
Scenario 1

• Answer part A before reading part B.
• A Threatened by a superior enemy force, the
  general faces a dilemma. His intelligence
  officers say his soldiers will be caught in an
  ambush in which 600 of them will die unless he
  leads them to safety by one of two available
  routes. If he takes the first route, 200 soldiers
  will be saved. If he takes the second, theres a
  one-third chance that 600 soldiers will be saved
  and a two-thirds chance that none will be saved.
  Which route should he take?
• B The general again has to choose between two
  escape routes. But this time his aides tell him
  that if he takes the first, 400 soldiers will
  die. If he takes the second, theres a one-third
  chance that no soldiers will die, and a
  two-thirds chance that 600 soldiers will die.
  Which route should he take?

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Scenario 2

• Linda is 31, single, outspoken, and very bright.
  She majored in philosophy in university. As a
  student, she was deeply concerned with
  discrimination and other social issues, and
  participated in anti-nuclear demonstrations.
  Which statement is more likely
• a. Linda is a bank teller
• b. Linda is a bank teller and active in the
  feminist movement.

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Exhibit 11-4Decision-Style Model
High
Analytical
Conceptual
Tolerance for Ambiguity
Behavioural
Directive
Low
Rational
Intuitive
Way of Thinking
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Organizational Constraints

• Performance Evaluations
• Reward Systems
• Programmed Routines
• System-Imposed Time Constraints
• Historical Precedents

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Group Decision Making

• 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

• Strengths of Group Decision Making
• Generates more complete information and knowledge
• Offers increased diversity of views
• Generates higher-quality decisions
• Leads to increased acceptance of a solution

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Effectiveness and Efficiency

• Accuracy Group Decisions
• Speed Individual Decisions
• Creativity Group Decisions
• Acceptance Group Decisions
• Efficiency Individual Decisions

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Groupthink and Groupshift

• Groupthink
• 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

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Symptoms of Groupthink

• Rationalized Resistance
• Peer Pressure
• Minimized Doubts
• Illusion of Unanimity

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What Causes Groupshift?

• Discussion creates familiarization among group
  members
• Group discussion motivates individuals to take
  risks
• Group diffuses responsibility

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Group Decision-Making Techniques

• Interacting Groups
• Brainstorming
• Nominal Group Technique
• Electronic Meeting

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Nominal Group Technique

• Members meet as a group but, before any
  discussion takes place, each member independently
  writes down his or her ideas on the problem.
• After this silent period, each member takes turns
  presenting one idea at a time to the group. No
  discussion takes place until all ideas have been
  recorded.
• The group then discusses the ideas for clarity
  and evaluates them.
• Each group member silently and independently
  rank-orders the ideas. The idea with the highest
  aggregate ranking determines the final decision.

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Exhibit 11-5Evaluating Group Effectiveness
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Leader Behaviours with Groups

• AI. You solve the problem or make a decision
  yourself using whatever facts you have at hand.
• AII. You obtain the necessary information from
  subordinates and then decide on the solution to
  the problem yourself.
• CI. You share the problem with relevant
  subordinates one-on-one, getting their ideas and
  suggestions. However, the final decision is yours
  alone.
• CII. You share the problem with your subordinates
  as a group, collectively obtaining their ideas
  and suggestions. Then you make the decision that
  may or may not reflect your subordinates
  influence.
• GII. You share the problem with your subordinates
  as a group. Your goal is to help the group concur
  on a decision. Your ideas are not given any
  greater weight than those of others.

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Contingency Variables in the Leader-Participation
Model

• QR Quality Requirement How important is the
  technical quality of this decision?
• CR Commitment Requirement How important is
  subordinate commitment to the decision?
• LI Leader Information Do you have sufficient
  information to make a high-quality decision?
• ST Problem Structure Is the problem well
  structured?
• CP Commitment Probability If you were to make
  the decision by yourself, is it reasonably
  certain that your subordinates would be committed
  to the decision?
• GC Goal Congruence Do subordinates share the
  organizational goals to be attained in solving
  this problem?
• CO Subordinate Conflict Is conflict among
  subordinates over preferred solutions likely?
• SI Subordinate Information Do subordinates have
  sufficient information to make a high-quality
  decision?
• TC Time Constraint Does a critically severe
  time constraint limit your ability to involve
  subordinates?
• GD Geographical Dispersion Are the costs
  involved in bringing together geographically
  dispersed subordinates prohibitive?
• MT MotivationTime How important is it to you
  to minimize the time it takes to make the
  decision?
• MD MotivationDevelopment How important is it
  to you to maximize the opportunities for
  subordinate development?

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Exhibt 11-6 Contingency Variables in the
Leader-Participation Model
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Exhibit 11-7 Revised Leadership-Participation
Model
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Creativity

• The process of creating products, ideas, or
  procedures that are novel or original, and are
  potentially relevant or useful to an organization

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De Bonos Six Thinking Hats

• White hat impartial thinking, focussing strictly
  on the facts.
• Red hat expression of feelings, passions,
  intuitions, emotions.
• Black hat a critical, deliberate, evaluating
  outlook.
• Yellow hat an optimistic, upbeat, positive
  outlook.
• Green hat creativity, inspiration, imagination,
  and the free flow of new concepts.
• Blue hat control, an overall managerial
  perspective of the process.

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Organizational Factors Affecting Creativity

• Challenge
• Freedom
• Resources
• Work-Group Features
• Supervisory
• Organizational Support

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Creativity Blocks

• Expected evaluation
• Surveillance
• External motivators
• Competition
• Constrained choice

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Ethics in Decision Making

• An individual can use three different criteria in
  framing or making ethical choices.
• Utilitarian criterion Decisions are made solely
  on the basis of their outcomes or consequences.
• Rights criterion Decisions consistent with
  fundamental liberties and privileges as set forth
  in documents like the Canadian Charter of Rights
  and Freedoms.
• Justice criterion Decisions that impose and
  enforce rules fairly and impartially so there is
  an equitable distribution of benefits and costs.

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Exhibit 11-8Factors Affecting Ethical
Decision-Making Behaviour
Organizational environment
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Summary and Implications

• Individual decision making
• Individuals think and reason before they act.
• Under some decision situations, people follow the
  rational decision making model.
• What can managers do to improve their decision
  making?
• Analyze the situation.
• Be aware of biases.
• Combine rational analysis with intuition.
• Dont assume that your specific decision style is
  appropriate for every job.
• Use creativity-stimulation techniques.
• Group decision making
• Organizations that use teams face additional
  problems and synergies with respect to decision
  making
• Leader-participation model can be used to
  determine when to allow teams to make decisions

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Summary and Implications

• Creativity
• Organizations need to reward and encourage
  creativity
• Ethics
• Managers set the tone for ethics in the
  organization