Chapter Ten

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(No Transcript)
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Chapter Ten
Making Decisions
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Chapter Ten Outline

• Models of Decision Making
• The Rational Model
• Simons Normative Model
• Dynamics of Decision Making
• Contingency Model of Decision Making
• Improving Decision Making
• General Decision-Making Styles
• Escalation of Commitment
• Creativity

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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

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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

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Simons 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

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Judgmental Heuristics
Availability Heuristic A decision makers
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 ones impressions
about similar occurrences.
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Judgmental Heuristics (cont)
Satisficing Choosing a solution that meets a
minimum standard of acceptance
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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.

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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

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Decision Making Styles

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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?

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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

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Skills and Best Practices Recommendations to
Reduce Escalation of Commitment

1. Set minimum targets for performance, and have
   decision makers compare their performance with
   these targets.
2. Have different individuals make the initial and
   subsequent decisions about a project.
3. Encourage decision makers to become less
   ego-involved with a project.
4. Provide more frequent feedback about project
   completion and costs.
5. Reduce the risk of penalties of failure.
6. Make decision makers aware of the costs of
   persistence.

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Stages Underlying the Creative Process

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

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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?

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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

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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

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Group Problem Solving Techniques

• Other approaches to a group decision
• Unanimity
• A minority or one decides

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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.

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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

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If time permits . . .

• Discuss question on p. 248