behavior in organization writing assignment

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CHAPTER10.ppt
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CHAPTER 10

DECISION MAKING IN ORGANIZATIONS

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LEARNING OBJECTIVES

Identify the steps in the analytical model of decision making and distinguish between the various types of decisions that people make.

Describe different individual decision styles and the various organizational factors that influence the decision making process

Distinguish among three approaches to how decisions are make: the rational-economic model, the administrative model, and image theory

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LEARNING OBJECTIVES

Identify the various factors that lead people to make imperfect decisions

Compare the conditions under which groups make superior decision than individuals and when individuals make superior decisions than groups

Describe the various techniques that can be used to enhance the quality of individual decisions and group decisions

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DECISION MAKING

  • The process of making choices form among several alternatives

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A GENERAL ANALYTIC MODEL OF THE DECISION MAKING PROCESS

  • Three phases of Decision-Making
  • Formulation

  • Consideration

  • Implementation

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A GENERAL ANALYTIC MODEL OF THE DECISION MAKING PROCESS

  • Decision Formulation
  • Problem Identification

  • Define the objectives to be met in solving the problem

  • Make a predecision

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A GENERAL ANALYTIC MODEL OF THE DECISION MAKING PROCESS

  • Decision Consideration
  • Alternative generation

  • Evaluating alternative solutions

  • Make a choice

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A GENERAL ANALYTIC MODEL OF THE DECISION MAKING PROCESS

  • Decision Implementation
  • Implementing the Decision

  • Follow-up

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THE BROAD SPECTRUM OF ORGANIZATIONAL DECISIONS

  • Programmed vs. non programmed decisions

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THE BROAD SPECTRUM OF ORGANIZATIONAL DECISIONS

  • Certain versus Uncertain Decisions
  • Understanding Risk: Objective and Subjective Probabilities

  • Organizational decisions involve some sort of risk

  • Objective and subjective probabilities

  • Reduction of Uncertainty – Information

  • Top Down versus Empowered Decisions

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FACTORS AFFECTING DECISION MAKING

  • Individual differences in decision making
  • Decision Styles

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FACTORS AFFECTING DECISION MAKING - continued

  • Individual Differences in Decision Making
  • Indecisiveness
  • Difficulty making decisions? Delay? Long-Time? Change Mind? Worry about decisions made?

  • Reason:
  • Perfectionists (not in a good way – overly concerned about mistakes . . )
  • Indecisive people unable to narrow information to what is important

  • However, hasty decision may be a sign of lack of care

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FACTORS AFFECTING DECISION MAKING - continued

  • Group influences: A matter of trade-offs
  • Potential benefits of decision making groups

  • Potential problems of decision making groups

  • Groupthink:

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FACTORS AFFECTING DECISION MAKING - continued

  • Organizational Influences on DM

  • Political Pressures
  • Face Saving

  • Time constraints

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HOW INDIVIDUAL DECISIONS ARE MADE?

  • The Rational-Economic Model: In search of the Ideal Decision
  • Rational Decisions:

  • Rational-Economic Model:

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HOW INDIVIDUAL DECISIONS ARE MADE?

  • The Administrative Model: The Limits of Human Rationality
  • Recognizes the bounded rationality that limits the making of optimally rational-economic decisions

  • Satisficing decisions

  • Bounded rationality

  • Bounded discretion

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HOW INDIVIDUAL DECISIONS ARE MADE? - continued

  • Image Theory: An Intuitive Approach to Decision Making

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HOW INDIVIDUAL DECISIONS ARE MADE? - continued

  • Image Theory: An Intuitive Approach to Decision Making
  • Deals with decisions about adopting a certain course of action or changing a course of action
  • Step 1: Compatibility test
  • Step 2: No compatibility, decision rejected. If compatible, then the profitability test
  • Decisions are made by past experience

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • Framing Effects: the tendency for people to make different decisions based on how the problems is presented to them

  • Risky choice frames:

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • Framing Effects - continued

  • Attribute framing

  • Goal framing:

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • Reliance on Heuristics
  • Heuristic:

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • Reliance on Heuristics – continued
  • Two common types
  • The availability heuristic:

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • Reliance on Heuristics – continued
  • Two common types

  • The representativeness heuristic:

  • The helpful side of heuristic

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • The Inherently Biased Nature of Individual Decisions
  • Bias toward implicit favorites
  • Implicit favorite:

  • Confirmation candidate:

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • The Inherently Biased Nature of Individual Decisions
  • Hindsight favorites

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • The Inherently Biased Nature of Individual Decisions
  • Person Sensitivity Bias

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THE IMPERFECTN NATURE OF INDIVIDUAL DECISIONS

  • The Inherently Biased Nature of Individual Decisions
  • Escalation of Commitment Bias

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GROUP DECISIONS: DO TOO MANY COOKS SPOIL THE BROTH?

  • When are groups superior to individuals?

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GROUP DECISIONS: DO TOO MANY COOKS SPOIL THE BROTH?

  • When are individuals superior to groups?
  • Poorly structured, creative tasks, individuals do better

  • However, brainstorming may work for groups under these circumstances
  • Avoiding criticism
  • Share even far-out suggestions
  • Offer as many comments as possible
  • Build on other ideas to create your own

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TECHNIQUES FOR IMPROVING THE EFFECTIVENESS OF DECISIONS

  • Techniques for improving decision making
  • Training individuals to improve group performance – to avoid the following errors

  • Hypervigilance:

  • Unconflicted adherence:

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TECHNIQUES FOR IMPROVING THE EFFECTIVENESS OF DECISIONS

  • Techniques for improving decision making
  • Training individuals to improve group performance – to avoid the following errors

  • Unconflicted change:

  • Defensive avoidance:

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TRADITIONAL TECHNIQUES FOR IMPROVING THE EFFECTIVENESS OF DECISIONS

  • Techniques for Enhancing Group Decisions
  • The Delphi Technique: Decisions by expert consensus, solicited by mail and then compiled, shared again with the experts in a second mailing, then come up with a consensus

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TRADITIONAL TECHNIQUES FOR IMPROVING THE EFFECTIVENESS OF DECISIONS

  • Techniques for Enhancing Group Decisions - continued

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  • The Nominal Group Technique:

  • The Stepladder Technique:

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COMPUTER-BASED APPROACHES TO PROMOTING EFFECTIVE DECISIONS

  • Group Decision Support Systems
  • Interactive computer based systems that combine communication, computer and decision technologies to improve the effectiveness of group problem-solving meetings.

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