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Chapter 11 Making Decisions

L E A R N I N G O B J E C T I V E S

After reading this chapter, you should be able to do the following:

1. Understand what is involved in decision making.

2. Compare and contrast different decision-making models.

3. Compare and contrast individual and group decision making.

4. Understand potential decision-making traps and how to avoid them.

5. Understand the pros and cons of different decision-making aids.

6. Engage in ethical decision making.

7. Understand cross-cultural differences in decision making.

Empowered Decision Making: The Case of Ingar Skaug “If you always do what you always did, you always get what you always got,”

according to Ingar Skaug—and he should know. Skaug is president and CEO of

Wilh. Wilhelmsen, ASA, a leading global maritime industry company based in

Norway with 23,000 employees and 516 offices worldwide. He faced major

challenges when he began his job at Wilhelmsen Lines in 1989. The entire top

management team of the company had been killed in an airplane crash while

returning from a ship dedication ceremony. As you can imagine, employees

were mourning the loss of their friends and leadership team. While Skaug

knew that changes needed to be made within the organization, he also knew

that he had to proceed slowly and carefully in implementing any changes. The

biggest challenge he saw was the decision-making style within the company.

Skaug recalls this dilemma as follows. “I found myself in a situation in

Wilhelmsen Lines where everyone was coming to my office in the morning and

they expected me to take all the decisions. I said to people, ‘Those are not my

decisions. I don’t want to take those decisions. You take those decisions.’ So

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for half a year they were screaming about that I was very afraid of making

decisions. So I had a little bit of a struggle with the organization, with the

people there at the time. They thought I was a very poor manager because I

didn’t dare to make decisions. I had to teach them. I had to force the people to

make their own decisions.”

His lessons paid off over the years. The company has now invented a cargo

ship capable of transporting 10,000 vehicles while running exclusively on

renewable energy via the power of the sun, wind, and water. He and others

within the company cite the freedom that employees feel to make decisions

and mistakes on their way to making discoveries in improved methods as a

major factor in their success in revolutionizing the shipping industry one

innovation at a time.

Sources: McCathy, J. F., O’Connell, D. J., & Hall, D. T. (2005). Leading

beyond tragedy: The balance of personal identity and adaptability. Leadership

& Organizational Development Journal, 26, 458–475; Skaug, I. (2007, July).

Breaking free in turbulent times: The intersection of turbulence, innovation

and leadership: Unleashing creativity and driving positive change. Business

Leadership Review, 4, 1–7; Furness, V. (2005). Interview with Ingar

Skaug. European Business Forum. Retrieved April 4, 2008, from

http://www.ebfonline.com/article.aspx?extraid=30; Norwegian executive

Ingar Skaug named chairman of Center for Creative Leadership (2006).

Retrieved April 4, 2008, from

http://www.ccl.org/leadership/news/2006/skaug.aspx.

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11.1 Understanding Decision Making

L E A R N I N G O B J E C T I V E S

1. Define decision making.

2. Understand different types of decisions.

Decision making refers to making choices among alternative courses of

action—which may also include inaction. While it can be argued that

management is decision making, half of the decisions made by managers

within organizations ultimately fail. [1]

Therefore, increasing effectiveness in

decision making is an important part of maximizing your effectiveness at

work. This chapter will help you understand how to make decisions alone or in

a group while avoiding common decision-making pitfalls.

Individuals throughout organizations use the information they gather to make

a wide range of decisions. These decisions may affect the lives of others and

change the course of an organization. For example, the decisions made by

executives and consulting firms for Enron ultimately resulted in a $60 billion

loss for investors, thousands of employees without jobs, and the loss of all

employee retirement funds. But Sherron Watkins, a former Enron employee

and now-famous whistleblower, uncovered the accounting problems and tried

to enact change. Similarly, the decision made by firms to trade in mortgage-

backed securities is having negative consequences for the entire economy in

the United States. All parties involved in such outcomes made a decision, and

everyone is now living with the consequences of those decisions.

Types of Decisions

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Most discussions of decision making assume that only senior executives make

decisions or that only senior executives’ decisions matter. This is a dangerous

mistake.

Peter Drucker

Despite the far-reaching nature of the decisions in the previous example, not

all decisions have major consequences or even require a lot of thought. For

example, before you come to class, you make simple and habitual decisions

such as what to wear, what to eat, and which route to take as you go to and

from home and school. You probably do not spend much time on these

mundane decisions. These types of straightforward decisions are termed

programmed decisions, or decisions that occur frequently enough that we

develop an automated response to them. The automated response we use to

make these decisions is called the decision rule. For example, many

restaurants face customer complaints as a routine part of doing business.

Because complaints are a recurring problem, responding to them may become

a programmed decision. The restaurant might enact a policy stating that every

time they receive a valid customer complaint, the customer should receive a

free dessert, which represents a decision rule.

On the other hand, unique and important decisions require conscious

thinking, information gathering, and careful consideration of alternatives.

These are called nonprogrammed decisions. For example, in 2005 McDonald’s

Corporation became aware of the need to respond to growing customer

concerns regarding the unhealthy aspects (high in fat and calories) of the food

they sell. This is a nonprogrammed decision, because for several decades,

customers of fast-food restaurants were more concerned with the taste and

price of the food, rather than its healthiness. In response to this problem,

McDonald’s decided to offer healthier alternatives such as the choice to

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substitute French fries in Happy Meals with apple slices and in 2007 they

banned the use of trans fat at their restaurants.

A crisis situation also constitutes a nonprogrammed decision for companies.

For example, the leadership of Nutrorim was facing a tough decision. They

had recently introduced a new product, ChargeUp with Lipitrene, an improved

version of their popular sports drink powder, ChargeUp. At some point, a

phone call came from a state health department to inform them of 11 cases of

gastrointestinal distress that might be related to their product, which led to a

decision to recall ChargeUp. The decision was made without an investigation

of the information. While this decision was conservative, it was made without

a process that weighed the information. Two weeks later it became clear that

the reported health problems were unrelated to Nutrorim’s product. In fact, all

the cases were traced back to a contaminated health club juice bar. However,

the damage to the brand and to the balance sheets was already done. This

unfortunate decision caused Nutrorim to rethink the way decisions were made

when under pressure. The company now gathers information to make

informed choices even when time is of the essence. [2]

Decisions can be classified into three categories based on the level at which

they occur. Strategic decisions set the course of an organization. Tactical

decisions are decisions about how things will get done. Finally, operational

decisions refer to decisions that employees make each day to make the

organization run. For example, think about the restaurant that routinely offers

a free dessert when a customer complaint is received. The owner of the

restaurant made a strategic decision to have great customer service. The

manager of the restaurant implemented the free dessert policy as a way to

handle customer complaints, which is a tactical decision. Finally, the servers

at the restaurant are making individual decisions each day by evaluating

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whether each customer complaint received is legitimate and warrants a free

dessert.

Figure 11.4 Examples of Decisions Commonly Made Within Organizations

In this chapter we are going to discuss different decision-making models

designed to understand and evaluate the effectiveness of non-programmed

decisions. We will cover four decision-making approaches, starting with the

rational decision-making model, moving to the bounded rationality decision-

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making model, the intuitive decision-making model, and ending with the

creative decision-making model.

Making Rational Decisions

The rational decision-making model describes a series of steps that decision

makers should consider if their goal is to maximize the quality of their

outcomes. In other words, if you want to make sure that you make the best

choice, going through the formal steps of the rational decision-making model

may make sense.

Let’s imagine that your old, clunky car has broken down, and you have enough

money saved for a substantial down payment on a new car. It will be the first

major purchase of your life, and you want to make the right choice. The first

step, therefore, has already been completed—we know that you want to buy a

new car. Next, in step 2, you’ll need to decide which factors are important to

you. How many passengers do you want to accommodate? How important is

fuel economy to you? Is safety a major concern? You only have a certain

amount of money saved, and you don’t want to take on too much debt, so price

range is an important factor as well. If you know you want to have room for at

least five adults, get at least 20 miles per gallon, drive a car with a strong

safety rating, not spend more than $22,000 on the purchase, and like how it

looks, you have identified the decision criteria. All the potential options for

purchasing your car will be evaluated against these criteria. Before we can

move too much further, you need to decide how important each factor is to

your decision in step 3. If each is equally important, then there is no need to

weigh them, but if you know that price and mpg are key factors, you might

weigh them heavily and keep the other criteria with medium importance. Step

4 requires you to generate all alternatives about your options. Then, in step 5,

you need to use this information to evaluate each alternative against the

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criteria you have established. You choose the best alternative (step 6), and

then you would go out and buy your new car (step 7).

Of course, the outcome of this decision will influence the next decision made.

That is where step 8 comes in. For example, if you purchase a car and have

nothing but problems with it, you will be less likely to consider the same make

and model when purchasing a car the next time.

Figure 11.5 Steps in the Rational Decision-Making Model

While decision makers can get off track during any of these steps, research

shows that searching for alternatives in the fourth step can be the most

challenging and often leads to failure. In fact, one researcher found that no

alternative generation occurred in 85% of the decisions he studied. [3]

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Conversely, successful managers know what they want at the outset of the

decision-making process, set objectives for others to respond to, carry out an

unrestricted search for solutions, get key people to participate, and avoid

using their power to push their perspective. [4]

The rational decision-making model has important lessons for decision

makers. First, when making a decision, you may want to make sure that you

establish your decision criteria before you search for alternatives. This would

prevent you from liking one option too much and setting your criteria

accordingly. For example, let’s say you started browsing cars online before you

generated your decision criteria. You may come across a car that you feel

reflects your sense of style and you develop an emotional bond with the car.

Then, because of your love for the particular car, you may say to yourself that

the fuel economy of the car and the innovative braking system are the most

important criteria. After purchasing it, you may realize that the car is too small

for your friends to ride in the back seat, which was something you should have

thought about. Setting criteria before you search for alternatives may prevent

you from making such mistakes. Another advantage of the rational model is

that it urges decision makers to generate all alternatives instead of only a few.

By generating a large number of alternatives that cover a wide range of

possibilities, you are unlikely to make a more effective decision that does not

require sacrificing one criterion for the sake of another.

Despite all its benefits, you may have noticed that this decision-making model

involves a number of unrealistic assumptions as well. It assumes that people

completely understand the decision to be made, that they know all their

available choices, that they have no perceptual biases, and that they want to

make optimal decisions. Nobel Prize winning economist Herbert Simon

observed that while the rational decision-making model may be a helpful

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device in aiding decision makers when working through problems, it doesn’t

represent how decisions are frequently made within organizations. In fact,

Simon argued that it didn’t even come close.

Think about how you make important decisions in your life. It is likely that

you rarely sit down and complete all 8 of the steps in the rational decision-

making model. For example, this model proposed that we should search for all

possible alternatives before making a decision, but that process is time

consuming, and individuals are often under time pressure to make decisions.

Moreover, even if we had access to all the information that was available, it

could be challenging to compare the pros and cons of each alternative and

rank them according to our preferences. Anyone who has recently purchased a

new laptop computer or cell phone can attest to the challenge of sorting

through the different strengths and limitations of each brand and model and

arriving at the solution that best meets particular needs. In fact, the

availability of too much information can lead to analysis paralysis, in which

more and more time is spent on gathering information and thinking about it,

but no decisions actually get made. A senior executive at Hewlett-Packard

Development Company LP admits that his company suffered from this spiral

of analyzing things for too long to the point where data gathering led to “not

making decisions, instead of us making decisions.” [5]

Moreover, you may not

always be interested in reaching an optimal decision. For example, if you are

looking to purchase a house, you may be willing and able to invest a great deal

of time and energy to find your dream house, but if you are only looking for an

apartment to rent for the academic year, you may be willing to take the first

one that meets your criteria of being clean, close to campus, and within your

price range.

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Making “Good Enough” Decisions

The bounded rationality model of decision making recognizes the limitations

of our decision-making processes. According to this model, individuals

knowingly limit their options to a manageable set and choose the first

acceptable alternative without conducting an exhaustive search for

alternatives. An important part of the bounded rationality approach is the

tendency to satisfice (a term coined by Herbert Simon from satisfy and

suffice), which refers to accepting the first alternative that meets your

minimum criteria. For example, many college graduates do not conduct a

national or international search for potential job openings. Instead, they focus

their search on a limited geographic area, and they tend to accept the first

offer in their chosen area, even if it may not be the ideal job situation.

Satisficing is similar to rational decision making. The main difference is that

rather than choosing the best option and maximizing the potential outcome,

the decision maker saves cognitive time and effort by accepting the first

alternative that meets the minimum threshold.

Making Intuitive Decisions

The intuitive decision-making model has emerged as an alternative to other

decision making processes. This model refers to arriving at decisions without

conscious reasoning. A total of 89% of managers surveyed admitted to using

intuition to make decisions at least sometimes and 59% said they used

intuition often. [6]

Managers make decisions under challenging circumstances,

including time pressures, constraints, a great deal of uncertainty, changing

conditions, and highly visible and high-stakes outcomes. Thus, it makes sense

that they would not have the time to use the rational decision-making model.

Yet when CEOs, financial analysts, and health care workers are asked about

the critical decisions they make, seldom do they attribute success to luck. To

an outside observer, it may seem like they are making guesses as to the course

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of action to take, but it turns out that experts systematically make decisions

using a different model than was earlier suspected. Research on life-or-death

decisions made by fire chiefs, pilots, and nurses finds that experts do not

choose among a list of well thought out alternatives. They don’t decide

between two or three options and choose the best one. Instead, they consider

only one option at a time. The intuitive decision-making model argues that in

a given situation, experts making decisions scan the environment for cues to

recognize patterns. [7]

Once a pattern is recognized, they can play a potential

course of action through to its outcome based on their prior experience.

Thanks to training, experience, and knowledge, these decision makers have an

idea of how well a given solution may work. If they run through the mental

model and find that the solution will not work, they alter the solution before

setting it into action. If it still is not deemed a workable solution, it is

discarded as an option, and a new idea is tested until a workable solution is

found. Once a viable course of action is identified, the decision maker puts the

solution into motion. The key point is that only one choice is considered at a

time. Novices are not able to make effective decisions this way, because they

do not have enough prior experience to draw upon.

Making Creative Decisions

In addition to the rational decision making, bounded rationality, and intuitive

decision-making models, creative decision making is a vital part of being an

effective decision maker. Creativity is the generation of new, imaginative

ideas. With the flattening of organizations and intense competition among

companies, individuals and organizations are driven to be creative in decisions

ranging from cutting costs to generating new ways of doing business. Please

note that, while creativity is the first step in the innovation process, creativity

and innovation are not the same thing. Innovation begins with creative ideas,

but it also involves realistic planning and follow-through. Innovations such as

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3M’s Clearview Window Tinting grow out of a creative decision-making

process about what may or may not work to solve real-world problems.

The five steps to creative decision making are similar to the previous decision-

making models in some keys ways. All the models include problem

identification, which is the step in which the need for problem solving

becomes apparent. If you do not recognize that you have a problem, it is

impossible to solve it. Immersion is the step in which the decision maker

consciously thinks about the problem and gathers information. A key to

success in creative decision making is having or acquiring expertise in the area

being studied. Then, incubation occurs. During incubation, the individual sets

the problem aside and does not think about it for a while. At this time, the

brain is actually working on the problem unconsciously. Then comes

illumination, or the insight moment when the solution to the problem

becomes apparent to the person, sometimes when it is least expected. This

sudden insight is the “eureka” moment, similar to what happened to the

ancient Greek inventor Archimedes, who found a solution to the problem he

was working on while taking a bath. Finally, the verification and application

stage happens when the decision maker consciously verifies the feasibility of

the solution and implements the decision.

A NASA scientist describes his decision-making process leading to a creative

outcome as follows: He had been trying to figure out a better way to de-ice

planes to make the process faster and safer. After recognizing the problem, he

immersed himself in the literature to understand all the options, and he

worked on the problem for months trying to figure out a solution. It was not

until he was sitting outside a McDonald’s restaurant with his grandchildren

that it dawned on him. The golden arches of the M of the McDonald’s logo

inspired his solution—he would design the de-icer as a series of Ms. [8]

This

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represented the illumination stage. After he tested and verified his creative

solution, he was done with that problem, except to reflect on the outcome and

process.

How Do You Know If Your Decision-Making Process Is Creative?

Researchers focus on three factors to evaluate the level of creativity in the

decision-making process. Fluency refers to the number of ideas a person is

able to generate. Flexibility refers to how different the ideas are from one

another. If you are able to generate several distinct solutions to a problem,

your decision-making process is high on flexibility. Originality refers to how

unique a person’s ideas are. You might say that Reed Hastings, founder and

CEO of Netflix Inc. is a pretty creative person. His decision-making process

shows at least two elements of creativity. We do not know exactly how many

ideas he had over the course of his career, but his ideas are fairly different

from each other. After teaching math in Africa with the Peace Corps, Hastings

was accepted at Stanford, where he earned a master’s degree in computer

science. Soon after starting work at a software company, he invented a

successful debugging tool, which led to his founding of the computer

troubleshooting company Pure Software LLC in 1991. After a merger and the

subsequent sale of the resulting company in 1997, Hastings founded Netflix,

which revolutionized the DVD rental business with online rentals delivered

through the mail with no late fees. In 2007, Hastings was elected to

Microsoft’s board of directors. As you can see, his ideas are high in originality

and flexibility. [9]

Figure 11.7 Dimensions of Creativity

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Some experts have proposed that creativity occurs as an interaction among

three factors: people’s personality traits (openness to experience, risk taking),

their attributes (expertise, imagination, motivation), and the situational

context (encouragement from others, time pressure, physical

structures). [10]

For example, research shows that individuals who are open to

experience, less conscientious, more self-accepting, and more impulsive tend

to be more creative. [11]

OB Toolbox: Ideas for Enhancing Organizational Creativity  Team Composition

 Diversify your team to give them more inputs to build on and more

opportunities to create functional conflict while avoiding personal conflict.

 Change group membership to stimulate new ideas and new interaction

patterns.

 Leaderless teams can allow teams freedom to create without trying to please

anyone up front.

 Team Process

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 Engage in brainstorming to generate ideas. Remember to set a high goal for

the number of ideas the group should come up with, encourage wild ideas, and

take brainwriting breaks.

 Use the nominal group technique (see Tools and Techniques for Making

Better Decisions below) in person or electronically to avoid some common

group process pitfalls. Consider anonymous feedback as well.

 Use analogies to envision problems and solutions.

 Leadership

 Challenge teams so that they are engaged but not overwhelmed.

 Let people decide how to achieve goals, rather than telling them what goals to

achieve.

 Support and celebrate creativity even when it leads to a mistake. Be sure to

set up processes to learn from mistakes as well.

 Role model creative behavior.

 Culture

 Institute organizational memory so that individuals do not spend time on

routine tasks.

 Build a physical space conducive to creativity that is playful and humorous—

this is a place where ideas can thrive.

 Incorporate creative behavior into the performance appraisal process.

Sources: Adapted from ideas in Amabile, T. M. (1998). How to kill

creativity.Harvard Business Review, 76, 76–87; Gundry, L. K., Kickul, J. R., &

Prather, C. W. (1994). Building the creative organization. Organizational

Dynamics, 22, 22–37; Keith, N., & Frese, M. (2008). Effectiveness of error

management training: A meta-analysis. Journal of Applied Psychology, 93,

59–69. Pearsall, M. J., Ellis, A. P. J., & Evans, J. M. (2008). Unlocking the

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effects of gender faultlines on team creativity: Is activation the key? Journal of

Applied Psychology, 93, 225–234. Thompson, L. (2003). Improving the

creativity of organizational work groups. Academy of Management

Executive, 17, 96–109.

There are many techniques available that enhance and improve creativity.

Linus Pauling, the Nobel Prize winner who popularized the idea that vitamin C

could help strengthen the immune system, said, “The best way to have a good

idea is to have a lot of ideas.” [12]

One popular method of generating ideas is to

use brainstorming. Brainstorming is a group process of generating ideas that

follow a set of guidelines, including no criticism of ideas during the

brainstorming process, the idea that no suggestion is too crazy, and building

on other ideas (piggybacking). Research shows that the quantity of ideas

actually leads to better idea quality in the end, so setting high idea quotas, in

which the group must reach a set number of ideas before they are done, is

recommended to avoid process loss and maximize the effectiveness of

brainstorming. Another unique aspect of brainstorming is that since the

variety of backgrounds and approaches give the group more to draw upon, the

more people are included in the process, the better the decision outcome will

be. A variation of brainstorming is wildstorming, in which the group focuses

on ideas that are impossible and then imagines what would need to happen to

make them possible. [13]

K E Y T A K E A W A Y

Decision making is choosing among alternative courses of action, including inaction.

There are different types of decisions ranging from automatic, programmed

decisions to more intensive nonprogrammed decisions. Structured decision-making

processes include rational, bounded rationality, intuitive, and creative decision

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making. Each of these can be useful, depending on the circumstances and the

problem that needs to be solved.

E X E R C I S E S

1. What do you see as the main difference between a successful and an unsuccessful

decision? How much does luck versus skill have to do with it? How much time needs

to pass to know if a decision is successful or not?

2. Research has shown that over half of the decisions made within organizations fail.

Does this surprise you? Why or why not?

3. Have you used the rational decision-making model to make a decision? What was

the context? How well did the model work?

4. Share an example of a decision in which you used satisficing. Were you happy with

the outcome? Why or why not? When would you be most likely to engage in

satisficing?

5. Do you think intuition is respected as a decision-making style? Do you think it should

be? Why or why not?

11.2 Faulty Decision Making

L E A R N I N G O B J E C T I V E S

1. Understand overconfidence bias and how to avoid it.

2. Understand hindsight bias and how to avoid it.

3. Understand anchoring and how to avoid it.

4. Understand framing bias and how to avoid it.

5. Understand escalation of commitment and how to avoid it.

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Avoiding Decision-Making Traps

No matter which model you use, it is important to know and avoid the

decision-making traps that exist. Daniel Kahnemann (another Nobel Prize

winner) and Amos Tversky spent decades studying how people make

decisions. They found that individuals are influenced by overconfidence bias,

hindsight bias, anchoring bias, framing bias, and escalation of commitment.

Overconfidence bias occurs when individuals overestimate their ability to

predict future events. Many people exhibit signs of overconfidence. For

example, 82% of the drivers surveyed feel they are in the top 30% of safe

drivers, 86% of students at the Harvard Business School say they are better

looking than their peers, and doctors consistently overestimate their ability to

detect problems. [1]

Much like friends that are 100% sure they can pick the

winners of this week’s football games despite evidence to the contrary, these

individuals are suffering from overconfidence bias. Similarly, in 2008, the

French bank Société Générale lost over $7 billion as a result of the rogue

actions of a single trader. Jérôme Kerviel, a junior trader in the bank, had

extensive knowledge of the bank’s control mechanisms and used this

knowledge to beat the system. Interestingly, he did not make any money from

these transactions himself, and his sole motive was to be successful. He

secretly started making risky moves while hiding the evidence. He made a lot

of profit for the company early on and became overly confident in his abilities

to make even more. In his defense, he was merely able to say that he got

“carried away.” [2]

People who purchase lottery tickets as a way to make money

are probably suffering from overconfidence bias. It is three times more likely

for a person driving ten miles to buy a lottery ticket to be killed in a car

accident than to win the jackpot. [3]

Further, research shows that

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overconfidence leads to less successful negotiations. [4]

To avoid this bias, take

the time to stop and ask yourself if you are being realistic in your judgments.

Hindsight bias is the opposite of overconfidence bias, as it occurs when

looking backward in time and mistakes seem obvious after they have already

occurred. In other words, after a surprising event occurred, many individuals

are likely to think that they already knew the event was going to happen. This

bias may occur because they are selectively reconstructing the events.

Hindsight bias tends to become a problem when judging someone else’s

decisions. For example, let’s say a company driver hears the engine making

unusual sounds before starting the morning routine. Being familiar with this

car in particular, the driver may conclude that the probability of a serious

problem is small and continues to drive the car. During the day, the car

malfunctions and stops miles away from the office. It would be easy to criticize

the decision to continue to drive the car because in hindsight, the noises heard

in the morning would make us believe that the driver should have known

something was wrong and taken the car in for service. However, the driver in

question may have heard similar sounds before with no consequences, so

based on the information available at the time, continuing with the regular

routine may have been a reasonable choice. Therefore, it is important for

decision makers to remember this bias before passing judgments on other

people’s actions.

Anchoring refers to the tendency for individuals to rely too heavily on a single

piece of information. Job seekers often fall into this trap by focusing on a

desired salary while ignoring other aspects of the job offer such as additional

benefits, fit with the job, and working environment. Similarly, but more

dramatically, lives were lost in the Great Bear Wilderness Disaster when the

coroner, within 5 minutes of arriving at the accident scene, declared all five

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passengers of a small plane dead, which halted the search effort for potential

survivors. The next day two survivors who had been declared dead walked out

of the forest. How could a mistake like this have been made? One theory is

that decision biases played a large role in this serious error, and anchoring on

the fact that the plane had been consumed by flames led the coroner to call off

the search for any possible survivors. [5]

Framing bias is another concern for decision makers. Framing bias refers to

the tendency of decision makers to be influenced by the way that a situation or

problem is presented. For example, when making a purchase, customers find

it easier to let go of a discount as opposed to accepting a surcharge, even

though they both might cost the person the same amount of money. Similarly,

customers tend to prefer a statement such as “85% lean beef” as opposed to

“15% fat.” [6]

It is important to be aware of this tendency, because depending

on how a problem is presented to us, we might choose an alternative that is

disadvantageous simply because of the way it is framed.

Escalation of commitment occurs when individuals continue on a failing

course of action after information reveals it may be a poor path to follow. It is

sometimes called the “sunken costs fallacy,” because continuation is often

based on the idea that one has already invested in the course of action. For

example, imagine a person who purchases a used car, which turns out to need

something repaired every few weeks. An effective way of dealing with this

situation might be to sell the car without incurring further losses, donate the

car, or use it until it falls apart. However, many people would spend hours of

their time and hundreds, even thousands of dollars repairing the car in the

hopes that they might recover their initial investment. Thus, rather than

cutting their losses, they waste time and energy while trying to justify their

purchase of the car.

23

A classic example of escalation of commitment from the corporate world is

Motorola Inc.’s Iridium project. In the 1980s, phone coverage around the

world was weak. For example, it could take hours of dealing with a chain of

telephone operators in several different countries to get a call through from

Cleveland to Calcutta. There was a real need within the business community to

improve phone access around the world. Motorola envisioned solving this

problem using 66 low-orbiting satellites, enabling users to place a direct call to

any location around the world. At the time of idea development, the project

was technologically advanced, sophisticated, and made financial sense.

Motorola spun off Iridium as a separate company in 1991. It took researchers a

total of 15 years to develop the product from idea to market release. However,

in the 1990s, the landscape for cell phone technology was dramatically

different from that in the 1980s, and the widespread cell phone coverage

around the world eliminated most of the projected customer base for Iridium.

Had they been paying attention to these developments, the decision makers

could have abandoned the project at some point in the early 1990s. Instead,

they released the Iridium phone to the market in 1998. The phone cost

$3,000, and it was literally the size of a brick. Moreover, it was not possible to

use the phone in moving cars or inside buildings. Not surprisingly, the launch

was a failure, and Iridium filed for bankruptcy in 1999. [7]

In the end, the

company was purchased for $25 million by a group of investors (whereas it

cost the company $5 billion to develop its product), scaled down its

operations, and modified it for use by the Department of Defense to connect

soldiers in remote areas not served by land lines or cell phones.

Why does escalation of commitment occur? There may be many reasons, but

two are particularly important. First, decision makers may not want to admit

that they were wrong. This may be because of personal pride or being afraid of

24

the consequences of such an admission. Second, decision makers may

incorrectly believe that spending more time and energy might somehow help

them recover their losses. Effective decision makers avoid escalation of

commitment by distinguishing between when persistence may actually pay off

versus when it might mean escalation of commitment. To avoid escalation of

commitment, you might consider having strict turning back points. For

example, you might determine up front that you will not spend more than

$500 trying to repair the car and will sell it when you reach that point. You

might also consider assigning separate decision makers for the initial buying

and subsequent selling decisions. Periodic evaluations of an initially sound

decision to see whether the decision still makes sense is also another way of

preventing escalation of commitment. This type of review becomes

particularly important in projects such as the Iridium phone, in which the

initial decision is not immediately implemented but instead needs to go

through a lengthy development process. In such cases, it becomes important

to periodically assess the soundness of the initial decision in the face of

changing market conditions. Finally, creating an organizational climate in

which individuals do not fear admitting that their initial decision no longer

makes economic sense would go a long way in preventing escalation of

commitment, as it could lower the regret the decision maker may

experience. [8]

So far we have focused on how individuals make decisions and how to avoid

decision traps. Next we shift our focus to the group level. There are many

similarities as well as many differences between individual and group decision

making. There are many factors that influence group dynamics and also affect

the group decision-making process. We will discuss some of them in the

following section.

25

K E Y T A K E A W A Y

Understanding decision-making traps can help you avoid and manage them.

Overconfidence bias can cause you to ignore obvious information. Hindsight bias can

similarly cause a person to incorrectly believe in their ability to predict events.

Anchoring and framing biases show the importance of the way problems or

alternatives are presented in influencing one’s decision. Escalation of commitment

demonstrates how individuals’ desire to be consistent or avoid admitting a mistake

can cause them to continue to invest in a decision that is no longer prudent.

E X E R C I S E S

1. Describe a time when you fell into one of the decision-making traps. How did you

come to realize that you had made a poor decision?

2. How can you avoid escalation of commitment?

3. Share an example of anchoring.

4. Which of the traps seems the most dangerous for decision makers and why?

11.3 Decision Making in Groups

L E A R N I N G O B J E C T I V E S

1. Understand the pros and cons of individual and group decision making.

2. Learn to recognize the signs of groupthink.

3. Recognize different tools and techniques for making better decisions.

When It Comes to Decision Making, Are Two Heads Better Than One?

The answer to this question depends on several factors. Group decision

making has the advantage of drawing from the experiences and perspectives of

a larger number of individuals. Hence, a group may have the potential to be

26

more creative and lead to more effective decisions. In fact, groups may

sometimes achieve results beyond what they could have done as individuals.

Groups may also make the task more enjoyable for the members. Finally,

when the decision is made by a group rather than a single individual,

implementation of the decision will be easier, because group members will be

more invested in the decision. If the group is diverse, better decisions may be

made, because different group members may have different ideas based on

their backgrounds and experiences. Research shows that for top management

teams, diverse groups that debate issues make decisions that are more

comprehensive and better for the bottom line. [1]

Despite its popularity within organizations, group decision making suffers

from a number of disadvantages. We know that groups rarely outperform their

best member. [2]

While groups have the potential to arrive at an effective

decision, they often suffer from process losses. For example, groups may suffer

from coordination problems. Anyone who has worked with a team of

individuals on a project can attest to the difficulty of coordinating members’

work or even coordinating everyone’s presence in a team meeting.

Furthermore, groups can suffer from groupthink. Finally, group decision

making takes more time compared to individual decision making, because all

members need to discuss their thoughts regarding different alternatives.

Thus, whether an individual or a group decision is preferable will depend on

the specifics of the situation. For example, if there is an emergency and a

decision needs to be made quickly, individual decision making might be

preferred. Individual decision making may also be appropriate if the

individual in question has all the information needed to make the decision and

if implementation problems are not expected. On the other hand, if one

person does not have all the information and skills needed to make a decision,

27

if implementing the decision will be difficult without the involvement of those

who will be affected by the decision, and if time urgency is more modest, then

decision making by a group may be more effective.

Figure 11.11 Advantages and Disadvantages of Different Levels of Decision

Making

Groupthink

Have you ever been in a decision-making group that you felt was heading in

the wrong direction but you didn’t speak up and say so? If so, you have already

been a victim of groupthink. Groupthink is a tendency to avoid a critical

evaluation of ideas the group favors. Iriving Janis, author of a book

called Victims of Groupthink, explained that groupthink is characterized by

eight symptoms: [4]

28

1. Illusion of invulnerability is shared by most or all of the group

members, which creates excessive optimism and encourages them to

take extreme risks.

2. Collective rationalizations occur, in which members downplay

negative information or warnings that might cause them to reconsider

their assumptions.

3. An unquestioned belief in the group’s inherent

morality occurs, which may incline members to ignore ethical or moral

consequences of their actions.

4. Stereotyped views of outgroups are seen when groups discount

rivals’ abilities to make effective responses.

5. Direct pressure is exerted on any members who express strong

arguments against any of the group’s stereotypes, illusions, or

commitments.

6. Self-censorship occurs when members of the group minimize their

own doubts and counterarguments.

7. Illusions of unanimity occur, based on self-censorship and direct

pressure on the group. The lack of dissent is viewed as unanimity.

8. The emergence of self-appointed mindguards happens when one

or more members protect the group from information that runs counter

to the group’s assumptions and course of action.

OB Toolbox: Recommendations for Avoiding Groupthink  Groups should do the following:

 Discuss the symptoms of groupthink and how to avoid them.

 Assign a rotating devil’s advocate to every meeting.

 Invite experts or qualified colleagues who are not part of the core decision-

making group to attend meetings and get reactions from outsiders on a

regular basis and share these with the group.

29

 Encourage a culture of difference where different ideas are valued.

 Debate the ethical implications of the decisions and potential solutions being

considered.

 Individuals should do the following:

 Monitor personal behavior for signs of groupthink and modify behavior if

needed.

 Check for self-censorship.

 Carefully avoid mindguard behaviors.

 Avoid putting pressure on other group members to conform.

 Remind members of the ground rules for avoiding groupthink if they get off

track.

 Group leaders should do the following:

 Break the group into two subgroups from time to time.

 Have more than one group work on the same problem if time and resources

allow it. This makes sense for highly critical decisions.

 Remain impartial and refrain from stating preferences at the outset of

decisions.

 Set a tone of encouraging critical evaluations throughout deliberations.

 Create an anonymous feedback channel through which all group members can

contribute if desired.

Sources: Adapted and expanded from Janis, I. L. (1972). Victims of

groupthink. New York: Houghton Mifflin; Whyte, G. (1991). Decision failures:

Why they occur and how to prevent them. Academy of Management

Executive, 5, 23–31.

30

Tools and Techniques for Making Better Decisions

Nominal Group Technique (NGT) was developed to help with group decision

making by ensuring that all members participate fully. NGT is not a technique

to be used routinely at all meetings. Rather, it is used to structure group

meetings when members are grappling with problem solving or idea

generation. It follows four steps. [5]

First, each member of the group begins by

independently and silently writing down ideas. Second, the group goes in

order around the room to gather all the ideas that were generated. This

process continues until all the ideas are shared. Third, a discussion takes place

around each idea, and members ask for and give clarification and make

evaluative statements. Finally, group members vote for their favorite ideas by

using ranking or rating techniques. Following the four-step NGT helps to

ensure that all members participate fully, and it avoids group decision-making

problems such as groupthink.

Delphi Technique is unique because it is a group process using written

responses to a series of questionnaires instead of physically bringing

individuals together to make a decision. The first questionnaire asks

individuals to respond to a broad question such as stating the problem,

outlining objectives, or proposing solutions. Each subsequent questionnaire is

built from the information gathered in the previous one. The process ends

when the group reaches a consensus. Facilitators can decide whether to keep

responses anonymous. This process is often used to generate best practices

from experts. For example, Purdue University Professor Michael Campion

used this process when he was editor of the research journal Personnel

Psychology and wanted to determine the qualities that distinguished a good

research article. Using the Delphi technique, he was able to gather responses

from hundreds of top researchers from around the world and distill them into

31

a checklist of criteria that he could use to evaluate articles submitted to his

journal, all without ever having to leave his office. [6]

Majority rule refers to a decision-making rule in which each member of the

group is given a single vote and the option receiving the greatest number of

votes is selected. This technique has remained popular, perhaps due to its

simplicity, speed, ease of use, and representational fairness. Research also

supports majority rule as an effective decision-making technique. [7]

However,

those who did not vote in favor of the decision will be less likely to support it.

Consensus is another decision-making rule that groups may use when the goal

is to gain support for an idea or plan of action. While consensus tends to

require more time, it may make sense when support is needed to enact the

plan. The process works by discussing the issues at hand, generating a

proposal, calling for consensus, and discussing any concerns. If concerns still

exist, the proposal is modified to accommodate them. These steps are repeated

until consensus is reached. Thus, this decision-making rule is inclusive,

participatory, cooperative, and democratic. Research shows that consensus

can lead to better accuracy, [8]

and it helps members feel greater satisfaction

with decisions. [9]

However, groups take longer with this approach, and if

consensus cannot be reached, members tend to become frustrated. [10]

OB Toolbox: Perform a Project “Premortem” Doctors routinely perform postmortems to understand what went wrong with

a patient who has died. The idea is for everyone to learn from the unfortunate

outcome so that future patients will not meet a similar fate. But what if you

could avoid a horrible outcome before it happened by proactively identifying

project risks? Research has shown that the simple exercise of imagining what

could go wrong with a given decision can increase people’s ability to correctly

identify reasons for future successes or failures by 30%. [11]

A “premortem” is a

32

way to imagine what might go wrong and avoid it before spending a cent or

having to change course along the way. Gary Klein, an expert on decision

making in fast-paced, uncertain, complex, and critical environments,

recommends that decision makers follow a five-step process to increase their

chances of success.

1. A planning team comes up with an outline of a plan, such as the launching of a

new product.

2. Either the existing group or a unique group is then told to imagine looking

into a crystal ball and seeing that the new product failed miserably. They then

write down all the reasons they can imagine that might have led to this failure.

Each team member shares items from their list until all the potential problems

have been identified.

3. The list is reviewed for additional ideas.

4. The issues are sorted into categories in the search for themes.

5. The plan should then be revised to correct the flaws and avoid these potential

problems.

This technique allows groups to truly delve into “what if” scenarios. For

example, in a premortem session at a Fortune 500 company, an executive

imagined that a potential billion-dollar environmental sustainability project

might fail because the CEO had retired.

Sources: Breen, B. (2000, August). What’s your intuition? Fast Company,

290; Klein, G. (2007, September). Performing a project premortem. Harvard

Business Review,85, 18–19; Klein, G. (2003). The power of intuition: How to

use your gut feelings to make better decisions at work. New York: Random

House; Pliske, R., McCloskey, M., & Klein, G. (2001). Decision skills training:

Facilitating learning from experience. In E. Salas & G. Klein (Eds.), Linking

33

expertise and naturalistic decision making (pp. 37–53). Mahwah, NJ:

Lawrence Erlbaum Associates.

Group Decision Support Systems (GDSS) are interactive computer-based

systems that are able to combine communication and decision technologies to

help groups make better decisions. Research shows that a GDSS can actually

improve the output of groups’ collaborative work through higher information

sharing. [12]

Organizations know that having

effective knowledge management systems to share information is important,

and their spending reflects this reality. Businesses invested $2.7 billion into

new systems in 2002, and projections were for this number to double every 5

years. As the popularity of these systems grows, they risk becoming

counterproductive. Humans can only process so many ideas and information

at one time. As virtual meetings grow larger, it is reasonable to assume that

information overload can occur and good ideas will fall through the cracks,

essentially recreating a problem that the GDSS was intended to solve, which is

to make sure every idea is heard. Another problem is the system possibly

becoming too complicated. If the systems evolve to a point of uncomfortable

complexity, it has recreated the problem. Those who understand the interface

will control the narrative of the discussion, while those who are less savvy will

only be along for the ride. [13]

Lastly, many of these programs fail to take into

account the factor of human psychology. These systems could make employees

more reluctant to share information because of lack of control, lack of

immediate feedback, or the fear of online “flames.”

Decision trees are diagrams in which answers to yes or no questions lead

decision makers to address additional questions until they reach the end of the

tree. Decision trees are helpful in avoiding errors such as framing

bias. [14]

Decision trees tend to be helpful in guiding the decision maker to a

34

predetermined alternative and ensuring consistency of decision making—that

is, every time certain conditions are present, the decision maker will follow

one course of action as opposed to others if the decision is made using a

decision tree.

K E Y T A K E A W A Y

There are trade-offs between making decisions alone and within a group. Groups

have a greater diversity of experiences and ideas than individuals, but they also have

potential process losses such as groupthink. Groupthink can be avoided by

recognizing the eight symptoms discussed. Finally, there are a variety of tools and

techniques available for helping to make more effective decisions in groups,

including the nominal group technique, Delphi technique, majority rule, consensus,

GDSS, and decision trees.

E X E R C I S E S

1. Do you prefer to make decisions in a group or alone? What are the main reasons for

your preference?

2. Have you been in a group that used the brainstorming technique? Was it an effective

tool for coming up with creative ideas? Please share examples.

3. Have you been in a group that experienced groupthink? If so, how did you deal with

it?

4. Which of the decision-making tools discussed in this chapter (NGT, Delphi, and so on)

have you used? How effective were they?

11.4 The Role of Ethics and National Culture

L E A R N I N G O B J E C T I V E S

35

1. Consider the role of ethical behavior on decision making.

2. Consider the role of national culture on decision making.

Ethics and Decision Making

Because many decisions involve an ethical component, one of the most

important considerations in management is whether the decisions you are

making as an employee or manager are ethical. Here are some basic questions

you can ask yourself to assess the ethics of a decision. [1]

 Is this decision fair?

 Will I feel better or worse about myself after I make this decision?

 Does this decision break any organizational rules?

 Does this decision break any laws?

 How would I feel if this decision were broadcast on the news?

The current economic crisis in the United States and many other parts of the

world is a perfect example of legal yet unethical decisions resulting in disaster.

Many experts agree that one of the driving forces behind the sliding economy

was the lending practices of many banks (of which several no longer exist). In

March of 2008, a memo from JPMorgan Chase & Co. was leaked to an Oregon

newspaper called “Zippy Cheats & Tricks” (Zippy is Chase’s automated,

computer-based loan approval system). Although Chase executives firmly

stated that the contents of the memo were not company policy, the contents

clearly indicate some of the questionable ethics involved with the risky loans

now clogging the financial system.

In the memo, several steps were outlined to help a broker push a client’s

approval through the system, including, “In the income section of your 1003,

make sure you input all income in base income. DO NOT break it down by

overtime, commissions or bonus. NO GIFT FUNDS! If your borrower is

36

getting a gift, add it to a bank account along with the rest of the assets. Be sure

to remove any mention of gift funds on the rest of your 1003. If you do not get

Stated/Stated, try resubmitting with slightly higher income. Inch it up $500 to

see if you can get the findings you want. Do the same for assets.” [2]

While it is not possible to determine how widely circulated the memo was, the

mentality it captures was clearly present during the lending boom that

precipitated the current meltdown. While some actions during this period

were distinctly illegal, many people worked well within the law and simply

made unethical decisions. Imagine a real estate agent that knows a potential

buyer’s income. The buyer wants to purchase a home priced at $400,000, and

the agent knows the individual cannot afford to make payments on a mortgage

of that size. Instead of advising the buyer accordingly and losing a large

commission, the agent finds a bank willing to lend money to an unqualified

borrower, collects the commission for the sale, and moves on to the next

client. It is clear how these types of unethical yet legal decisions can have

dramatic consequences.

Suppose you are the CEO of a small company that needs to cut operational

costs or face bankruptcy. You have decided that you will not be issuing the

yearly bonus that employees have come to expect. The first thing you think

about after coming to this decision is whether or not it is fair. It seems logical

to you that since the alternative would be the failure of the company and

everyone’s losing their jobs, not receiving a bonus is preferable to being out of

work. Additionally, you will not be collecting a bonus yourself, so that the

decision will affect everyone equally. After deciding that the decision seems

fair, you try to assess how you will feel about yourself after informing

employees that there will not be a bonus this year. Although you do not like

the idea of not being able to issue the yearly bonus, you are the CEO, and

37

CEOs often have to make tough decisions. Since your ultimate priority is to

save the company from bankruptcy, you decide it is better to withhold bonuses

rather than issuing them, knowing the company cannot afford it. Despite the

fact that bonuses have been issued every year since the company was founded,

there are no organizational policies or laws requiring that employees receive a

bonus; it has simply been a company tradition. The last thing you think about

is how you would feel if your decision were broadcast on the news. Because of

the dire nature of the situation, and because the fate of the business is at stake,

you feel confident that this course of action is preferable to laying off loyal

employees. As long as the facts of the situation were reported correctly, you

feel the public would understand why the decision was made.

Decision Making Around the Globe

Decision-making styles and approaches tend to differ depending on the

context, and one important contextual factor to keep in mind is the culture in

which decisions are being made. Research on Japanese and Dutch decision

makers show that while both cultures are consensus-oriented, Japanese

managers tend to seek consensus much more than Dutch managers. [3]

Additionally, American managers tend to value quick decision making, while

Chinese managers are more reflective and take their time to make important

decisions—especially when they involve some sort of potential conflict.

Another example of how decision-making styles may differ across cultures is

the style used in Japan called nemawashi. Nemawashi refers to building

consensus within a group before a decision is made. Japanese decision makers

talk to parties whose support is needed beforehand, explain the subject,

address their concerns, and build their support. Using this method clearly

takes time and may lead to slower decision making. However, because all

parties important to the decision will give their stamp of approval before the

38

decision is made, this technique leads to a quicker implementation of the final

decision once it is decided.

K E Y T A K E A W A Y

Asking yourself some key questions can help you determine if a decision you are

considering is ethical. A decision being legal does not automatically make it ethical.

Unethical decisions can lead to business failures for a variety of reasons. Different

cultures have different styles of decision making. In countries with a collectivist

orientation, a high value is placed on building consensus. Some national cultures

value quick decision making, whereas others believe in taking time to arrive at a

decision. Taking national culture into account is important in effective cross-cultural

business interactions.

E X E R C I S E S

1. How can you assess if you are making ethical decisions or not?

2. Have you seen examples of ethical or unethical decisions being made? Describe what

you observed.

3. Have you seen examples of national culture affecting decision making?

4. What advice surrounding decision making would you give to someone who will be

managing a new division of a company in another culture?

5. What can go wrong when cultural factors are ignored?

11.5 Conclusion Decision making is a critical component of business. Some decisions are

obvious and can be made quickly, without investing much time and effort in

the decision-making process. Others, however, require substantial

consideration of the circumstances surrounding the decision, available

39

alternatives, and potential outcomes. Fortunately, there are several methods

that can be used when making a difficult decision, depending on various

environmental factors. Some decisions are best made by groups. Group

decision-making processes also have multiple models to follow, depending on

the situation. Even when specific models are followed, groups and individuals

can often fall into potential decision-making pitfalls. If too little information is

available, decisions might be made based on a feeling. On the other hand, if

too much information is presented, people can suffer from analysis paralysis,

in which no decision is reached because of the overwhelming number of

alternatives.

Ethics and culture both play a part in decision making. From time to time, a

decision can be legal but not ethical. These gray areas that surround decision

making can further complicate the process, but following basic guidelines can

help people ensure that the decisions they make are ethical and fair.

Additionally, different cultures can have different styles of decision making. In

some countries such as the United States, it may be customary to come to a

simple majority when making a decision. Conversely, a country such as Japan

will often take the time to reach consensus when making decisions. Being

aware of the various methods for making decisions as well as potential

problems that may arise can help people become effective decision makers in

any situation.

11.6 Exercises

E T H I C A L D I L E M M A

Herb’s Concoction (and Martha’s Dilemma): The Case of the Deadly Fertilizer [1]

40

Martha Wang worked in the Consumer Affairs Department of a company called

Herb’s Garden Products. Martha was a relatively new employee and had only worked

there 6 months, while most employees at Herb’s had been with the company since

its beginning back in 1958. She enjoyed her job and hoped to be promoted at her

next performance appraisal. One especially exciting part of working at Herb’s was

that they had made a public commitment to protecting the environment. There were

regular meetings at work about the choice to brand the organization in this way, sell

their products at “green” markets, and capture some of the growing consumer

market for natural products. Martha’s values were closely aligned with this

mentality, so she really loved her new job at Herb’s Garden Products. How quickly

things change.

One day, Martha received a call from a dissatisfied customer who complained that

Herb’s Special Fertilizer Mix killed her dog, an expensive and beloved toy poodle.

Martha knew that the fertilizer was made mostly of fish byproducts and chicken

manure, but she had also heard there was a “secret ingredient” that had only been

revealed to long-time employees. The company had advertised the product as “safe

enough to eat for breakfast” and “able to work wonders on any plant.” However,

Martha had used the product only once herself. Shortly after applying the fertilizer,

Martha found several dead birds near the garden where she had spread the most

fertilizer. At the time, she convinced herself this was just a coincidence. Listening

now to this customer describing the death of her small dog after lying on the soil

near the fertilizer, Martha began to wonder if those birds had perished for the same

reason. Martha took the customer’s name and number and went immediately to her

boss.

Martha’s boss was Herb’s nephew, Mac. Once Martha explained her story about her

own experience with the fertilizer and the customer’s claim that it killed her dog,

Mac began to smile. “Some people will complain about the littlest things,” Mac said.

41

Martha protested that it was her job as a consumer affairs officer to address the

serious concerns of this customer and follow company procedure to ensure the

safety of future customers and their pets. Mac laughed and said, “You really believe

that something is wrong with our product? We’ve been selling this fertilizer for 35

years. People love it! Now and again someone whines about finding dead animals,

but that’s just their imagination. After all, we use all-natural ingredients!” Martha

thanked Mac for his help and slowly headed back toward her cubicle. She felt

extremely confused and torn about her role at this point. What should she tell the

customer when she called her back? Was the fertilizer safe? Should she worry about

working in a place with potentially dangerous products? What about quality issues

for the company’s products in general? Were Herb’s other products unsafe or of

poor quality? What might be the environmental impact of this product as it runs off

into lakes and streams? As her head began to spin with the difficulty of the task

ahead of her, the phone suddenly rang. It was Herb himself, the owner and founder

of the company. “Martha,” the voice on the other line whispered, “Herb’s Special

Fertilizer is our best seller! Don’t let us down.”

NOW It Is Your Turn

 What kind of decision does Martha face? What are some of her decision-making

challenges?

 What recommendations do you have for a company facing this situation? What

should they do to deal with this customer complaint? From the perspective of the

management at Herb’s Garden Products, what are some next steps that could be

taken?

I N D I V I D U A L E X E R C I S E

The Nine Dots Problem

Instructions: Using only four straight lines, intersect all the dots without ever lifting

up your pen or pencil.

42

Figure 11.15

G R O U P E X E R C I S E

Moon Walk and Talk [2]

Warning: Do not discuss this exercise with other members of your class until instructed

to do so.

You are a member of the moon space crew originally scheduled to rendezvous with a

mother ship on the lighted surface of the moon. Due to mechanical difficulties,

however, your ship was forced to land at a spot some 200 miles (320 km) from the

rendezvous point. During reentry and landing, much of the equipment aboard was

damaged, and because survival depends on reaching the mother ship, the most

critical items available must be chosen for the 200-mile (320 km) trip. Please see the

list of the 15 items left intact and undamaged after landing. Your task is to rank the

items in terms of their importance for your crew to reach the rendezvous point.

Place the number 1 by the most important, 2 by the next most important, and so on,

with 15 being the least important.

T A B L E 1 1 . 1

Undamaged items

My ranking

Group ranking

NASA ranking

My difference

Group difference

43

Undamaged items

My ranking

Group ranking

NASA ranking

My difference

Group difference

Box of matches

Food concentrates

50 feet of nylon

Parachute silk

Portable heating unit

Two 45-caliber pistols

One case dehydrated milk

Two 100 lb. tanks oxygen

Stellar map (of moon's constellations)

Life raft

Magnetic compass

5 gallons of water

Signal flares

First aid kit containing injection needles

Solar powered FM receiver–

44

Undamaged items

My ranking

Group ranking

NASA ranking

My difference

Group difference

transmitter