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7. Organizational Behavior core concepts. McGraw-Hill/Irwin Organizational Behavior, Core Concepts. Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved. Decision Making: How Individuals and Groups Arrive at Decisions. Learning Objectives.

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Organizational Behavior

core concepts


Organizational Behavior, Core Concepts

Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.

Decision Making: How Individuals and Groups Arrive at Decisions

learning objectives
Learning Objectives
  • Compare the rational model of decision making with Simon’s normative model.
  • Discuss knowledge management and ways that companies increase knowledge sharing.
  • Explain the model of decision-making styles and the stages of the creative process.
learning objectives4
Learning Objectives
  • Summarize pros and cons of involving groups in the decision-making process.
  • Explain how participative management affects performance.
  • Describe techniques used to improve the quality of group decisions
models of decision making
Models of Decision Making
  • Decision making
    • identifying and choosing solutions that lead to a desired result
models of decision making6
Models of Decision Making
  • The Rational Model
    • logical four-step approach to decision making.
the rational model
The Rational Model
  • Identifying the problem
  • Generating alternative solutions
  • Selecting a solution
  • Implementing and evaluating the solution
rational model
Rational Model
  • Identifying the Problem
    • Problem – exists when the actual situation and the desired situation differ
  • Generating Solutions
    • For routine decisions alternatives are readily available through decision rules
rational model9
Rational Model
  • Selecting a Solution
    • Want to maximize the expected utility of an outcome
    • People vary in their preferences for safety or risk
    • Ethics should be considered
rational model10
Rational Model
  • Selecting a Solution
    • Evaluating alternatives assume they can be judged according to some criteria
    • Assumes valid criteria exists
    • Each alternative can be compared to these criteria
    • Decision maker actually uses the criteria
rational model11
Rational Model
  • Implementing and Evaluating the Solution
    • After solution is implemented, the evaluation phase is used to evaluate its effectiveness
    • Optimizing – choosing the best possible solution
simon s normative model
Simon’s Normative Model

Decision making is characterized by:

  • Limited information processing
  • Use of judgmental heuristics
  • Satisficing
simon s normative model13
Simon’s Normative Model
  • Bounded rationality
    • constraints that restrict decision making
simon s normative model14
Simon’s Normative Model

Limited Information Processing

  • Tendency to acquire manageable rather than optimal amounts of information
  • Difficult for managers to identify all possible alternative solutions

What is a rule of thumb that people use to reduce information processing demands?

  • Decision maker
  • Judgmental heuristics
  • Judgmental verdict
  • Decision conclusion
simon s normative model16
Simon’s Normative Model
  • Judgmental heuristics
    • rules of thumb or shortcuts that people use to reduce information processing demands.
simon s normative model17
Simon’s Normative Model
  • Availability heuristic
    • tendency to base decisions on information readily available in memory.
  • Representativeness heuristic
    • tendency to assess the likelihood of an event occurring based on impressions about similar occurrences.
simon s normative model18
Simon’s Normative Model
  • Satisficing
    • choosing a solution that meets a minimum standard
dynamics of decision making
Dynamics of Decision Making
  • Knowledge management
    • implementing systems and practices that increase the sharing of knowledge and information throughout an organization
forms of knowledge
Forms of Knowledge
  • Tacit knowledge
    • information gained through experience that is difficult to express and formalize.
  • Explicit knowledge
    • information that can be easily put into words and shared with others.
general decision making styles
General Decision Making Styles
  • Decision making styles
    • combination of how individuals perceive and respond to information
general decision making styles22
General Decision Making Styles
  • Value orientation
    • reflects the extent to which an individual focuses on either task and technical concerns or people and social concerns when making decisions
  • Tolerance for ambiguity
    • extent to which a person has a high need for structure or control in his life
escalation of commitment
Escalation of commitment

sticking to an ineffective course of action too long

Escalation of Commitment
escalation of commitment25
Escalation of Commitment

Psychological and Social Determinants

  • Tend to bias facts so that they support previous decisions
  • Take more risks when a decision is stated in negative terms
  • Get too ego-involved with the project
escalation of commitment26
Escalation of Commitment

Organizational Determinants

  • Breakdowns in communication
  • Workplace politics
  • Organizational inertia
escalation of commitment27
Escalation of Commitment

Project Characteristics

  • Tendency to attribute setbacks to temporary causes that are correctable with additional expenditures
escalation of commitment28
Escalation of Commitment

Contextual determinants

  • Culture of the decision makers
  • Political climate of the escalation situation
recommendations to reduce escalation of commitment
Recommendations To Reduce Escalation of Commitment
  • Set minimum targets for performance, and have decision makers compare their performance with these targets.
  • Have different individuals make the initial and subsequent decisions about a project.
  • Encourage decision makers to become less ego-involved with a project.
recommendations to reduce escalation of commitment30
Recommendations To Reduce Escalation of Commitment
  • Provide more frequent feedback about project completion and costs.
  • Reduce the risk or penalties of failure.
  • Make decision makers aware of the costs of persistence.

What is the process of using imagination to develop a new process?

  • Originality
  • Innovation
  • Creativity
  • Resourcefulness
  • Creativity
    • process of using intelligence, imagination, and skill to develop a new or novel product, object, process, or thought
stages of the creative process
Stages of the Creative Process
  • Preparation
  • Concentration
  • Incubation
  • Illumination
  • Verification
group involvement
Group Involvement
  • Minority dissent
    • extent to which group members feel comfortable disagreeing with other group members, and the extent to which group members participate in decision making
participative management
Participative Management
  • Participative Management
    • involving employees in various forms of decision making
    • Setting goals
    • Making decisions
    • Solving problems
    • Making changes in the organization
group problem solving techniques
Group Problem Solving Techniques
  • Consensus
    • presenting opinions and gaining agreement to support a decision
  • Brainstorming
    • process to generate a quantity of ideas
rules for brainstorming
Rules for Brainstorming
  • Defer judgment
  • Build on the ideas of others
  • Encourage wild ideas
  • Go for quantity over quality
  • Be visual
  • Stay focused on the topic
  • One conversation at a time
group problem solving techniques39
Group Problem Solving Techniques
  • Nominal Group Technique
    • process to generate ideas and evaluate solutions.
  • Delphi technique
    • process to generate ideas from physically dispersed experts
group problem solving techniques40
Group Problem Solving Techniques
  • Computer-aided decision making
    • reduces consensus roadblocks while collecting more information in a shorter period of time
computer aided decision making
Computer-aided Decision Making
  • Chauffeur-driven systems
    • ask participants to answer predetermined questions on electronic keypads
  • Group-driven meetings
    • conducted in special facilities equipped with individual workstations that are networked to each other