Organizational Behavior : An Experiential Approach 8E

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Chapter 17 Decision Making
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Objectives

• Explain why decision making is a social process
• Define and explain how bounded rationality
  influences decision making
• Describe five models of decision making
• Explain groupthink and how it can be avoided

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Objectives

• Explain how experts make decisions
• Identify your personal approach to organizational
  decision making
• Apply the leader-participation model of decision
  making

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Are Individual Decisions Independent?

• Individual decisions are not independent,
  solitary events
• Instead
• They are closely connected to previous decisions
• And
• Are influenced by the social processes that
  brought the decision point to a head

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Are Individual Decisions Independent?

• Decision making at very high levels
• A lonely, individual struggle?
• NO! Instead,
• It involves information sharing and
  inter-dependence among organization members

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The Managers Role in Decision Making

• The managers job is to handle the decision
  process by assessing
• The information needed
• The players who need to be involved

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Process of Rational Decision Making
1. Recognize and define problem
5. Evaluate alternatives
2. Identify decision objective and criteria
6. Select the best alternative
3. Allocate weights to criteria
7. Implement the decision
4. List and develop alternatives
8. Evaluate the decision
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Bounded Rationality - Defined
The theory of bounded rationality maintains that
people are restricted in making decisions and
settle for less than ideal solutions They
satisfice, selecting the first alternative that
is satisfactory.
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Common Decision Biases

• Anchoring and adjusting
• Representativeness
• Availability
• Overconfidence
• Bounded awareness
• Emotional involvement
• Self-serving reasoning

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Garbage Can Model

• Factors
• Problems
• Participants
• Solutions
• Choice opportunities
• Above factors float randomly inside the
  organization and if they connect, a decision
  results

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Choice Shift

• Occurs when groups make more extreme decisions
  than individuals
• Risky shift
• People support riskier decisions in a group
  setting than they would individually
• Cautious shift
• The group decision is more conservative than
  individual positions

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Groupthink - Defined
Groupthink is the tendency for members of a
highly cohesive group to seek consensus so
strongly that they fail to do a realistic
appraisal of other possibly better alternatives
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Traditional Groupthink Model

• Antecedent Conditions
• Cohesion
• Insulation
• Directive leadership
• High stress low esteem low hope of finding
  solution
• Limited search and appraisal

• DefectiveDecision Making Symptoms
• Poor information search
• Selective information processing
• Failure to appraise risks
• Incomplete survey of alternatives and solutions

• Groupthink Symptoms
• Self-censorship
• Pressure on dissenters
• Pressure toward uniformity
• Illusion of unanimity
• Illusion of invulnerability
• Belief in inherent morality
• Collective rationalization
• Outgroup stereotyping

Defective Decisions
Consensus seeking
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How to Avoid Groupthink

• Encourage all members to express their doubts
• Assign a devils advocate
• Adopt the perspectives of other constituencies
• Bring in qualified outsiders to discuss decisions
• Sleep on a tentative decision and have a second
  chance meeting
• Leaders should listen to others opinions first
• Leaders should demonstrate willingness to be
  criticized

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Escalation of Commitment
Occurs when people continue to commit resources
to a failing course of action
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Leader-Participation Model

• Contingency theory of leadership
• Continuum of leadership styles ranges from
  autocratic to participative styles
• Decide
• Consult individuals and groups
• Facilitate
• Delegate

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Leader-Participation Model

• Choice of leadership style can affect outcomes of
  the decision-making process

Decision Quality
Decision Implementation
Cost of Decision Making
Development
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Seven Questions for Managers to Ask about a
Decision
Team Competence
Decision Significance
?
Group Expertise
Importance of Commitment
Leaders Expertise
Group Support for Objectives
Likelihood of Commitment
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Types of Problems
Structured Problems Repetitive, routine problems
for which definite procedures have been
developed
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Intuition - Defined
Intuition is a cognitive conclusion based on
a decision makers previous experiences and
emotional inputs Thus, intuition and rational
analysis are complementary aspects of good
decision making
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The Zone of Indifference

• Zone of indifference
• The range within which each person in which he or
  she willingly accepts orders without consciously
  questioning authority

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Recognition PrimedDecision (RPD) Model

• Components of the Model
• Cue recognition and pattern matching
• Action script activation
• Mental simulation driven by mental models

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Kleins RPD Model
Situation
generates
Cues
Mental Simulations
to affect the
using your
that let you recognize
Mental Models
which you assess by
Patterns
Action Scripts
that activate
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PreMortem Exercises

• Designed to expose vulnerabilities in planning