Decision Making

by Individuals
and Groups

Chapter 10
Organizational
Behavior
Nelson & Quick, 6th edition

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 Group vs Team
• Group is defined as • a group of people with
two or more complementary skills
individuals, interacting who are committed to
and interdependent, a common mission,
who have come performance goals,
together to achieve and approach for
particular objectives. which they hold
themselves mutually
accountable-e.g-CFT

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 The Decision-Making Process

Programmed Decision - a simple,

routine matter for which a manager
has an established decision rule-
transfer an employee

Nonprogrammer Decision - a new,

complex decision that requires a
creative solution-How to launch a
new product
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The Recognize the problem
and the need for a decision
Decision-
Making Identify the objective
Process- of the decision
step by
step Gather and evaluate data
and diagnose the situation
approach
to solve List and evaluate
problems. alternatives
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 Select the best
The course of action
Decision-
Making Implement
Process the decision

Gather feedback

Follow up

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 Models of Decision-Making
Effective Decision - a timely decision that
meets a desired objective and is acceptable to
those individuals affected by it

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Rational Model(Economic theory)
Rationality - a logical, step-by-step approach to
decision making, with a thorough analysis of
alternatives and their consequences
1. The outcome will be completely rational
2. The decision maker uses a consistent system
of preferences to choose the best alternative
3. The decision maker is aware of all alternatives
4. The decision maker can accurately calculate
the probability of success for each alternative

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 Bounded Rationality Model
Bounded Rationality - a theory that suggests that
there are limits upon how rational a decision maker can
actually be .If decision factors do not include humans,
the probability of rationality increases.
Satisfice – to select the first
alternative that is “good
enough,” because the costs Managers suggest
in time and effort are too the first satisfactory
great to optimize-best alternative
college(Herustics )

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 Bounded Rationality Model
Managers recognize that their conception
of the world is simple
Managers are comfortable making
decisions without determining all the
alternatives
Heuristics – shortcuts
in decision making that Managers make
save mental activity- decisions by rules
rule of thumb-save of thumb or
time& mental activity heuristics
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 Solutions
Garbage Can
Model Problems Choice
opportunities
Participants

Garbage Can Model -

a theory that contends
that decisions in
organizations are
random and
unsystematic
SOURCE: From M.D. Cohen, J.G. March, and J.P. Olsen in Copyright ©2009
Administrative Science Quarterly 17 (March 1972) 1-25. South-Western, a division
Reprinted by permission of the Administrative Science Quarterly of Cengage Learning
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 Risk and the Manager
Risk Aversion - the tendency to choose
options that entail fewer risks and less
uncertainty
Risk takers(high payoffs)
– Accept greater potential for loss
– Tolerate greater uncertainty
– More likely to make risky decisions
– Often lead the group discussions

Evidence: Successful Managers Take Risks

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 Escalation of Commitment
Escalation of Commitment - The tendency
to continue to commit resources to a failing
course of action
Why it occurs How to deal with it
– humans dislike – split responsibility for
inconsistency decisions
– optimism – provide individuals
– control with a graceful exit
– sunk costs – have groups make the
initial decision
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 Cognitive Style(Carl Jung)
Cognitive Style - an individual’s preference
for gathering information and evaluating
alternatives

Individual’s Individual’s
Cognitive
Perceiving + Sensing = Style
Style Style

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 Cognitive Style

Jungian theory
offers a way of
understanding
and appreciating
differences
among
individuals.

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 Jung’s 4 Cognitive Styles
Style Ideal Organization
Facts
ST Sensing/thinking
Impersonal analysis
Facts and organizational
SF Sensing/feeling
relationships
Broad issues
NT Intuiting/thinking
Impersonal and ideal
Serve humankind
NF Intuiting/feeling
General values
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 Z Problem-Solving Model

Look at Sensing Intuition What

the facts alternatives
and details do the facts
suggest?

What impact
Can it be will it have
analyzed on those
objectively? Thinking Feeling involved?
SOURCE: Excerpted from Type Talk at Work by Otto Kroeger and Janet M. Thuesen, 1992, Copyright ©2009
Delacorte Press. Reprinted by permission Otto Kroeger Associates. South-Western, a division
of Cengage Learning
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 Two Brains, Two Cognitive Styles
Left Hemisphere Right Hemisphere
Verbal Nonverbal, visuospatial
Sequential, Simultaneous, spatial,
temporal, digital analogical
Logical, analytic Gestalt, synthetic
Rational Intuitive
Western thought Eastern thought

Ideal = “brain-lateralized” making use of

either or both sides, depending on situation
SOURCE: Created based on ideas from Left Brain, Right Brain by Copyright ©2009
Springer and Deutsch, p.272. © 1993 by Sally Springer and Georg South-Western, a division
Deutsch. (New York: W.H. Freeman and Company, 1993). of Cengage Learning
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 Influences on Decision-Making

Intuition - fast, Creativity - a process

positive force in influenced by individual
decision making and organizational
utilized at a level factors that results in
below consciousness the production of novel
and involves learned and useful ideas,
patterns of information products, or both

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 Four Stages of
the Creative Process

Preparation Incubation Illumination Verification

experience/ reflective insight into thinking,
opportunity thought, solving sharing,
to build often a problem testing the
knowledge unconscious decision
base

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 Influences on Creativity
Individual examples Organizational
– Cognitive Processes examples
• Divergent thinking – Autonomous
• Associational abilities feelings
• Unconscious processes – Diverse team skills
– Quality, supportive
– Personality Factors relationships with
• Intellectual, artistic values supervisors
• Breadth of interests – Flexible organization
• High energy structure
• Self-confidence – Participative
decision making

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 Four Types of Creativity
Creativity Presented or Internal or External
Type Discovered Trigger
You respond to Because it is
Responsive
problems expected of you
You respond to Because you want
Contributory
problems to be creative
You discover Because it is
Expected
problems expected of you
You discover Because you want
Proactive
problems to be creative
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 Participation in Decision Making

Participative Decision Making -

Individuals who are affected by
decisions influence the making of
those decisions

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Foundations for Participation and
Empowerment
• Organizational Foundations
– Participative, supportive organizational culture
– Team-oriented work design
• Individual Prerequisites
– Capability to become psychologically involved
in participative activities
– Motivation to act autonomously
– Capacity to see the relevance of participation
for one’s own well-being
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 Group Decision-Making
• Role of synergy - a positive force that occurs in
groups when group members stimulate new
solutions to problems through the process of
mutual influence and encouragement in the group

• Role of social decision schemes - simple rules

used to determine final group decisions
Two-thirds Majority
Majority Wins
First-shift
Truth Wins
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 Group Decision Making
1. More knowledge through pooling of
group member resources
2. Increased acceptance and commit-
Advantages ment to decisions (had a voice)
3. Greater understanding due to
involvement in decision stages

1. Pressure in groups to conform

2. Domination by one forceful member or
Disadvantages dominant clique-VVIP
3. Amount of time required, because
group is slower than individual to
make a decision
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 Group Phenomenon

Groupthink - a deterioration of mental

efficiency, reality testing, and moral
judgment resulting from in-group
pressures

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 Conditions Favoring Groupthink
• High cohesiveness
• Group homogeneity
• Decision with high
consequences
• Time constraints

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 Symptoms of Groupthink
• Illusions of invulnerability
• Illusions of group morality
• Illusions of unanimity
• Rationalization
• Stereotyping the enemy
• Self-censorship
• Peer pressure
• Mindguards
SOURCE: Irving L Janis, Groupthink: Psychological Photos courtesy of Clips Online Copyright ©2009
Studies of Policy Decisions and Fiascoes, Second Edition. ©2008 Microsoft Corporation South-Western, a division
Copyright © 1982 by Houghton Mifflin Company. Used
with permission.
of Cengage Learning
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 Preventing Groupthink

• Ask each group member to act as critical

evaluator
• Have the leader avoid stating his opinion prior
to the group decision
• Create several groups to work simultaneously
• Appoint a devil’s advocate
• Evaluate the competition carefully
• After consensus, encourage rethinking the
position
SOURCE: Irving L Janis, Groupthink: Psychological Copyright ©2009
Studies of Policy Decisions and Fiascoes, Second
South-Western, a division
Edition. Copyright © 1982 by Houghton Mifflin
Company. Used with permission.
of Cengage Learning
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 Group Polarization

Group Polarization - the tendency for

group discussion to produce shifts toward
more extreme attitudes among members

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 Group Decision Making Techniques
Brainstorming
Self-Managed Nominal
Teams Group
Group Technique (NGT)
Decision
G
Quality Circles
Techniques
Delphi
and
Technique
Quality Teams

Dialectical Devil’s
Inquiry Advocacy
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 Diversity and Culture
in Decision Making
• Racially dissimilar groups
– More open information sharing
– Dissenting perspectives encouraged
– Better decision making
• Functionally dissimilar groups $

– Engage in greater debate $

$
– Better financial performance

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 Technological Aids
to Decision-Making
Expert Systems - a programmed decision tool set
up using decision rules
Decision Support Systems - computer and
communication systems that process incoming
data and synthesize pertinent information
Group Decision Support Systems - systems that
use computer software and communication
facilities to support group decision-making
processes (face-to-face meetings or dispersed)
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 Decision Making
in the Virtual Workplace
Desktop video
conferencing systems
Group decision
Tools for
support systems
Virtual
Teams Internet/Intranet
systems

Agent-based modeling
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 Ethics Check
 Is it legal?
– Does it violate law
– Does it violate company policy

 Is it balanced?
– Is it fair to all
– Does it promote win-win relationships

 How will it make me feel about myself?

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