Chapter Ten

Making Decisions
 Chapter Ten Outline
Models of Decision Making
•The Rational Model
•Simon’s Normative Model

Dynamics of Decision Making

•Contingency Model of Decision Making
•Improving Decision Making
•General Decision-Making Styles
•Escalation of Commitment
•Creativity
 Chapter Ten Outline (continued)
Group Decision Making
•Advantages and Disadvantages of Group-Aided Decision
Making
•Participative Management
•When to Have Groups Participate in Decision Making:
The Vroom/Yetton/Jago Model
•Group Problem-Solving Techniques
9-2

The Rational Model of Decision

Making
•Consists of a structured four-step sequence
* identifying the problem
* generating alternative solutions
* selecting a solution
* implementing and evaluating the solution
 Simon’s Normative Model of
Decision Making
•Based on the notion of bounded rationality, i.e.
decision makers face a variety of constraints
•Decision making is characterized by
* limited information processing
* use of judgmental heuristics (rules, shortcuts)
* satisficing
 Judgmental Heuristics
Availability Heuristic: A decision maker’s tendency to
base decisions on information that is readily available in
memory.

Representativeness Heuristic: The tendency to

assess the likelihood of an event occurring based on one’s
impressions about similar occurrences.
 Judgmental Heuristics (cont)

Satisficing: Choosing a solution that meets a minimum

standard of acceptance
Improving Decision Making
Through Effective Knowledge
Management
 Systems and practices that increase the sharing of
knowledge and information
 Types of knowledge
 Tacit knowledge – intuition, experience, natural abilities
 Explicit knowledge
 Explicit knowledge requires access to large amounts of
information; tacit knowledge is obtained through
observation, mentoring, collaboration, etc.
General Decision Making Styles
 Based on how one perceives and
comprehends stimuli and chooses to
respond
 Value orientation – task and technical
concerns or people and social concerns
 Tolerance for ambiguity – need of
structure or control
 Decision Making Styles
High
Tolerance for Ambiguity

Analytical Conceptual

Directive Behavioral
Low
Tasks and Technical People and Social
Concerns Concerns
Value Orientation
Hands on
Exercise

What is Your Decision Making

Style?
• Which of the four styles best represents your
decision-making style? Which is least reflective of
your style?
• How do your scores compare with the following
norms: directive (75), analytical (90), conceptual
(80), and behavioral (55)?
• What are the advantages and disadvantages of
your decision-making style?
Escalation of Commitment
 Tendency to stick to a course of action even when
it is associated with and unlikely to reverse a bad
situation. Why?
 Psychological and social
 Bias facts to support a decision
 “Recover losses” more attractive than achieve gains
 Ego
 Organizational inertia
 Characteristics of project – long-term returns
 Contextual determinants – outside organization
9-9

Skills and Best Practices: Recommendations

to Reduce Escalation of Commitment
1. Set minimum targets for performance, and have
decision makers compare their performance with these
targets.
2. Have different individuals make the initial and
subsequent decisions about a project.
3. Encourage decision makers to become less ego-
involved with a project.
4. Provide more frequent feedback about project
completion and costs.
5. Reduce the risk of penalties of failure.
6. Make decision makers aware of the costs of
persistence.
9-10

Stages Underlying the Creative

Process
1. Preparation: Reflects the notion that creativity starts
from a base of knowledge.
2. Concentration: Where an individual concentrates on the
problem at hand.
3. Incubation: Done unconsciously. During this stage,
people engage in daily activities while their minds
simultaneously mull over information and make remote
associations.
4. Illumination: Remote associations from the incubation
stage are ultimately generated.
5. Verification: Entails going through the entire process to
verify, modify, or try out the new idea.
Group decision-making
 Data suggests that innovative groups possessed
high levels of both minority dissent and
participation in decision making
 Note four requirements of effective decision
making in a group:
 Focus on process
 Understand requirements for an effective choice
 Assess positive qualities of alternative solutions
 Assess negative qualities of alternative solutions
 Suggests openness, acceptance of dissent?
9-11
Table 9-2

Advantages and Disadvantages of

Group-Aided Decision Making
Advantages Disadvantages
1. Greater pool of knowledge 1. Social pressure
2. Different perspectives 2. Minority domination
3. Greater comprehension 3. Logrolling
4. Increased acceptance 4. Goal displacement
5. Training ground 5. “Groupthink”
Group Problem Solving Techniques

 Definition of consensus – . . . reached

when all members can say they either
agree . . . Or have had their “day in court”
and were unable to convince the others of
their viewpoint. In the final analysis,
everyone agrees to support the outcome
Group Problem Solving Techniques

 Other approaches to a group decision

 Unanimity
 A minority or one decides
More Formal Group Problem
Solving Techniques
 Brainstorming - disciplined process
 Silent idea (optional)
 Ideas/opinions solicited and written on a board,
disallowing criticisms, allowing piggy-backing on
ideas, clarification
 Delphi technique is another, more formal form of
brainstorming. Involves several rounds of
questionnaire, feedback, etc. Useful in cases
where participants are not in the same place.
More Formal Group Problem
Solving Techniques
 Nominal Group Technique – used to
narrow down options through voting
 Computer-aided Decision Making
 Usescomputers to manage brainstorming or
delphi questioning
If time permits . . .
 Discuss question on p. 248