Chapter 6-Decision Making - Apr2022 - Ska5

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CHAPTER 6
DECISION MAKING
©Olivier Renck/ Getty Images
©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
LEARNING OBJECTIVES
1. Compare rational and nonrational decision
making.
2. Describe how evidence-based management
and business analytics contribute to decision
making.
3. Compare four decision-making styles.
4. Outline the basics of group decision making.
©McGraw-Hill Education.
Robbins, DeCenzo & Coulter, Management, Pearson
Decision Making Approaches
1. RATIONAL DECISION MAKING
Examples:
• customer complaints,
supplier breakdowns,
• staff turnover,
• sales shortfalls,
• competitor innovations,
• low employee
motivation,
• poor quality
©McGraw-Hill Education. Copyright ©McGraw-Hill Education. Permission required for reproduction or display.

Decision making - Creativity

Examples;
• Is it ethical?
• Is it feasible? (time, cost,
technology, customer
resistance)
• Is it effective? (good enough,
Optimal in lung run)
Implementation
• Plan carefully Evaluation
(written plans) • Give it more time
• Be sensitive to those • Change it slightly
affected • Try another
(inconvenienced, alternative
insecure, even fearful, • Start over
resistance)
Robbins & Coulter, Management, Pearson

SOME HINDRANCES to PERFECTLY

RATIONAL DECISION MAKING
2. NONRATIONAL DECISION MAKING
2.1 Satisficing model
• Managers seek alternatives until they

find one that is satisfactory, not
optimal.
2. NONRATIONAL DECISION MAKING

2.2 INTUITION MODEL
• Intuition is making a choice without the use of
conscious thought or logical inference.
• Stems from both:
• Expertise: A person’s explicit and tacit
knowledge about a person, a situation, an
object, or a decision opportunity—is known as a
holistic hunch.
• Automated experience: The involuntary
emotional response to those same matters.
Robbins & Coulter, Management, Pearson

Complete McGraw Hill Connect

Learning Activity 1
This activity may take you

10 mins to complete
3. MAKING ETHICAL DECISIONS
Ethics
Standards of right and wrong that
influence behavior.
©McGraw-Hill Education. ©Ing. Andrej Kaprinay/Shutterstock

4. EVIDENCE-BASED DECISION MAKING

• Systematic use of the
best available
evidence to improve
management
practice.
• Don’t brag, just use
facts.
• Brings rationality to
the decision-making
process.
Evidence - Big data

Includes not only data
in corporate
databases but also
web-browsing data
trails, social network
communications,
sensor data, and
surveillance data.
BIG DATA – examples
• Improving hiring & personnel management

• It applies people analytics to hiring for all
the airline’s positions.
• It helps the company sort through the
125,000 job applications it receives each
year.
BIG DATA – examples
• Twitter data is used to predict accurately box-

office revenues of Hollywood movies.
• Uses data about people’s reading habits to reshape

the way publishers acquire, edit and market books.
Decision Making Styles
Style: reflects the combination of

how an individual perceives and
responds to information
DECISION-MAKING STYLES
Directive
autocratic exercise power & control focus on the short run
decisive action oriented focus on fact
Efficient, logical, practical, & systematic in their approach to solving
problems
CEO, Jeff Bezos fits this pattern. He said: “Most

decisions should probably be made with
somewhere around 70% of the information you
wish you had. If you wait for 90%, in most cases
you are probably being slow”.
Analytical
Careful decision makers
take longer to make decisions respond well to new/uncertain situation
They like to consider more information and alternatives than those
adopting the directive style.
Her decision to refocus the

company on cloud-based
technology and AI put it
squarely in unchanged
territory where it faces a
great deal of uncertainty.
Conceptual
adopt a long-term perspective take a broad perspective to
problem solving
Willing to take risks Good at finding creative solutions
to problems
focus on the people or social like to consider many options and
aspects of a work future possibilities.
Elon Musk, founder of

Tesla fits this description
well.
Behavioral
most people-oriented of the four Supportive, receptive to
styles suggestions, show warmth
work well with others & enjoy adopt wish-washy approach to
social interactions in which decision making
opinions are openly exchanged
prefer verbal to written information, have a hard time saying no
tend to avoid conflict.
Madeline Bell, CEO: I create a stakeholder
map of the key people who need to be on
board. I identify the detractors and their
concerns and then I think about how I can
take the energy that they might put into
resistance and channel it into something
positive. I make it clear to people that
they’re important to the process and they’ll
be part of a win.

Learning Activity 2

10 mins to complete
THREE EFFECTIVE REACTIONS:

DECIDING TO DECIDE
Importance
• “How high priority is this situation?”
Credibility
• “How believable is the information about the situation?”
Urgency
• “How quickly must I act on the information about the
situation?”
ARTIFICIAL INTELLIGENCE
• The potential of devices,
such as robots, drones,
and even home
appliances, to make
their own decisions and
act independently of
human oversight and
direction.
• Driverless cars.
• Marketing and pricing
strategies.
Group Decision Making
Advantages
• Greater pool of knowledge and information
from which to draw.
• Different perspectives, different people see
the problems from different angles.
• Intellectual stimulation, brainstorming
• Better understanding of decision rationale,
the reasonings behind the decision.
• Deeper commitment to the decision
DISADVANTAGES
1. Few people dominate or intimidate.
• a handful of people will talk the longest and the
loudest, and the rest of the group will simply give
in.
One individual, such as a

strong leader, will exert
disproportionate influence,
sometimes by intimidation.
This cuts down on the
variety of ideas.
2. Satisficing: The “good enough” decision.

• cut a meeting short
• groups have limited time
• lack the right kind of information,
• unable to handle large amounts of information.
3. Goal displacement:
• During the meeting,
other considerations
may rise to the fore,
such as rivals trying to
win an argument.
• The primary goal is
subsumed by a
secondary goal.
4. Groupthink
• members strive to agree
for the sake of unanimity
& thus avoid accurately
assessing the decision
situation.
• groupthink can include
failure to consider new
information and a loss of
new ideas.
5. less efficient, take longer to make

decisions.
6. size affects decision quality.
• Optimal group size may be 5 or 7
people.
• Odd group numbers are best.
7. too confident, it can lead to

groupthink.
Group Decision Technique - Brainstorming

• Individual members
are asked to
silently generate
ideas or solutions,
which are then
written on a board
or flip chart.
• Next step is to
critique and
evaluate the

Self assessment as manager My
Decision-making Style

10 mins to complete

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©Olivier Renck/ Getty Images

Robbins, DeCenzo & Coulter, Management, Pearson

Decision Making Approaches

1. RATIONAL DECISION MAKING

Robbins, DeCenzo & Coulter, Management, Pearson

Decision making - Creativity

Robbins, DeCenzo & Coulter, Management, Pearson

Robbins & Coulter, Management, Pearson

SOME HINDRANCES to PERFECTLY

2. NONRATIONAL DECISION MAKING

2.1 Satisficing model

• Managers seek alternatives until they

2. NONRATIONAL DECISION MAKING

Robbins & Coulter, Management, Pearson

Complete McGraw Hill Connect

This activity may take you

3. MAKING ETHICAL DECISIONS

©McGraw-Hill Education. ©Ing. Andrej Kaprinay/Shutterstock

4. EVIDENCE-BASED DECISION MAKING

Evidence - Big data

BIG DATA – examples

• Improving hiring & personnel management

BIG DATA – examples

• Twitter data is used to predict accurately box-

• Uses data about people’s reading habits to reshape

Decision Making Styles

Style: reflects the combination of

CEO, Jeff Bezos fits this pattern. He said: “Most

Her decision to refocus the

Elon Musk, founder of

Complete McGraw Hill Connect

This activity may take you

THREE EFFECTIVE REACTIONS:

Group Decision Making

One individual, such as a

2. Satisficing: The “good enough” decision.

5. less efficient, take longer to make

7. too confident, it can lead to

Group Decision Technique - Brainstorming

Complete McGraw Hill Connect

This activity may take you

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