Chapter Seven:

Decision Making
and Creativity

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 Personal Reflection

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 Learning Objectives
1. Describe the elements of rational choice decision making. 
2.  Explain why people don’t apply rational choice decision
making when identifying problems/opportunities,
evaluating/choosing alternatives, and evaluating decision
outcomes. 
3.  Discuss the roles of emotions and intuition in decision
making. 
4.  Describe employee characteristics, workplace conditions,
and specific activities that support creativity. 
5.  Describe the benefits of employee involvement and identify
four contingencies that affect the optimal level of employee
involvement. 
© 2021 McGraw-Hill Limited. Slide 8
 Integrative Model of OB

Exhibit 1.3 An Integrative Model of OB

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 DECISION MAKING OPTIONS
WE ALL MAKE DECISIONS, BUT HOW AND WHY?!
 Rational Choice Decision Making
 Bounded Decision Making/ OB Evidence
 Intuitive Decision Making

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 Intuitive Decision Making
Let me hear your feedback
Please read: The body’s sixth sense - https://irp.nih.gov/scibites/the-bodys-sixth-sense

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 Five-Factor Personality Model (CANOE)

Conscientiousness organized, dependable, thorough

Agreeableness trusting, helpful, good-natured

Neuroticism anxious, insecure, self-conscious

Openness to experience imaginative, creative, curious

Extraversion outgoing, talkative, energetic

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 Rational Choice Formula for Best Choice Calculation

EXHIBIT 7.1 
Rational Choice
Decision-Making
Example

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 Rational Choice Decision Making
Rational choice decisions.
• Uses logic; all information is used
to choose the highest value
alternative.
• Historically, viewed as the ideal
state of decision making. Is this
true or even realistic?
Two key elements.
1. Rational choice formula calculating
the best choice (positive valence/
outcome).
2. Rational choice systematic decision
process.
N.B. This model is seldom actually used: it’s more
of a goal than a practical method
© 2021 McGraw-Hill Limited. Slide 14 ©wavebreakmedia/Shutterstock
 Rational Choice Decision Process

EXHIBIT 7.2 
Rational Choice
Decision Process

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 Drawbacks - Decision Making in Organizations

Assumptions of the Rational Decision Making Model

1. There is complete knowledge of the situation
2. All relevant options are known, in an unbiased manner
3. The decision maker seeks the highest utility/ satisfaction

In other words: This model assumes a “perfect world” in order to

make decisions. It assumes that there is complete information,
that every option has been identified and that there is a maximum
payoff.

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 Decision Making in Organizations

Bounded Rationality
1. Limited information-processing capability makes it impossible
to assimilate and understand all the information necessary
2. Bounded rationality is constructing simplified models that
extract the essential features from problems without capturing
their complexity
In other words: People seek solutions that are satisfactory and
sufficient, rather than optimal (they “satisfice”). Bounded reality,
represents more of the real world, where it seeks solutions that
are the best given the information that is available.

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 Bounded Decision Making in Organizations

Decision making is composed of three steps:

1. Limited search for criteria and alternatives – use familiar
criteria and easily found alternatives
2. Limited review of alternatives – focus on alternatives, similar to
those already in effect
3. Satisficing – select the first alternative that is “good enough”

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 Intuitive Decision Making in Organizations
Intuitive Decision Making
• A non-conscious process that is created out of experience
– Increases with experience
– Can be a powerful complement to rational analysis
in decision making

In other words: It is the way people make decisions naturally,

without the use of formal tools and procedures. Trusting your
“gut” feelings.

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 EMOTION REGULATION DECISION

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 Choosing Alternatives: Rational Choice Assumptions
vs. OB Evidence/[Bounded Rationality]
Rational Choice Assumptions OB Evidence/[Bounded Rationality]

Goals are clear, compatible, and agreed Goals are ambiguous, in conflict, and lack
upon. full support.
Decision makers can calculate all Decision makers have limited information-
alternatives and their outcomes. processing abilities.
Decision makers evaluate all alternatives Decision makers evaluate alternatives
simultaneously. sequentially.
Decision makers use absolute standards to Decision makers evaluate alternatives
evaluate alternatives. against an implicit favourite.

Decision makers use factual information to Decision makers process perceptually

choose alternatives. distorted information.
Decision makers choose the highest payoff Decision makers choose the “good
alternative (maximization). enough” alternative (satisficing).

EXHIBIT 7.3 Rational Choice Assumptions versus Organizational Behaviour Findings about Choosing Alternatives

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 REFLECTIONS ON CHAPTER 7

Why do we think
people do not apply
rational choice
decision making, when
identifying problems or
opportunities, when
they are evaluating or
choosing alternatives,
and are evaluating
decision outcomes?
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 Decision Making Exercise 4

Explain the instances, in an organization, when HR could

use:
 rational choice decision making,
 bounded rationality, and or
 emotions and intuition in decision making. 

10-15 minutes

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 Decision Making Exercise 5
Take about 10-15 minutes to think about some decisions
you have made in the past and the outcomes. Use the
activity sheet given to you.

As you do this exercise, think about three (3) aspects of

the notes/ readings, from the chapter that you think you
will be able to apply towards improving your decision
making and creativity.
10-15 minutes

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 Decision Making Exercise 6

 Do emotions and moods influence our decision

making? Explain.
 You have been asked by your CEO to help find some
creative people to work on a social media initiative
for a new financial service. What are some
characteristics you would be looking for in those
creative people? How would you go about selecting
the persons and what number would you select?
 Please say what would influence your decisions.
10-15 minutes

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 Decision Making and Creativity

What do we know about immersive technologies

and what do we need to know?

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 Decision Making Exercise 7

 As HR, what strategies do you plan to use, or are

using, to promote employees involvement and
employee engagement in your organization.
 What types of creative work initiative/ activities will
you create and promote?
 Creative work environments/ culture will you help to
build and promote?
GIVE ME ALL PRACTICAL EXAMPLES
10-15 minutes

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 Emotions and Making Choices
1. Emotions form preferences before conscious
evaluation.
2. “Affect” = Moods and emotions affect the decision
process.
3. Emotions serve as information in decisions.

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 Intuitive Decision Making
Ability to know when a problem or opportunity exists
and to select the best course of action without
conscious reasoning.
Intuition as emotional experience:
• Gut feelings are emotional signals.
• Not all emotional signals are intuition.
Intuition as rapid nonconscious analysis:
• Uses action scripts.

• [Intuition - That other sense/the sixth sense]

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 Making Choices More Effectively
1. Systematically evaluate
alternatives against
relevant factors (don’t be
too decisive).

2. Revisit decisions later

when emotions/moods
have changed.

3. Scenario planning. – A systematic

process or thinking about alternatives futures and what
the organization should do to anticipate and react to
those environments.

© 2021 McGraw-Hill Limited. Slide 30 ©wavebreakmedia/Shutterstock

 Decision Evaluation Problems
Confirmation bias (post-decisional justification).
• Underweight negative outcomes of the preference.
• Inflates valence of the selected alternative.

Escalation of commitment is repeating or further

investing in an apparently bad decision.
Causes of escalation:
• Self-justification effect.
• Self-enhancement effect.
• Prospect theory effect.
• Sunk costs effect.

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 Improving Decision Evaluation

1. Change the decision maker.

2. Create a stop-loss.
3. Seek factual and social feedback.
4. Change the decision-maker’s mindset.

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 Creative Process Model

Exhibit 7.4. The Creative Process Model

Source: Based on G. Wallas, The Art of Thought (London: Jonathan Cape, 1926), Chap. 4.

Exhibit 7.4. The Creative Process Model

© 2021 McGraw-Hill Limited. Slide 33 Source: Based on G. Wallas, The Art of Thought (London: Jonathan Cape, 1926), Chap. 4.
 Creativity in Organizations
Exhibit 6.4 Three-Stage Model of Creativity in Organizations (taken
from Robins et al., 2022)

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 Characteristics of Creative People

EXHIBIT 7.5 Characteristics of Creative People

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 Creative Work Environments
• Learning orientation.

• Enriched jobs– autonomy,

task significance.
• Communication with co-
workers.
• Sufficient resources, job
security.
• Leader and co-worker
support (usually).

© 2021 McGraw-Hill Limited. Slide 36 ©SFIO CRACHO/Shutterstock

 Creative Activities
Redefine the problem.
• Revisit, involve others.
Associative play.
• Playful activities, creative
challenges, morphological
analysis.
Cross-pollination.
• Exchange ideas across the
firm.
Design thinking.
• Human-centred, solution-
focused creative process.

© 2021 McGraw-Hill Limited. Slide 37 ©SFIO CRACHO/Shutterstock

 Design Thinking

Human-centred, solution-focused process – relies on

creative thinking, logical analysis, empathy, intuition.
Four design thinking rules:
• Human rule – involve others.
• Ambiguity rule – avoid problem identification too soon.
• Re-design rule – review past solutions.
• Tangible rule – build prototypes, embrace learning orientation.

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 Employee Involvement
Employees participate in and influence decisions about
their jobs, work units, or organization.
Several levels of involvement.
• Low: people individually asked for specific information but the
problem is not described.
• Medium low: problem is described, employees are asked for
information.
• Medium high: problem is described, employees collectively
develop recommendations.
• High: Employees identify problem, discover alternatives,
choose the best alternative, and implement their choice.

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 Employee Involvement Model

EXHIBIT 7.7 Model of Employee Involvement in Decision Making

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 Contingencies of Employee Involvement
Decision structure.
• Less involvement for programmed decisions.
Source of decision knowledge.
• More involvement when employees have useful knowledge.
Decision commitment.
• Commitment to decision increases with involvement.
Risk of conflict.
• Low involvement if employee goals and norms conflict with
the organization’s goals.
• Moderate or lower involvement when employees can’t agree
on preferred solution.

© 2021 McGraw-Hill Limited. Slide 41 Source of decision know

 Learning Objectives
1. Describe the elements of rational choice decision making. 
2.  Explain why people don’t apply rational choice decision
making when identifying problems/opportunities,
evaluating/choosing alternatives, and evaluating decision
outcomes. 
3.  Discuss the roles of emotions and intuition in decision
making. 
4.  Describe employee characteristics, workplace conditions,
and specific activities that support creativity. 
5.  Describe the benefits of employee involvement and identify
four contingencies that affect the optimal level of employee
involvement. 
© 2021 McGraw-Hill Limited. Slide 42
 Reminder

 Please read the chapter in the book.

 Please complete your weekly assessments

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