10DECISION MAKING by INDIVIDUALS and GROUPS
Chapter Scan
Decision making can be strengthened individually and in group situations. Groups can use techniques such as brainstorming, nominal group technique, Delphi technique, devil's advocacy, and dialectical inquiry. Groups must be aware of difficulties that negatively impact decision making, such as groupthink and group polarization. Individual decision making can be analyzed by examining cognitive styles that are used for gathering information and evaluating alternatives. Models of decision-making range from very rational (e.g., the rational model) to nonrational (e.g., the garbage can model). Intuition and creativity can be developed and improved to assist decision makers. Finally, technology can aid individuals or groups through expert systems and group decision support systems.
LEARNING OBJECTIVES
After reading this chapter, you should be able to do the following:
1.Explain the assumptions of bounded rationality.
2.Describe Jung's cognitive styles and how they affect managerial decision making.
3.Understand the role of creativity in decision making, and practice ways to increase your
own creativity.
4.Identify the advantages and disadvantages of group decision making.
5.Discuss the symptoms of groupthink and ways to prevent it.
6.Evaluate the strengths and weaknesses of several group decision-making techniques.
7.Describe the effects that expert systems and group decision support systems have on
decision making in organizations.
8.Utilize an ‘ethics check’ for examining managerial decisions.
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Chapter 10: Decision Making by Individuals and Groups
key terms
Chapter 10 introduces the following key terms:
programmed decision
nonprogrammed decision
effective decision
rationality
bounded rationality
satisfice
heuristics
garbage can model
risk aversion
escalation of commitment
cognitive style
intuition
creativity
participative decision making
synergy
social decision schemes
groupthink
group polarization
brainstorming
nominal group technique (NGT)
Delphi technique
devil's advocacy
dialectical inquiry
THE CHAPTER SUMMARIZED
- LOOKING AHEAD: Running in the Restaurant Industry’s Horse Race Requires Good
Decision Making at All Levels
II.THE DECISION-MAKING PROCESS
Decisions that managers make are either programmed decisions (which are routine, and have established decision rules) or nonprogrammed decisions (new, complex decisions that require creative solutions). The decision making process is a step-by-step approach that can be utilized for a variety of types of problems.
III.MODELS OF DECISION MAKING
Effective decisions are timely, acceptable to those affected by them, and meet desired objectives.
A.Rational Model
The rational model comes from classic economic theory, and assumes that there is a completely rational solution to all problems. In this model, decision makers have consistent systems of preferences, are aware of all alternatives, and can accurately calculate the probability of success for each alternative.
B.Bounded Rationality Model
Bounded rationality is a theory that suggests that there are limits to how rational a decision maker can actually be. If the decision factors do not deal with humans, the probability of rationality increases. Since managers cannot make perfect decisions, they satisfice, selecting instead the first alternative that is ‘good enough’. This is similar to students selecting a college that is within their decision frame, as opposed to viewing all 3,000 available colleges and universities. Satisficing involves a shortcut, intuitive approach to decision making, which is referred to as heuristics.
Heuristics are shortcuts in decision making that save mental activity. The development of heuristics became the backbone of expert systems, which capture the intuitive shortcuts of experts, and create a program to mimic this behavior.
C.Garbage Can Model
In another model, problems, solutions, participants, and choice opportunities exist randomly within the organization. This haphazard approach is referred to as the garbage can model.
IV.DECISION MAKING AND RISK
A.Risk and the Manager
One of the difficulties with decisions that are innovative is that they also tend to be risky. Unfortunately, many managers tend to be risk averse. Risk aversion is the tendency to choose options that entail fewer risks and less uncertainty. Unfortunately, this tendency can cause managers to avoid risky decisions that may produce novel ideas and potentially high payoffs.
B.Escalation of Commitment
Once individuals make decisions, they tend to become committed to those decisions. Escalation of commitment is the tendency to continue to commit resources to a failing course of action. Students may draw the analogy between stubbornness and escalation of commitment.
V.JUNG'S COGNITIVE STYLES
An individual's preferred method of gathering information and making judgments is called a cognitive style. The Z problem solving method outlines 4 steps for good decisions, (1) examine the facts and details, (2) generate alternatives, (3) analyze the alternatives objectively, and (4) weigh the impact of the decision. These four steps are analogues to using the following preferences: (1) sensing, (2) intuiting, (3) thinking, and (4) feeling.
VI.OTHER INDIVIDUAL INFLUENCES ON DECISION MAKING
A.The Role of Intuition
In many cases, managers do not appear to use a systematic approach to decision making. Instead, they rely on ‘hunches’, or intuition, to make quick decisions based on recognition of situational possibilities. Intuition is a fast, positive force in decision making utilized at a level below consciousness that involves learned patterns of information.
B.Creativity at Work
Creativity is a process influenced by individual and organizational factors that results in the production of novel and useful ideas, products, or both. The ability to promote creativity is an important competency that managers need to develop in order to succeed.
1.Individual Influences
Personality factors appear to be related to creativity. These characteristics include intellectual and artistic values, breadth of interests, high energy, concern with achievement, independence of judgment, intuition, self-confidence, and a creative self-image.
2.Organizational Influences
The organizational environment can significantly impact creativity in the work place. Focusing on how work will be evaluated, being monitored too closely, and competing with others in win–lose situations hinder creativity. Feelings of autonomy, membership in a diverse team, and high-quality relationships with creative supervisors foster creativity.
3.Individual/Organization Fit
Research indicates that creative performance is greatest when there is a match between the individual and organizational influences on creativity. Furthermore, it suggests that individuals can be trained to be more creative.
VII.PARTICIPATION IN DECISION MAKING
A.The Effects of Participation
Participative decision making is a situation in which individuals affected by decisions influence the making of those decisions.
Participation increases employee satisfaction and creativity. Some studies have shown that participation is related to increases in productivity.
- Foundations for Participation and Empowerment
The organizational foundations for empowerment include a participative, supportive organizational culture and a team-oriented work design. One of the difficulties of implementing participative groups is that middle managers may experience fear and anxiety as a result of perceptions that they are losing power, which can disrupt participative decision making efforts.
The three individual prerequisites for empowerment include (1) the capability to become psychologically involved in participative activities, (2) the motivation to act autonomously, and (3) the capacity to see the relevance of participation for one's own well-being.
VIII.THE GROUP DECISION-MAKING PROCESS
A.Advantages and Disadvantages of Group Decision Making
Advantages of group decision making include the synergy of pooled group member resources, increased approval for the solution, and greater understanding of the decision. Disadvantages include pressure to conform, potential for domination of the group by a member or clique, and the increased time required to make decisions.
B.Groupthink
One of the major disadvantages of group decision making is the tendency for groupthink. Groupthink is a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressures. This happens because the cohesiveness and the solidarity of the group tend to stifle disagreement and questions about the group's chosen course of action.
C.Group Polarization
Group polarization is the tendency for group discussion to produce shifts toward more extreme attitudes among members. Group polarization can be seen with juries that become locked in disagreement.
IX.TECHNIQUES FOR GROUP DECISION MAKING
A.Brainstorming
Brainstorming is a technique for generating as many ideas as possible on a given subject, while suspending evaluation until all the ideas have been suggested. Electronic brainstorming reduces production blocking and evaluation apprehension.
B.Nominal Group Techniques
Nominal group technique is a structured approach to group decision making that focuses on generating alternatives and choosing one. Nominal group technique is a refinement of brainstorming.
C.Delphi Technique
The Delphi technique gathers judgments of experts for use in decision making. A coordinator summarizes the judgments and reports them back to the experts, who then rate the alternatives.
D.Devil's Advocacy
A devil's advocate is an approach for preventing groupthink. An individual plays the role of a critic to arouse discussion and thought, bringing out the opposite viewpoint and pointing potential problems.
E.Dialectical Inquiry
A debate between two opposing sets of recommendations is referred to as dialectical inquiry.
F.Quality Circles and Quality Teams
Quality circles and teams combine the best of collaborative group efforts with a specific improvement in mind.
G.Self-Managed Teams
Self-managed teams focus on broader decision-making activities than do quality circles and quality teams, such as work scheduling, job assignments, and staffing.
X.CULTURAL ISSUES IN DECISION MAKING
Hofstede’s dimensions of culture influence the decision-making process. Uncertainty avoidance influences whether or not decisions are seen as opportunities for change. Power distance affects the level at which decisions are typically made in organizations, and the individualist/collectivist dimensions has implications for comfort with group decisions. The masculine/feminine dimension indicates the value placed on quick, assertive decisions versus those that show more concern for others.
XI.TECHNOLOGICAL AIDS TO DECISION MAKING
A.Expert Systems
Expert systems are programmed decision tools, set up using decision rules that incorporate the knowledge and experience of veteran decision makers in the organization. Because expert systems can significantly affect managerial decisions, managers must exercise caution and judgment in adopting system recommendations.
B.Group Decision Support Systems (GDSS)
GDSS improve conflict management in groups by depersonalizing issues and forcing groups to discuss conflict management processes. Members tend to share information more fully when they use a GDSS.
C.Decision Making in the Virtual Workplace
In many of today’s flexible organizations, the workplace is unconstrained by geography, time, or organizational boundaries. Virtual teams work together through telecommunications and information technologies to accomplish tasks. These technologies include desktop videoconferencing systems (DVCS), group decision support systems (GDSS), and Internet/intranet systems.
XII.ETHICAL ISSUES IN DECISION MAKING
Managers should consider three questions. Is it legal? Is it balanced? How will it make me feel about myself?
XIII.MANAGERIAL IMPLICATIONS: DECISION MAKING IS A CRITICAL ACTIVITY
XIV.LOOKING BACK: A Lesson in Decentralized Decision Making
CHAPTER SUMMARY
Bounded rationality assumes that there are limits to how rational managers can be.
The garbage can model shows that under high uncertainty, decision making in organizations can be an unsystematic process.
Jung's cognitive styles can be used to help explain individual differences in gathering information and evaluating alternatives.
Intuition and creativity are positive influences on decision making and should be encouraged in organizations.
Empowerment and teamwork require specific organizational design elements and individual characteristics and skills.
Techniques such as brainstorming, nominal group technique, Delphi technique, devil's advocacy, dialectical inquiry, quality circles and teams, and self-managed teams can help managers reap the benefits of group methods while limiting the possibilities of groupthink and group polarization.
Technology is providing assistance to managerial decision making, especially through expert systems and group decision support systems. More research is needed to determine the effects of these technologies.
Managers should carefully weigh the ethical issues surrounding decisions and encourage ethical decision making throughout the organization.
REVIEW QUESTIONS: suggested answers
1. Compare the garbage can model with the bounded rationality model. Compare the usefulness of these models in today's organizations.
Decisions in the garbage can model are nonrational and unsystematic. It is typically used in situations of high uncertainty. The bounded rationality model assumes that managers satisfice by selecting the first alternative that is good enough. The pressures of time and competition in today’s global environment require that managers make decisions quickly. Both models reflect decision making in this fast-paced environment.
2. List and describe Jung's four cognitive styles. How does the Z problem-solving model capitalize on the strengths of the four preferences?
Jung combines the concepts of thinking and feeling, and sensing and intuiting into four cognitive styles: ST, SF, NT, and NF. The Z model recommends using the following preferences, in order: (1) S; (2) N; (3) T; (4) F.
3. What are the individual and organizational influences on creativity?
Cognitive factors of the individual affect creativity. Personality factors also influence one's ability to be creative. Interestingly, being in a good mood provides better creativity than does a bad or even neutral mood. Organizational influences include support and a flexible organization structure. Participative decision making is also related to creativity.
4. What are the organizational foundations of empowerment and teamwork? The individual foundations?
The organizational foundations of empowerment and teamwork are a participative, supportive organizational culture and a team-oriented work design. Individual foundations include the capability to become psychologically involved in participative activities, motivation to act autonomously, and the capacity to see the relevance of participation for one's own well-being.
5. Describe the advantages and disadvantages of group decision making.
Group decision making is slow because of the process of getting everyone involved, and is susceptible to groupthink and group polarization. However, group decisions are often better decisions, and the group decision making process has a far greater acceptance level for the final outcome than singular decision making.
6. Describe the symptoms of groupthink, and identify actions that can be taken to prevent it.
The symptoms of groupthink include illusions of invulnerability, group morality, and unanimity; rationalization, stereotyping the enemy, members’ self-censorship, peer pressure to agree, and mind guards who protect the group from negative feedback.
Methods of preventing groupthink include appointing a devil's advocate, asking each member to be a critical evaluator, creating several teams that work on the decision simultaneously, having outside experts evaluate the group's progress, evaluating the competition carefully, and encouraging the group to rethink its chosen course of action.
7. What techniques can be used to improve group decisions?
There are several structured techniques for improving decisions, including brainstorming, nominal group technique, Delphi technique, dialectical inquiry, and devil's advocacy.
DISCUSSION AND COMMUNICATION QUESTIONS: suggested answers
1. Why is identification of the real problem the first and most important step in the decision making process? How does attribution theory explain mistakes that can be made as managers and employees work together to explain why the problem occurred?
Identification of the real problem is critical because it ensures that the group will be "treating the problem instead of the symptom." Attribution theory suggests that individuals will tend to look to external causes to explain their own failure. This could bias the problem-solving process.
2. How can organizations effectively manage both risk taking and escalation of commitment in the decision-making behavior of employees?
Students may suggest solutions including policies such as requiring that someone outside the decision making team review a decision to try to guard against excessive risk taking. Organizations may manage the escalation of commitment by having different individuals make initial and later decisions.
3. How will you most likely make decisions based on your cognitive style? What might you overlook using your preferred approach?
The key to this question is to identify what one’s predominant style is, and to recognize that it may not be appropriate in all situations. The Z model incorporates the strengths of all four preferences.
4. How can organizations encourage creative decision making?
Organizations can reward risk taking, provide a supportive environment, and permit failure.
5. What are some organizations that use expert systems? Group decision support systems? How will these two technologies affect managerial decision making?
Campbell Soup Company and DuPont use expert systems while Boeing utilizes a GDSS. Students could also look to the six focus companies to respond to this question or examine organizations with which they have had personal experience. These tools may help simplify the decision process and can affect conflict management within a group.
6. How do the potential risks associated with participating in quality circles differ from those associated with participating in quality teams? If you were a member of a quality circle, how would management's decisions to reject your recommendations affect your motivation to participate?
Quality circles are generated from the bottom up; therefore, they operate from fewer formal bases of power in the organization.
7. Form a team of four persons. Find two examples of recent decisions made in organizations: one that you consider a good decision, and one that you consider a bad decision. Two members should work on the good decision, and two on the bad decision. Each pair should write a brief description of the decision. Then write a summary of what went right, what went wrong, and what could be done to improve the decision process. Compare and contrast your two examples in a presentation to the class.