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Chapter 17 Decision Making Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-1 Objectives Explain why decision making is a social process Define and explain how bounded rationality influences decision making Describe five models of decision making Explain groupthink and how it can be avoided Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-2 …Objectives Explain how experts make decisions Identify your personal approach to organizational decision making Apply the leader-participation model of decision making Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-3 Are Individual Decisions Independent? Individual decisions are not independent, solitary events Instead They are closely connected to previous decisions And Are influenced by the social processes that brought the decision point to a head Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-4 …Are Individual Decisions Independent? Decision making at very high levels – A lonely, individual struggle? NO! Instead, It involves information sharing and interdependence among organization members Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-5 The Manager’s Role in Decision Making The manager’s job is to handle the decision process by assessing The information needed The players who need to be involved Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-6 Process of Rational Decision Making 1. Recognize and define problem 5. Evaluate alternatives 2. Identify decision objective and criteria 6. Select the best alternative 3. Allocate weights to criteria 7. Implement the decision 4. List and develop alternatives 8. Evaluate the decision Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-7 Bounded Rationality Defined The theory of bounded rationality maintains that people are restricted in making decisions and settle for less than ideal solutions They satisfice, selecting the first alternative that is satisfactory. Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-8 Common Decision Biases Anchoring and adjusting Representativeness Availability Overconfidence Bounded awareness Emotional involvement Self-serving reasoning Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-9 Garbage Can Model Factors: – Problems – Participants – Solutions – Choice opportunities Above factors float randomly inside the organization and if they connect, a decision results Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-10 Choice Shift Occurs when groups make more extreme decisions than individuals Risky shift People support riskier decisions in a group setting than they would individually Cautious shift The group decision is more conservative than individual positions Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-11 Groupthink - Defined Groupthink is the tendency for members of a highly cohesive group to seek consensus so strongly that they fail to do a realistic appraisal of other possibly better alternatives Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-12 Traditional Groupthink Model Antecedent Conditions Groupthink Symptoms •Self-censorship •Cohesion •Pressure on dissenters •Directive leadership •High stress & low esteem & low hope of finding solution •Limited search and appraisal Consensus seeking •Insulation •Pressure toward uniformity •Illusion of unanimity Defective Decision Making Symptoms •Poor information search •Illusion of invulnerability •Selective information processing •Belief in inherent morality •Failure to appraise risks •Collective rationalization •Outgroup stereotyping Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner Defective Decisions •Incomplete survey of alternatives and solutions 17-13 How to Avoid Groupthink Encourage all members to express their doubts Assign a devil’s advocate Adopt the perspectives of other constituencies Bring in qualified outsiders to discuss decisions “Sleep” on a tentative decision and have a second chance meeting Leaders should listen to others’ opinions first Leaders should demonstrate willingness to be criticized Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-14 Escalation of Commitment Occurs when people continue to commit resources to a failing course of action Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-15 Leader-Participation Model Contingency theory of leadership Continuum of leadership styles ranges from autocratic to participative styles Decide Consult individuals and groups Facilitate Delegate Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-16 …Leader-Participation Model Choice of leadership style can affect outcomes of the decision-making process Decision Quality Decision Implementation Cost of Decision Making Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner Development 17-17 Seven Questions for Managers to Ask about a Decision Team Competence Group Expertise Decision Significance ? Importance of Commitment Leader’s Expertise Group Support for Objectives Likelihood of Commitment Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-18 Types of Problems Structured Problems Repetitive, routine problems for which definite procedures have been developed Unstructured Problems Novel, infrequent and / or complex problems for which no procedures have been developed Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-19 Intuition - Defined Intuition is a cognitive conclusion based on a decision maker’s previous experiences and emotional inputs Thus, intuition and rational analysis are complementary aspects of good decision making Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-20 The Zone of Indifference Zone of indifference – The range within which each person in which he or she willingly accepts orders without consciously questioning authority Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-21 Recognition Primed Decision (RPD) Model Components of the Model Cue recognition and pattern matching Action script activation Mental simulation driven by mental models Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-22 Klein’s RPD Model Situation Cues Mental Simulations which you assess by Action Scripts Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner Mental Models that activate that let you recognize Patterns 17-23 PreMortem Exercises Designed to expose vulnerabilities in planning Stage 1. Preparation Activity Review the plan 2. Imagine a fiasco Imagine causes of failures 3. Generate reasons Individuals write down for failure reasons for failures 4. Consolidate the lists Individuals take turns listing reasons 5. Revisit the plan Address issues of major concern; schedule additional meeting 6. Review the list Periodically revisit the list of reasons for failure Organizational Behavior : An Experiential Approach 8/E Joyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner 17-24