Transcript Chapter 7: Information and Decision Making

Course Check-in
Questions?
 Project reports
 Mid-term exam?
 Life?
 Other?

Case Insights:
1.
2.
3.
4.
5.
Summary (MBA Language).
Be sure it states the problem and not the solution –
do this or that (write it as a question).
Theories – you must discuss them rather than just
list (show me you know what it is about).
Solutions (3) – you must connect them to the
theories used.
Best solution – show why your proposed solution is
the BEST e.g. + advantages of it / - weaknesses of
the others – relate it to the theories. A diagram
helps!
Chapter 13
What is the role of information in
management?
 How do managers use information?
 What are the steps in the decision
making process?
 Current issues in managerial decision
making?

Study Question 1: How is information
technology changing the workplace?
 Implications of IT within organizations:
 Facilitation of communication and information
sharing.
 Flattening of organizational structures (operating
with fewer middle managers).
 Faster decision making.
 Increased coordination and control.
 Has it worked?
 The Future?
4
The future of information:
 Basic information system concepts
Artificial intelligence (AI)
 Computer systems with the capacity to reason
the way people do.
 Expert systems (ES).
 Software systems that use AI to mimic the
thinking of human experts.
 Social Networks
 Informal / formal networks
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Where are we getting our info
from?
Useful information is timely, high quality,
complete, relevant, understandable
 Information flows: internal, external
 Small group discussions: What can
managers do to create useful information
flows in an organization?

What is the communication process?
 Effective and efficient communication:
 Effective communication
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Occurs when the intended meaning of the sender is
identical to the interpreted meaning of the receiver.
Efficient communication
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Occurs at a minimum resource cost.
Potential trade-offs between effectiveness and
efficiency must be recognized.
How can communication be improved?
 Active listening.
 The process of taking action to help someone
say exactly what he or she really means.
 Rules for active listening:
 Listen for message content.
 Listen for feelings.
 Respond to feelings.
 Note all cues, verbal and nonverbal.
 Paraphrase and restate.
Effective Listening
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Effective Listening Techniques
1) Restating (repeat things exactly as said)
 2) Bridging (nods, yes)
 3) Paraphrasing (reflecting and rewording)
 4) Inviting clarification (probing/elaboration)
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In groups of 3 - speaker, listener,
observer
Active Listening
Speaker with active listener have a
dialogue
 Observer then comments
 Rotate roles
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Active
Listener
Speaker
Observer
Two-way
How can communication be improved?
 Feedback.
 The process of telling others how you feel about
something they did or said, or about the situation in
general.
 Constructive feedback guidelines: Praise
Evaluation
 Give it directly.
 Make it specific.
Praise
 Give it when the receiver is willing/able to accept it.
 Make sure it is valid.
 Give it in small doses.
Foundations of Decision Making
What Decisions have you made so far
today?
 What important decisions have you
made in your life?
 What do you know about the process of
decision making?
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Study Question 3: How do managers use
information to make decisions?

Programmed decisions (rational decision
making approach).

Apply solutions that are readily available from
past experiences to solve structured
problems.

Structured problems are ones that are
familiar, straightforward, and clear with
respect to information needs.

Best applied to routine problems that can be
anticipated.
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Study Question 4: What are the steps in the
decision-making process?
Five-step decision-making process:
1.
Find and define the problem
2.
Generate and evaluate alternative solutions
(criteria & weights)
3.
Make a decision and conduct the “ethics double
check”
4.
Implement the decision
5.
Evaluate results
Repeat Process at required
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The Rational Decision-Making Process
1) Identification
of a
Problem
2) Identification
of Decision
Criteria
2) Allocation
of Weights
to Criteria
I need a new
computer.
•Price
•Brand Name and Model
•Warranties and Support
•Reliability
•Repair Record
•Reliability
•Brand Name and Model
•Warranties and Support
•Repair Record
•Price
100
85
70
25
10
15
2) Development
of
Alternatives
2) Analysis
of
Alternatives
Acer
Apple
AST
HP
Toshiba
Lenovo
Sony
Dell
Acer
Apple
AST
HP
3) Selection
of an
Alternative
4) Implementation
of the
Alternative
•Reliability
Toshiba
•Brand Name and Model Lenovo
•Warranties and Support
Sony
•Repair Record
Dell
•Price
The XXX
is the best.
5) Evaluation of
Decision Effectiveness
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Small Group Exercise
Apply the rational
decision-making
model to deciding
where your group
might eat dinner this
evening.
How closely were you
able to follow the
rational model in
making this
decision?
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Traps of the Rational DecisionMaking Model

Availability Bias: simplify process (near information)
 Representation Bias: thinking things are similar to
other decisions
 Anchoring / Adjustment Bias: starting point makes a
difference
 Framing error: focus on positive or negative
perspective
 Confirmation error: looking only for the “right”
information
 Escalating commitment: “throwing good money after
bad”
Escalating commitment
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Ways to avoid the escalation trap:
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Set advance limits and stick to them.
Make your own decisions.
Carefully determine why you are continuing a
course of action.
Remind yourself of the costs.
Watch for escalation tendencies.
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How do managers use information to make
decisions?

Nonprogrammed decisions (intuitive).
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Develop novel solutions to meet the
demands of unique situation that present
unstructured problems.

Unstructured problems are ones that are full
of ambiguities and information deficiencies.

Commonly faced by higher-level
management.
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Intuitive Decision Making
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A subconscious process created out of
distilled experience
 When used:
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When a high level of uncertainty exists
When there is little precedent to draw on
When variables are less scientifically predictable
When “facts” are limited
When facts don’t clearly point the way to go
When analytical data are of little use
When there are several plausible alternative solutions to
choose from, with good arguments for each
When time is limited and there is pressure to come up with the
right decision.
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How do managers use information to make
decisions?

Crisis decision making.
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A crisis involves an unexpected problem that can
lead to disaster if not resolved quickly and
appropriately.
Rules for crisis management:
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Figure out what is going on.
Remember that speed matters.
Remember that slow counts, too.
Respect the danger of the unfamiliar.
An analysis shows that two-thirds of south tower
Value the skeptic.
occupants evacuated the upper floors during
the 16 1/2 minutes between the attacks.
Be ready to “fight fire with fire.”
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What are the current issues in managerial
decision making?
 Potential
advantages of group decision
making:
Greater amounts of information, knowledge,
and expertise are available.
 More action alternatives are considered.
 Increased understanding and acceptance of
outcomes.
 Increased commitment to implement final
plans.
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What are the current issues in managerial
decision making?
 Potential
disadvantages of group
decision making:
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Pressure to conform.
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Minority domination may occur.
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Decision making takes longer.
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What are the current issues in managerial
decision making?

Ethical decision making.
 Any decision should meet “ethics double
check.” mentioned in step 3 of the decisionmaking process.
How would I feel if my family found out about
this decision?
 How would I feel if this decision were published
in the local newspaper?
 Any discomfort in answering these questions
indicates the decision has ethical shortcomings.
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Motivation – Theory and
Practice
It is all about you
Influencing Individual Behavior
and Motivation

One of the paradoxes
that leaders face is what
motivates one person
might not motivate
another.
 This occurs because of
the “Law of Individual
Differences”
What is Motivation?
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Motivation
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The processes that account for an
individual’s level (intensity), direction, and
persistence of effort toward attaining a goal
Level/Intensity: how hard a person tries
 Direction: where effort is channeled
 Persistence: how long effort is maintained
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Class Discussion

Drawing from your summary
What you found interesting or an insight
generated from the chapter (few sentences)
 A thought provoking question you could pose to
your colleagues (at least one)
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Motivation Theories
Needs/Static Based
Environment
Process Based
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There is nothing more useful than
good theory!
Behavior
Modification
Affiliation,
Power,
Achievement
Path-Goal
Maslow / ERG
Locke’s Goal
Theory
Learning /
Reinforcement Based
Job
Characteristic
Model
Herzberg
Vroom’s
Expectancy
Theory
Adam’s Equity Theory
Translating Theory into Practice
Pay for
Performance
 Merit Pay
 Spot Awards
 Skill Based Pay
 Recognition
 Job Redesign
 Empowerment
 Goal setting
 Positive
Reinforcement
 Lifelong
Learning
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Bringing Theory to Practice
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What can you do to “motivate” your
employees?
Small group
New Company – set up your motivation
approach
Manufacturing company
Professionals / High Skilled / Low Skilled
Non-union
Motivating Self and Others
Questions for Consideration

What do theories (e.g. content & process) tell
us about motivating ourselves and others?
 How do we motivate for specific
organizational circumstances and/or
individual differences?
 Are rewards always necessary?
Motivators
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Intrinsic
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A person’s internal desire to do something,
due to such things as interest, challenge,
and personal satisfaction.
Extrinsic
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Motivation that comes from outside the
person, such as pay, bonuses, and other
tangible rewards.
Theory X and Theory Y
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Theory X
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The assumption that employees dislike
work, are lazy, dislike responsibility, and
must be coerced to perform.
Theory Y
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The assumption that employees like work,
are creative, seek responsibility, and can
exercise self-direction.
Static-Content Theories
Needs Theories of Motivation
Maslow’s hierarchy of needs
 Herzberg’s two factor theory (motivationhygiene theory)
 Alderfer’s ERG theory
 McClelland’s theory of needs
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Basic idea:
 Individuals have needs that, when unsatisfied,
will result in motivation
Maslow’s
Hierarchy of Needs
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Physiological
 includes hunger, thirst, shelter, sex and other bodily needs
Safety
 security and protection from physical and emotional harm
Social
 affection, belongingness, acceptance, and friendship
Esteem
 internal factors: self-respect, autonomy, achievement;
 external factors: status, recognition, attention
Self-actualization
 the drive to become what one is capable of becoming; includes
growth, achieving one’s potential, self-fulfillment
Herzberg’s
Motivation-Hygiene Theory
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Hygiene factors - necessary for healthy adjustment
 extrinsic factors; context of work
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company policy and administration
relationship with employee's supervisor
interpersonal relations with one's peers
working conditions
Motivators - the sources of satisfaction
 intrinsic factors; content of work
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achievement
recognition
challenging, varied or interesting work
responsibility
advancement
Alderfer’s
ERG Theory
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Existence
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concerned with providing basic material
existence requirements
Relatedness
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•Not hierarchical
•If frustrated at a “higher”
level; refocus on a lower one
desire for maintaining important
interpersonal relationships
Growth
intrinsic desire for personal development
 Opportunities for advancement
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McClelland’s
Theory of Needs
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Need for Achievement
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Need for Power
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Do something better … to master complex tasks
Desire to control, influence or be responsible for
other people.
Need for Affiliation
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Desire to establish and maintain good relations.
Process Theories of
Motivation
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Looks at the actual on-going
process of motivation (dynamic)
Expectancy theory
 Goal-setting theory
 Equity
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Expectancy Theory
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The theory focuses on three relationships:
Effort-performance relationship or the belief that
effort leads to performance. (expectancy)
Performance-reward relationship or the belief that
performance is related to rewards. (instrumentality)
Rewards-personal goals relationship or the value or
importance an individual places on a reward. (valence)
Expectancy X Instrumentality X Valence = Motivation
Steps to Increasing Motivation, Using
Expectancy Theory
Goal-Setting Theory
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Specific and difficult goals lead to higher
performance.
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Goals tell what needs to be done and how much effort
will need to be expended.
Specific goals increase performance; difficult goals,
when accepted, result in higher performance than do
easy goals; and feedback leads to higher performance
than does non-feedback.
Specific hard goals produce a higher level of output than
does the generalized goal of “do your best.”
SMART Goals
Specific (self set)
 Measurable
 Attainable
 Referred to regularly
(reward)
 Time dependent
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Management by Objectives
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A program that encompasses
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specific goals
participatively set
for an explicit time period
with feedback on goal progress
MBO operationalizes the concept of objectives by
devising a process by which objectives cascade
down through the organization.
 The result is a hierarchy of objectives that links
objectives at one level to those at the next level.
 For the individual employee, MBO provides specific
personal performance objectives.
Cascading of Objectives
Overall
Organizational
Objectives
Divisional
Objectives
Departmental
Objectives
Individual
Objectives
XYZ Company
Consumer Products
Division
Industrial Products
Division
Sales
Production
Customer
Service
Marketing
Develop
Research
Responses to the Reward System
Equity Theory
 Fair Process
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Adams
Equity Theory
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Outputs
Inputs
Individuals compare their job inputs and outcomes
with those of others and then respond so as to
eliminate any inequities.
Equity theory recognizes that individuals are
concerned not only with the absolute amount of
rewards for their efforts, but also with the
relationship of this amount to what others receive.
Historically, equity theory focused on distributive
justice or the perceived fairness of the amount and
allocation of rewards among individuals.
Equity Theory
O/IA < O/IB
Perception due to being under
rewarded
O/IA = O/IB
Equity
O/IA > O/IB
Inequity due to being over
rewarded
Responses to Inequity
Change Inputs
 Change Outcomes
 Adjust Perceptions of Self
 Adjust Perceptions of Others
 Choose a Different Referent (comparison
person)
 Leave the Field
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Other Fair Process
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Procedural Justice
Perceived fairness of the process used to
determine the distribution of rewards
 Fair Decisions = unbiased, voice,
consistent, communication, reversible
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Interactional Justice
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The quality of the interpersonal treatment
received from others
Environmental
Key Terms
Positive Reinforcement
Negative Reinforcement
Punishment
Extinction
Shaping
HRM Perspective - Pay
Pay for performance
 Incentives
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Profit sharing
 Gain sharing
 Stock ownership
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Bringing Theory to Practice
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What can you do to “motivate” your
employees?
Small group
New Company – set up your motivation
approach
Manufacturing company
Professionals / High Skilled / Low Skilled
Non-union
Things to consider …
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Pay – variable, fixed, piece-rate, bonuses,
commissions, gainsharing, profit-sharing,
stock options, ESOPs, team/individual based
Content of work
Context of work
Intrinsic rewards
Process
Individual considerations
Benefits - flexible compensation plans; flexible
benefits plans such as child care, job sharing, etc.
Motivating Professionals
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How are “professionals” different?
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Receive a great deal of “intrinsic” satisfaction from their work.
Strong and long-term commitment to their field of expertise
Well paid/ Chief reward is work itself.
Value support
More focused on work as central life interest.
How do we motivate professionals?
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Provide challenging projects
Give them autonomy in follow interests and structure work.
Reward with educational opportunities.
Recognize their contributions.
Motivating Contingent
Workers
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No simple solutions to motivating contingent
workers.
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Contingent or temporary workers have little or no job
security/stability, therefore they don’t identify with the organization
or display the commitment of permanent employees.
Contingent or temporary workers are typically provided with little or
no health care, pensions, or similar benefits.
Greatest motivating factor is the opportunity to
gain permanent employment.
 Motivation is also increased if the employee sees
that the job he or she is doing for the firm can
develop salable skills.
Motivating Low-Skilled
Service Workers
Many 15- to 24-year-olds have “McJobs” with
pay levels near minimum wage
 To motivate
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employees want more respect
make jobs more appealing
raise pay levels
find unusual ways to motivate:
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flexible work schedules
broader responsibility for inventory, scheduling, and hiring
creation of a “family” atmosphere among employees
Management Reward Follies
But we reward:
We hope for:
The best individual team members
Teamwork and collaboration
Proven methods and no mistakes
Innovative thinking and risk taking
Technical achievements and
accomplishments
Development of people skills
Employee involvement and
empowerment
High achievement
Long-term growth
Tight control over operations,
resources
Another year’s efforts
Quarterly earnings
Commitment to total quality
Shipment on schedule, even with
defects
Candor
Reporting good news
Next Day and Next, Next Day
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Exam at the start of class
Cpt. 6: Planning Processes;
 Cpt. 7: Strategy
 Cpt. 11: Leadership and Communication
 Cpt. 10: Human Resource Management
 Cpt. 12: Individual Behaviour
 Cpt. 13: Information and Decision Making;
 Cpt. 14: Motivation
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Plus read: Cpt. 9: Innovation and Change
 Nov 19th – Class presentations / Projects due
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