Decision making


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Decision making

  1. 1. chapter 5 Perception and Individual Decision Making
  2. 2. What is perception? It is a process by which individuals organize and interpret sensory impressions to give meaning to their environment.. However this perception can be different from objective reality. Why is perception important in OB? Simply because people’s behavior is based on their perception. When an individual looks at something and tries to interpret what he sees, this interpretation is influenced by his personal characteristics: attitude, personality, interests, past experiences, and expectations. Perception and Individual decision Making
  3. 3. PERSONAL PERCEPTION <ul><li>Stereotyping -> when we judge someone on the basis of our perception of the group to which he belongs. Example: in organization, we often hear: men are not interested in child care; older workers can’t learn new skills. </li></ul><ul><li>Interviewing: interviewers make perceptual judgments that are often inaccurate. Research results showed that most interviewers’ decisions change very little after the first 4 or 5 minutes of the interview. </li></ul><ul><li>Appraising performance. Very much dependent on perceptual process. Many jobs are evaluated in subjective terms. The evaluator form a general impression of an </li></ul>
  4. 4. employees work. 4. Making a decision, The Rational Model • Define the problem • Identify criteria and determine what is relevant. This brings the decision maker’s interests, values and similar personal preferences. • Critically analyze and evaluate each one. • Select the best alternative Creativity in Decision Making The ability to produce creative and useful ideas. These are ideas that are different from what has been done before. Seeing problems that others cannot see. Think of the problems in divergent ways. Study of lifetime creativity of 461
  5. 5. <ul><li>men and women found that fewer than 1% were exceptionally creative; 10% were highly creative; 60% were somewhat creative. </li></ul><ul><li>How can we stimulate creativity if 60% of us are only somewhat creative? </li></ul><ul><li>Three Components of model of creativity: </li></ul><ul><li>Expertise. This is the foundation for all creative work. You won’t expect someone with a minimal knowledge of programming to be very creative. The potential for creativity is enhanced when individuals have abilities, knowledge, proficiencies in their field of expertise. </li></ul><ul><li>Creative – thinking skills. The ability to use analogies, to </li></ul>
  6. 6. See familiar situations in a different perspective. These traits have been associated with creativity: intelligence, independence, self-confidence, risk taking, tolerance of ambiguity, perseverance in the face of frustration. C. Intrinsic task motivation: the desire to work on something because it’s interesting, involving, exciting, satisfying, personally challenging. These motivational components help the individual create ideas. Work environment also stimulate creativity. This is an environment that encourages the flow of ideas and recognizes creative work.. These include: • Sufficient financial material • Sufficient information resources • Freedom to decide what work is to be done
  7. 7. and how to do it. • a supervisor who communicates effectively • a supervisor who shows confidence in others • Work group members who support and trust each other Decision Making Do decision makers really follow the rational model? In most cases, the experienced ones do not. They use their judgment instead of a defined prescriptive model. Recently intuition has been accepted in decision making. In some instances, intuition can improve decision making. Some consider intuition as a form of extraordinary perception or power. It is a personality trait with which a limited number
  8. 8. <ul><li>of people are born. For OB, intuitive decision making is an unconscious process created out of experience. This intuitive decision making process complement with some rationality. </li></ul><ul><li>North America, Great Britain, and Canada do not expect intuition to work.. </li></ul><ul><li>Four styles of decision making: </li></ul><ul><li>Directive style, seek for rationality </li></ul><ul><li>Analytic – Need more information and alternatives. </li></ul><ul><li>Conceptual style – good at finding creative solution </li></ul>
  9. 9. 4. Behavioral – Strong concern for people in the organization and their development. Managers in China -> Directive style. This can be explained in their maintaining social order. Managers in Japan -> Behavioral: This may be caused by strong sense of collectivism in workplace. Example during the second world war, the Japanese had difficulty reaching a consensus whether to surrender or not because it has to be a collective decision. Finally, they asked the king at that time King Hirohito and so the king announced to the whole country the surrender and people who were unfamiliar of his voice were surprised who he was.
  10. 10. How are decisions actually made in organizations? Are they always rational? Do they carefully assess problems? Identify all viable alternatives? For those with little experience, the rational model provides a fairly accurate description of the decision process. But such situations are exceptions. Most decisions in the real world don’t follow the rational model. People use their creativity and judgment rather than by a defined prescriptive model. When faced with complex problems, most people respond by reducing the problem to a level that can be well understood because of the limited capability of human beings. It is impossible to assimilate and understand all information ( bounded rationality).
  11. 11. INTUITION /JOE GARCIA • Committed to spend more than $40 million to build a new plant in Atlanta • He is the vice president for operations and he hired a consultant • The consultant ranked Atlanta third among the five alternatives • After reading the report of the consultant, Joe decided to go against their recommendation. When he was asked why? His answer “I looked at the report over very carefully, but in spite of its recommendation, I felt that the numbers didn’t tell me the whole story . Intuitively, I just sensed that Atlanta would prove to be the best bet over the long run”.
  12. 12. Now, intuition has earned some respectability. Experts no longer automatically assume that using intuition is irrational or ineffective. What is intuition? • Some consider it an extraordinary power or the sixth sense • Some believe it is a personality trait with which very few people are born with • It is based on experience ( ex. The firemen) • It doesn’t necessarily operate independently of rational analysis; rather the two complement.
  13. 13. The incident of tsunami in Asia: there was this man in Thailand who sensed that there is going to be disaster to hit Asia soon. He couldn’t explain his feeling but he sensed it. He had this extra sense to feel that something wrong was coming. In three days, there was this tsunami.
  14. 14. INDIVIDUAL DIFFERENCES IN DECISION MAKING STYLES : Put Chad and Sean into the same decision making situation and Chad almost always take longer to come to a solution.. He is slower in processing information although he comes up with good choices also like Sean.. Also Sean takes more risks than Chad. What this illustrates is we bring our individual style in the decisions that we make. We differ in our ways of thinking. Some people are logical; some are rational; some are intuitive; some have tolerance for ambiguity.
  15. 15. CULTURAL DIFFERENCES The rational model does not acknowledge cultural differences. Arabs for example do not necessarily make decisions the way Canadians do. Decision makers differ in depth of analysis Importance placed on logic and rationality Whether organizational decisions be made autocratically by an individual manager or by group Differences in time orientation Some cultures emphasize solving problems; some focus on accepting the situations as they are. The United States falls on the first; Thailand and Indonesia on the second; Japanese managers are group oriented. They value conformity and cooperation.