3. Chapter Ten Outline
Models of Decision Making
•The Rational Model
•Simon’s Normative Model
Dynamics of Decision Making
•Contingency Model of Decision Making
•Improving Decision Making
•General Decision-Making Styles
•Escalation of Commitment
•Creativity
4. Group Decision Making
•Advantages and Disadvantages of Group-Aided Decision
Making
•Participative Management
•When to Have Groups Participate in Decision Making:
The Vroom/Yetton/Jago Model
•Group Problem-Solving Techniques
Chapter Ten Outline (continued)
5. 9-2
•Consists of a structured four-step sequence
* identifying the problem
* generating alternative solutions
* selecting a solution
* implementing and evaluating the solution
The Rational Model of Decision
Making
6. •Based on the notion of bounded rationality, i.e.
decision makers face a variety of constraints
•Decision making is characterized by
* limited information processing
* use of judgmental heuristics (rules, shortcuts)
* satisficing
Simon’s Normative Model of
Decision Making
7. Availability Heuristic: A decision maker’s tendency to
base decisions on information that is readily available in
memory.
Representativeness Heuristic: The tendency to
assess the likelihood of an event occurring based on one’s
impressions about similar occurrences.
Judgmental Heuristics
8. Satisficing: Choosing a solution that meets a minimum
standard of acceptance
Judgmental Heuristics (cont)
9. Improving Decision Making
Through Effective Knowledge
Management
Systems and practices that increase the sharing of
knowledge and information
Types of knowledge
Tacit knowledge – intuition, experience, natural abilities
Explicit knowledge
Explicit knowledge requires access to large amounts of
information; tacit knowledge is obtained through
observation, mentoring, collaboration, etc.
10. General Decision Making Styles
Based on how one perceives and
comprehends stimuli and chooses to
respond
Value orientation – task and technical
concerns or people and social concerns
Tolerance for ambiguity – need of structure
or control
12. Hands on
Exercise
• Which of the four styles best represents your
decision-making style? Which is least reflective of
your style?
• How do your scores compare with the following
norms: directive (75), analytical (90), conceptual
(80), and behavioral (55)?
• What are the advantages and disadvantages of
your decision-making style?
What is Your Decision Making
Style?
13. Escalation of Commitment
Tendency to stick to a course of action even
when it is associated with and unlikely to reverse
a bad situation. Why?
Psychological and social
Bias facts to support a decision
“Recover losses” more attractive than achieve gains
Ego
Organizational inertia
Characteristics of project – long-term returns
Contextual determinants – outside organization
14. 9-9
1. Set minimum targets for performance, and have
decision makers compare their performance with these
targets.
2. Have different individuals make the initial and
subsequent decisions about a project.
3. Encourage decision makers to become less ego-
involved with a project.
4. Provide more frequent feedback about project
completion and costs.
5. Reduce the risk of penalties of failure.
6. Make decision makers aware of the costs of
persistence.
Skills and Best Practices: Recommendations
to Reduce Escalation of Commitment
15. 9-10
1. Preparation: Reflects the notion that creativity starts
from a base of knowledge.
2. Concentration: Where an individual concentrates on the
problem at hand.
3. Incubation: Done unconsciously. During this stage,
people engage in daily activities while their minds
simultaneously mull over information and make remote
associations.
4. Illumination: Remote associations from the incubation
stage are ultimately generated.
5. Verification: Entails going through the entire process to
verify, modify, or try out the new idea.
Stages Underlying the Creative
Process
16. Group decision-making
Data suggests that innovative groups
possessed high levels of both minority dissent
and participation in decision making
Note four requirements of effective decision
making in a group:
Focus on process
Understand requirements for an effective choice
Assess positive qualities of alternative solutions
Assess negative qualities of alternative solutions
Suggests openness, acceptance of dissent?
17. 9-11
Table 9-2
Advantages Disadvantages
1. Greater pool of knowledge 1. Social pressure
2. Different perspectives 2. Minority domination
3. Greater comprehension 3. Logrolling
4. Increased acceptance 4. Goal displacement
5. Training ground 5. “Groupthink”
Advantages and Disadvantages of
Group-Aided Decision Making
18. Group Problem Solving Techniques
Definition of consensus – . . . reached
when all members can say they either
agree . . . Or have had their “day in court”
and were unable to convince the others of
their viewpoint. In the final analysis,
everyone agrees to support the outcome
19. Group Problem Solving Techniques
Other approaches to a group decision
Unanimity
A minority or one decides
20. More Formal Group Problem
Solving Techniques
Brainstorming - disciplined process
Silent idea (optional)
Ideas/opinions solicited and written on a board,
disallowing criticisms, allowing piggy-backing on
ideas, clarification
Delphi technique is another, more formal form of
brainstorming. Involves several rounds of
questionnaire, feedback, etc. Useful in cases
where participants are not in the same place.
21. More Formal Group Problem
Solving Techniques
Nominal Group Technique – used to
narrow down options through voting
Computer-aided Decision Making
Uses computers to manage brainstorming or
delphi questioning
