The document discusses various decision-making processes within organizations, distinguishing between programmed and nonprogrammed decisions. It explores different decision-making models, such as the rational, bounded rationality, and garbage can models, as well as effective strategies for making decisions, including brainstorming techniques and the importance of evaluating objectives. Additionally, it highlights the roles of individual cognitive styles and group dynamics in the decision-making process.

1. ?
Chapter 10
Decision Making by
Individuals & Groups

2. The Decision-Making Process
Programmed Decision - a simple,
routine matter for which a manager
has an established decision rule
Nonprogrammed Decision - a new,
complex decision that requires a
creative solution

3. The
Decision-
Making
Process
Recognize the problem and
the need for a decision
Identify the objective of
the decision
Gather and evaluate data
and diagnose the situation
List and evaluate
alternatives

4. The
Decision-
Making
Process
Select the best
course of action
Implement
the decision
Gather
feedback
Follow up

5. Models of Decision-Making
Effective decision
a timely decision
that meets a desired objective and is
acceptable to those individuals affected
by it
Garbage Can Model
Bounded Rationality
Model
Rational Model

6. 1. The outcome will be completely rational
2. The decision maker uses a consistent system
of preferences to
choose the best alternative
3. The decision maker is aware of all alternatives
4. The decision maker can calculate the
probability of success for each
Rational Model
Rationality - a logical,
step-by-step approach
to decision making, with a
thorough analysis of
alternatives and their
consequences

7. 1. Managers suggest the first satisfactory alternative
2. Managers recognize that their conception of the
world is simple
3. Managers are comforable making decisions
without determining all the alternatives
4. Managers make decisions by rules of thumb or
heuristics
Bounded Rationality
Model
Bounded Rationality - a
theory that suggests that
there are limits upon how
rational a decision maker
can actually be

8. Garbage Can Model -
a theory that contends
that decisions in
organizations are
random and unsystematic
Garbage Can Model
Problems
Solutions
Choice
opportunities
Participants
From M.D. Cohen, J.G. March, and J.P. Olsen in Administrative Science Quarterly 17 (March 1972) 1.25.
Reprinted by permission of the Administrative Science Quarterly

9. The Quality, Timeliness, Acceptance, and Ethical
Appropriateness of a Decision Influence its
Effectiveness
Quality
Ethical
Appropriateness
Acceptance
Timeliness
+ +
+

10. A Manager’s Decision-Making Styles Will
Influence the Way She Attacks Problems
Left-brain thinkers tend to value
technical/task issues
Right-brain thinkers tend
to value
people/social issues
ANALYTIC
A problem solver who analyzes
alternatives and innovates
CONCEPTUAL
A socially oriented person
who sees the big picture
DIRECTIVE
A rapid decision maker who
expects results and relies on rules
BEHAVIORAL
A person who needs
affiliation and wants to help
others
High Cognitive
Complexity
Low Cognitive
Complexity

11. Managers Take Six Steps in Making an Effective Decision
Using the Rational Decision-Making Process
ANALYZE THE SITUATION
• What are the key elements in the situation?
• What constraints affect the decision?
• What resources are available?
SET OBJECTIVES
• Is the problem stated clearly?
• Do people understand what they will work on?
• By what criteria will decision making be judged?
SEARCH FOR ALTERNATIVES
• Do people involved in the problem make the decision?
• Have they sought complete information?
• Do those with information make the decision?
• Do they use diversity to generate ideas?
• Are all ideas encouraged?

12. Six Steps (Cont.)
EVALUATE THE ALTERNATIVES
• Do participants know that they are evaluating?
• Are criteria for assessment clear and understood?
• Are differences of opinion included in evaluation?
• Are some alternatives pilot tested?
MAKE THE DECISION
• Do employees know that they are making the decision?
• Are they aware if they are satisficing or optimizing?
• Do action plans fit with the decision?
• Are they committed to the decision?
EVALUATE THE DECISION
• Are responsibilities for data collection, analysis, and reporting clear?
• Is there a comprehensive evaluation plan?
• Is there an evaluation schedule?

13. Managers Can Ask These Questions When
Evaluating Objectives
Relevance
Practicality
Challenge
Measurability
Schedulability
Balance
Do the objectives relate to and support the basic purpose of
the organization?
Do the objectives recognize obvious constraints?
Do the objectives provide a challenge for managers at all
levels in the organization?
Can managers quantify the objectives?
Can managers monitor the objectives at interim points to
ensure progress?
Do the objectives provide a proper balance on all activities,
given organizational goals?
Criteria Questions to Ask

14. (cont.)
Flexibility
Timeliness
Technology
Growth
Cost
effectiveness
Accountability
Are the objectives sufficiently flexible or is the organization
likely to find itself locked into a particular course of action?
Given the organization’s environment , is this the proper time
to adopt these objectives?
Do the objectives fall within the boundaries of current
technological development?
Do the objectives help the organization grow, not just
survive?
Do the objectives’ expected costs clearly outweigh their
benefit?
Can managers assess the performance of those responsible
for attaining the objectives?
Criteria Questions to Ask

15. Problems Randomly Attach to Solutions in
the “Garbage Can”
Problem A
Problem C
Solution Y
Solution X
Problem B
Solution Z
Problem A
Solution X
+
Solutions Problems

16. Gathering Ideas
•Brainstorming
•The Nominal Group Technique
•The Affinity Diagram
•The Delphi Method
•Electronic Meetings

17. Brainstorming
• Topic
• Take turns sharing ideas
• Record each idea
• No comments/criticisms
• Keep the tempo moving
• One idea per turn
• Members may pass
• Keep going until ideas are exhausted

18. Mangers Should Follow This Advice for
Successful Brainstorming
• List all ideas.
• Do not Evaluate any ideas during the initial stages.
• Encourage creativity.
• Offer ideas related to those already listed.
• Ask each participant to offer a specific number
(e.g. five to ten) of new ideas.
• Set a time for brainstorming.

19. Managers Use an Affinity Diagram to Organize
Brainstorming in a Group of Employees
THEME
Why has the number of
defects increased 10 times
in the past year?
The employees
lack the right
training
Quality control
procedures are
inadequate
The product
design is
faulty
Materials received
from suppliers have
been defective
Equipment has not
been repaired in a
timely fashion
Top management needs
to reexamine workers’
training needs and find
ways to give them the
right training for their jobs.

20. The Nominal Group Technique
(Delbecq, Van de Ven and Gustafson, 1975)
• Silent idea generations,
• Round-robin sharing of ideas,
• Feedback to the group,
• Explanatory group discussion,
• Individual re-assessment, and
• Mathematical aggregation of revised judgements.
A generic name for face-to-face group techniques in which
instructions are given to group members not to interact with each
other except at specific steps in the process.

21. Affinity Diagram
Definition: A group decision-making technique designed to sort a large
number of ideas, process variables, concepts, and opinions into naturally
related groups. These groups are connected by a simple concept.
Purpose: To sort a list of ideas into groups.
Guidelines:
Insure ideas are described with phrases or sentences.
Minimize the discussion while sorting --
discuss while developing the header cards.
Aim for 5-10 groups.
If one group is much larger than others, consider splitting it.

22. How to Conduct an Affinity Sort:
• Clarify the list of ideas. Record them on small cards.
• Randomly lay out cards on table, flipchart, wall, etc.
• Sort the cards into "similar" groups in silence -- based on your
gut reaction. If you don't like the placement of a particular card
-- move it. Continue until consensus is reached.
• Create header cards consisting of a concise 3-5 word phrase
description, the unifying concept for the group. Place header
card at top of group.
• Discuss the groupings and try to understand how the groups
relate to each other.

24. • Inquire if ideas are clarified.
• Use 3-5 words in the phrase on the header card to describe
the group.
• If possible, have groupings reviewed by non-team
personnel.
• To sort, physically get up and gather around the area the
cards are placed.
• Team members will ultimately reach agreement on
placement -- if for no other reason that exhaustion.
• Sorting begins when all team members are ready.
• If an idea fits in more that one category or group, after
discussion, make a second card and place in both groups.
Tips

25. Delphi Technique
• Problem stated
• Questionnaires
• Anonymous & Independent
• Compile results
• Distribute copies of results
• New round begins
• Does not require physical
presence
• Time consuming

26. Electronic Meetings
• Horseshoe-shaped table
• Up to 50 participants
• Issues are presented
• Responses typed
• Projection screen display
• Anonymity, honesty, & speed
• 55% faster than traditional
• Lacks credit
• Fastest typist gets there first
• No face-to-face interchange

27. Risk and the Manager
Risk aversion - the tendency to
choose options that entail fewer
risks and less uncertainty
Risk takers
–accept greater potential for loss
–tolerate greater uncertainty
–more likely to make risky decisions
Evidence: Successful Managers Take Risks

28. Escalation of
Commitment
• Why it occurs
– humans dislike inconsistency
– optimism
– control
• How to deal with it
– split responsibility for decisions
– provide individuals with a graceful exit
– have groups make the initial decision
The tendency to continue to
commit resources to a losing
course of action

29. Cognitive Style
Cognitive Style - an individual’s
preference for gathering
information and evaluating
alternatives
Jungian theory offers a way of understanding and
appreciating differences among individuals.

30. Jung’s Cognitive Style
Style
Sensing/thinking
Sensing/feeling
Intuiting/thinking
Intuiting/feeling
Ideal Organization
Facts/ Impersonal Control
Facts & Org. relationships
Broad issues/ Impersonal & ideal
Serve humankind/General values
ST
SF
NT
NF

31. Z Problem-Solving Model
Look at
the facts
and details
Can it be
analyzed
objectively?
What alternatives
do the facts
suggest?
What impact
will it have on
those involved?
Sensing Intuition
Thinking Feeling
Figure from Type Talk at Work by Otto Kroeger and Janet M. Thuesen. Copyright © 1992 by Otto Kroeger
and Janet M. Thuesen. Used by permission of Dell Publishing, a division of Random House. Inc.

32. Influences on Decision-Making
Intuition - fast,
positive force in
decision making
utilized at a level
below
consciousness,
involves learned
patterns of
information
Creativity - a process influenced by individual
and organizational factors that results in the
production of novel and useful ideas,
products, or both

33. Four Stages of Creative Process
• Preparation - experience/ opportunity
to build knowledge base
• Incubation - reflective, often
unconscious thought
• Illumination - insight into problem
• Verification - thinking, sharing,
testing the decision

34. Influences on Creativity
• Individual examples
– Cognitive Processes
• Divergent Thinking
• Associational Abilities
– Personality Factors
• breadth of interests
• high energy
• self confidence
• Organizational ex.
– Flexible organization
structure
– Participative
decision-making
– Quality, supportive
relationships with
supervisors

35. Organizations Can Facilitate
Creative Decision-Making
• Reward creativity
• Allow employees to fail
• Make work more fun
• Provide creativity training
• Vary work groups (internal/external)
• Encourage creative stimuli (music,
art, etc.)

36. Participative
Decision Making
• Organizational Foundations
– Participative, supportive organizational culture
– Team-oriented work design
• Individual Prerequisites
– Capability to become psychologically involved in
participative activities
– Motivation to act autonomously
– Capacity to see the relevance of participation
for one’s own well-being
Individuals who are affected
by decisions influence the
making of those decisions

37. Two Brains, Two Cognitive Styles
Left Hemisphere Right Hemisphere
Verbal
Sequential, temporal,
digital
Logical, analytic
Rational
Western thought
Nonverbal, visuospatial
Simultaneous, spatial,
analogical
Gestalt, synthetic
Intuitive
Eastern thought
Ideal = “brain-lateralized” making use of
either or both sides, depending on situation
From Left Brain, Right Brain by Springer and Deutsch © 1989, 1985, 1981 by Sally Springer and Georg Deutsch.
Used with permission by W.H. Freeman and Company

38. Group Decision-Making
• Role of synergy - a positive force in groups
that occurs when group members stimulate
new solutions to problems through the
process of mutual influence and
encouragement in the group
• Role of social decision schemes - simple
rules used to determine
final group decisions
(prediction 80% correct)
Majority Wins
Truth Wins
Two-thirds Majority Wins
First-shift rule

39. Group Decision-Making
1) more knowledge
through pooling of
group resources
2) increased
acceptance &
commitment due
to voice in decisions
3) greater under-
standing due to
involvement in
decision stages
1) pressure in
groups to conform
2) domination by
one forceful member
or dominant clique
3) amount of time
required, because
group is slower
than individual
to make a
decision
Advantages
Disadvantages

40. Group Phenomenon
Groupthink - a deterioration of mental
efficiency, reality testing, and moral
judgment resulting from in-group
pressures
Group polarization - the tendency for
group discussion to produce shifts
toward more extreme attitudes
among members

41. Group
Decision
Techniques
Self-Managed Teams
Dialectical Inquiry
Brainstorming
Devil’s Advocacy
Delphi Technique
Nominal Group Technique
Quality Circles & Quality Teams

42. Technological Aids to Decision-
Making
Expert Systems - a programmed decision tool
set up using decision rules
Decision Support Systems - computer and
communication systems that process
incoming data and synthesize pertinent
information for managers to use
Group Decision Support Systems - systems that
use computer software and communication
facilities to support group decision-making
processes

43. Ethics Check
• Is it legal?
– Does it violate law
– Does it violate
company policy
• Is it balanced?
– Is it fair to all
– Does it promote win-win
• How will it make me feel about myself