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Decision MakingDr. Craig R. SealOrganization Theory and Beha.docx
- 1. Decision Making Dr. Craig R. Seal Organization Theory and Behavior California State University, San Bernardino 1 Dolan, S. & Lingham, T. (2012). Introduction to International Organizational Behavior. Global Higher Education Alliance. Robbins, S. P. & Judge, T. A. (2012). Essentials of Organizational Behavior (11th ed.). Prentice Hall. Janis, I. L. (November, 1971). Groupthink. Psychology Today, 5(6), 43–46. Harvey, J. B. (1974). The Abilene paradox: the management of agreement. Organizational Dynamics, 3, 63–80. 1 Contents Decision-Making Decision-Making Models Decision-Making Biases Group Decision-Making 2 Learning Objectives Understand the difference between programmed and non- programmed decisions Understand the difference between lateral and vertical thinking Compare and contrast rational decision making and bounded rationality Identify biases in decision-making
- 2. Discuss the symptoms of Groupthink and Abiliene Discuss group decision-making 3 Decision Making Decision Making Processes 4 Decision Making Decision making is the process of choosing from among alternatives 5 5 Types of Decisions Programmed (ACADEMIC) Well defined Repetitive and routine Formulated by others Necessary information provided One correct answer Defined procedure Limited methods to obtain answer Disembodied from everyday experience Non-Programmed (PRACTICAL) Ill defined Novel and complex Unformulated
- 3. Additional information required Multiple ‘correct’ answers No established procedure Multiple methods to obtain answer Embedded in everyday experience 6 6 Approaches to Decisions Lateral Thinking (Creative) Tries to find new ways for looking at things Avoids looking for what is right Analyzes ideas to determine how they might be used Attempts to introduce discontinuity Welcomes chance intrusions of information Progresses by avoiding the obvious Vertical Thinking (Traditional) Tries to find absolutes for judging relationships Seeks a yes or no justification Analyzes ideas to determine why they do not work Seeks continuity by logically proceeding from step to step Selectively chooses what to consider for generating ideas Progresses by using established patterns 7 7 Decision Making Models Decision Making Processes
- 4. 8 Rational Decision Making (Classical Decision Theory) Decision making is a rational process whereby decision makers seek to maximize the chances of achieving their desired outcome by considering all possible alternatives and consequences Consistently rational and objective Has complete information Can identify all the relevant options Can anticipate all likely consequences Chooses the option with the highest utility 9 Decision-Making Process Define the problem Gather information Develop alternatives Evaluate alternatives Select an alternative Implement the alternative Monitor the implemented alterative 10 10 Bounded Rationality (Theory of Administrative Man) The limited information-processing capability of human beings makes it impossible to assimilate and understand all the information necessary to optimize
- 5. People’s ability to fully comprehend the nature of complex problems is limited (or bounded) It is impossible to generate all possible alternative solutions to a problem Complete analysis of each alternative cannot be accomplished (due to time and prediction constraints) Satisficing is the practice of selecting an acceptable solutions, rather than the best solution (easy to identify, achieve, and implement) 11 Decision Making Biases Decision Making Processes 12 Biases in Decision Making Overconfidence – overly optimistic when asked to judge the probability that our answers are correct Anchoring – giving too much value to the first piece of information Confirming – selectively seeking out information that supports your point of view Availability – base judgments on information that is readily available Risk aversion – prefer a sure thing over a risky outcome Hindsight – believe falsely, after the fact, that we would have predicted the outcome 13 Groupthink (Janis, 1971) Conflict-management crisis: A mode of thinking, in which group members premature striving
- 6. for agreement overrides their ability to realistically appraise alternative courses of action Group pressure towards conformity 14 Groupthink – Causes Norms: Group cohesiveness Live up to rules of group Strive toward agreement Value membership Stress: Highly insulated groups Stressful decision-making 15 Groupthink – Symptoms Illusion of invulnerability Inherent morality of group Rationalization Stereotyping of outsiders Self-censorship Direct pressure Mind-guarding Illusion of unanimity 16
- 7. 16 Groupthink – Remedies Ask each group member to assume the role of the critical evaluator Have the leader avoid stating his or her position on the issue Create several groups that work on the decision simultaneously. Require each member to discuss deliberations with associates Bring in outside experts to evaluate the group process. Appoint a devil’s advocate to question the group’s course of action Evaluate the competition motivations and intentions Divide into two or more sub-groups Once consensus is reached, encourage the group to rethink its position 17 Abilene Paradox (Harvey, 1974) Agreement-management crisis: Organizations frequently take actions in contradiction to what they really want to do and therefore defeat the very purposes they are trying to achieve Existential fear of the unknown 18 Abilene – Symptoms Nature of the situation Steps required to cope Fail to accurately communicate
- 8. Make collective decisions Form subgroups Repeat cycle 19 19 Abilene – Landmarks Action Anxiety Negative Fantasies Real Risk Fear of Separation Psychological Reversal of Risk and Certainty 20 20 Abilene – Coping Confront the Issues in a Team Setting Conduct a Private Vote Minimize Status Differences Frame the Task as a Decision to be Made Provide Formal Forum for Controversial View Take Responsibility for Failure 21 Group Decision-Making Decision Making Processes
- 9. 22 Brainstorming Technique to minimize self-censorship and encourage creative idea generation Do not evaluate or discuss alternatives Encourage freewheeling ideas Welcome quantities of ideas Encourage piggybacking on others ideas Evaluation of ideas occurs after all ideas have been recorded 23 Delphi Technique Technique to encourage honesty by allowing participants to suggest opinions anonymously Participants are presented with an issue and asked to provide potential solutions A coordinator summarizes the responses and sends a summary back to the participants Participants rate (and comment) on each solution Coordinator tabulates the results Process continues until consensus 24 Nominal Group Technique Silent generation of ideas – personal brainstorm Round-robin recording of ideas – one idea per member Discussion of ideas – for clarification only Preliminary vote on item importance – rank order the ideas Additional discussion – for clarification only Final vote – on rank order of ideas
- 10. 25 Summary Decision Making Processes 26 Summary Decision Making Types of Decisions Approaches to Decisions Rational Decision Making Bounded Rationality Biases in Decision Making Groupthink and Abilene Group Decision Making Techniques 27 Questions Describe the difference between programmed and non- programmed decisions. Provide an outline of the decision-making process What is bounded rationality and how does it impact the decision making process? Provide examples of the various biases in decision making. Compare and contrast Groupthink and Abilene Consider how to use the nominal group technique 28 Discussion
- 11. Consider the class climate. Use the nominal group technique to suggest changes to the course that would improve student leaning and engagement. References Dolan, S. & Lingham, T. (2012). Introduction to International Organizational Behavior. Global Higher Education Alliance. Harvey, J. B. (1974). The Abilene paradox: the management of agreement. Organizational Dynamics, 3, 63–80. Janis, I. L. (November, 1971). Groupthink. Psychology Today, 5(6), 43–46. 30 30