© 2008the mcgraw-hill companies, inc. all rights reserved. individual and group decision making...
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© 2008The McGraw-Hill Companies, Inc. All rights reserved.
ChapterChapter 12 12
Individual and Group Decision
Making
Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Ch. 12 Learning Objectives
1. Compare and contrast the rational model of decision making, Simon’s normative model, and the garbage can model.
2. Discuss eight decision making biases.3. Discuss knowledge management and
techniques used by companies to increase knowledge sharing.
4. Explain the model of decision-making styles.5. Explain the model of intuition and the ethical
decision tree.12-2
Ch. 12 Learning Objectives
6. Summarize the pros and cons of involving groups in the decision-making process.
7. Contrast brainstorming, the nominal group technique, the Delphi technique, and computer-aided decision making.
8. Describe the stages of the creative process.
9. Discuss the practical recommendations for increasing creativity. 12-3
Problem Solving
Problem – gap between an actual and desired situation
A rental car company notices a dip in revenue from 12 months ago. The branch is located in a very congested area and hybrid vehicles can travel in express lanes. Customers complain that they would like environmentally-friendly cars to choose from to rent.What is the problem?
12-4
Problem Solving
Problem Solving Methods•Historical Cues•Scenario Technique•Perceptions of others
12-5
Decision Making
Decision making – Identifying and choosing solutions that lead to a desired end result
•First, determine responses or actions necessary to alleviate a problem
•Second, choose the best alternative 12-6
Models of Decision Making
Rational Model logical four-step approach to decision making
1. Identifying the problem2. Generating alternative
solutions3. Selecting solution4. Implementing and
evaluating the solution
McGraw-Hill12-7
Rational Decision Making
Do decision makers actually make decisions this way?What goal does the rational model assume the decision maker has?What assumptions does the rational decision making model make?
12-8
Non-Rational Models
Based on premise that decision making is not rationalAssume that:•Decision making is uncertain•Not all information is available or known•Making optimal decisions is difficult
Simon’s Normative ModelGarbage Can Model
12-9
Simon’s Normative Model of Decision Making
Based on premise that decision making is not rationalDecision makers are guided by bounded rationality•constraints that restrict decision making
Decision making is characterized by•Limited information processing•Satisficing
•Choosing a standard that meets a minimum standard of acceptance
12-10
Garbage Can Model
Based on premise that decision making is sloppy and haphazardDecisions are made as a result of the interaction between:•Problems, solutions, participants, and
choice opportunities
What are the implications of the Garbage Can model?
12-11
Integrating Normative and Rational Models
12-12
Decision Making Biases
Availability heuristic – use information readily available in memoryRepresentativeness heuristic – using similar situations to predict the occurrence of an eventConfirmation bias – decide before investigating then seek confirming evidenceAnchoring bias – decisions are influenced by initial information, data, stereotypes
12-13
Decision Making Biases
Overconfidence bias – tendency to be overconfident about estimates or forecastsHindsight bias – knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlierFraming bias – tendency to consider risks about gains differently than risks about lossesEscalation of commitment bias – tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed
12-14
Test Your Knowledge Which of the following will reduce escalation
of commitment? (A=Reduce, B=Won’t reduce)1. Set minimum targets for performance, and
have decision makers compare their performance with these targets
2. Have the same person have decision making authority over all aspects of an on-going project
3. Tie the person’s reputation to the success of the project
4. Provide more frequent feedback about project completion and costs
5. Make decision makers aware of costs of persistence
12-15
Dynamics of Decision Making
Knowledge Management• Implementing systems
and practices that increase the sharing of knowledge and information throughout an organization.
What specific actions can organizations take to facilitate knowledge management?
12-16
Forms of Knowledge
A. Troy is very effective at conducting client meetings. He knows what to say when and manages the discussion to maximize the impact of the meeting for all parties.
B. Sandra has established a process for efficiently and accurately conducting financial analyses. She has established a spreadsheet accompanied with a set of instructions.Which of the following types of information would be easier to share or capture? Why?
12-17
Decision Making Styles
Individual’s decision making styles vary on two dimensions…..Value Orientation•Task vs. People/Social
Tolerance for Ambiguity•High vs. Low
Your book has a questionnaire to determine your style
12-18
Decision Making Styles
Analytical Conceptual
Directive Behavioral
Tasks and TechnicalConcerns
People and SocialConcerns
Value Orientation
Low
High
Tole
ran
ce f
or
Am
big
uit
y
12-19
Decision Making Styles
What is the best decision making style?What is the value of understanding decision making styles?
12-20
Intuition in Decision Making
12-21
Guidelines for Developing Intuitive Awareness
12-22
Decision Tree for Ethical Decisions
12-23
Group vs. Individual Decision Making
What are the advantages of group decision making?What are the disadvantages?
12-24
Group-Aided Decision Making
12-25
Test Your Knowledge
Which of the following research findings are true? (A-True, B-False)
1. Groups are more efficient than individuals.
2. Groups are more confident in their choices than individuals.
3. The larger the group, the poorer the decision quality.
12-26
When to Use Groups for Decision Making
1) If additional information would increase the quality of the decision
2) If acceptance is important
3) If people can be developed through their participation
12-27
BrainstormingBrainstorming process to generate a quantity of ideasQuantity is more important than qualityCriticism is withheldBuild on others ideasCreate status-free environment 12-28
Nominal Group Technique
1. Group meets to discuss a problem2. Individual generate ideas
independently3. Everyone shares an idea from his/her
list and they are recorded but not discussed
4. Group discusses all ideas5. Group members vote for their top
choices 12-29
Delphi Technique
1. Manager identifies an issue to investigate
2. Questionnaire is sent to others and returned to manager
3. Manager summarizes responds and sends feedback to participants
4. Participants send their feedback and comments
5. Cycle repeats until issue is resolve or all relevant information is gathered. 12-30
Creativity & InnovationCREATIVITY is thinking up new things. INNOVATION is doing new things. ~ Theodore Levitt
Process of developing something new or unique
Three types…CreationSynthesisModification 12-31
Model of Creativity
12-32
Test Your Knowledge
Which of the following will foster creativity? (A-Yes, B-No)
1. Punishing mistakes or ideas that fail2. Allowing time for fun and playing around3. Holding people accountable for creative ideas4. Emphasize the importance of taking action or
generating output5. Encouraging discussion of “half-baked” ideas6. Rewarding creativity7. Establishing a rigid, hierarchical corporate
culture12-33
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