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Organizational Organizational Behavior, 9/EBehavior, 9/E

Schermerhorn, Hunt, and Schermerhorn, Hunt, and OsbornOsborn

Prepared by

Michael K. McCuddy

Valparaiso University

John Wiley & Sons, Inc.

Organizational Behavior: Chapter 14 2

Chapter 14 Study Questions

What is the decision-making process in

organizations?

What are the useful decision-making

models?

How do intuition, judgment, and creativity

affect decision making?


Chapter 14 Study Questions (cont.)

How do you manage the decision-making

process?

What are some of the current issues in

decision making?

How do you infuse ethics into the

decision-making process?


Study Question 1: What is the decision-making process in organizations? Decision making is the process of choosing a

course of action for dealing with a problem or opportunity.

Steps in systematic decision making.– Recognize and define the problem or opportunity.– Identify and analyze alternative courses of action, and

estimate their effects on the problem or opportunity.– Choose a preferred course of action.– Implement the preferred course of action.– Evaluate the results and follow up as necessary.


Study Question 1: What is the decision-making process in organizations?

Certain decision environments.

– Exist when information is sufficient to predict the

results of each alternative in advance of

implementation.

Risk decision environments.

– Exist when decision makers lack complete certainty

regarding the outcomes of various courses of action, but

they are aware of the probabilities associated with their

occurrence.



Uncertain decision environments.

– Exist when managers have so little information on

hand that they cannot even assign probabilities to

various alternatives and their possible outcomes.

– Described as a rapidly changing setting in terms of:• External conditions.

• The information technology requirements needed for

analyzing and making decisions.

• The people who influence problem and choice definitions.


Study Question 1: What is the decision-making process in organizations?Uncertain decision environments (cont.).

– Can be described in terms of types of risks

encountered by the organization.

• Strategic risks are threats to overall business

success.

• Operational risks are threats inherent in the

technologies used to reach business success.

• Reputation risks are threats to a brand or to the

firm’s reputation



Types of decisions.

– Programmed decisions.

• Involve routine problems that arise regularly and

can be addressed through standard responses.

– Nonprogrammed decisions.

• Involve nonroutine problems that require solutions

specifically tailored to the situation at hand.


Study Question 2:What are the usefuldecision-making models?



Classical decision theory assumes the manager faces a clearly defined problem, knows all possible action alternatives and their consequences, and then chooses the optimum solution.

Widespread application of classical decision theory is restricted by bounded rationality.



Classical decision theory does not appear to fit well in the modern business world, though it can be used toward the bottom of many firms.

Behavioral decision theory accepts the notion of bounded rationality. It assumes the manager acts only in terms of what is perceived about a given situation, and then chooses a satisficing solution.


Study Question 2:What are the usefuldecision-making models?The garbage can model.

– A model of decision making that views problems, solutions, participants, and choice situations as mixed together in the “garbage can” of the organization.

– The garbage can model highlights two important organizational facts of life.

• Different individuals may do choice making and implementation.

• Many problems go unsolved.



Decision making realities.

– Decision making information may not be

available.

– Bounded rationality and cognitive limitations

affect the way people define problems,

identify alternatives, and choose preferred

solutions.



Decision making realities (cont.).

– Most decision making in organizations goes

beyond step-by-step rational choice.

– Decisions must be made under risk and

uncertainty.

– Decisions should be ethical.


Study Question 3: How do intuition, judgment, and creativity affect decision making?

Intuition.

– The ability to know or recognize quickly and

readily the possibilities of a given situation.

– A key element of decision making under risk

and uncertainty.



Judgmental heuristics.

– Simplifying strategies or “rules of thumb”

used to make decisions.

– Make it easier to to deal with uncertainty and

limited information.



Types of heuristics.– Availability heuristic.

• Bases a decision on similarity to past occurrences that are easily remembered.

– Representativeness heuristic.• Bases a decision on similarities between an event

and stereotypes of similar occurrences.

– Anchoring and adjustment heuristic.• Bases a decision on incremental adjustments to an

initial value determined by historical precedent or some reference point.



General judgmental biases in decision making.– Confirmation trap.

• The tendency to seek confirmation for what is already thought to be true and to not search for disconfirming information.

– Hindsight trap.• The tendency to overestimate the degree to which

an event that has already taken place could have been predicted.



Stages in the creative thinking process.– Preparation.

– Concentration.

– Incubation.

– Illumination

– Verification.



Ways of fostering creativity.– Diversifying teams to include members with different

backgrounds, training, and perspectives.

– Encouraging analogical reasoning.

– Stressing periods of silent reflection.

– Recording all ideas so that the same ones are not rediscovered.

– Establishing high expectations for creativity.

– Developing a physical space that encourages fun, divergent ideas.



Creativity is higher when:– Linguistic ability, willingness to engage in

divergent thinking, and intelligence are present.

– Individuals are motivated by and derive satisfaction from task accomplishment.

– There are opportunities for creativity, as many constraints as possible are eliminated, and rewards are provided for creative efforts.



Creativity is higher when (cont.):– The decision maker emphasizes engagement

in the creative process and counsels individuals to share their ideas with others.

– The decision maker encourages subordinates to recognize ambiguity, contact others with different views, and be prepared to make considerable changes.


Study Question 4: How do you manage the decision-making process?

In choosing problems to address, ask and

answer the following questions:

– Is the problem easy to deal with?

– Might the problem resolve itself?

– Is this my decision to make?

– Is this a solvable problem within the context

of the organization?



Reasons for decision making failure.– Managers too often copy others’ choices and try to

sell them to subordinates.

– Subordinates may believe the manager is imposing his or her will rather than working for everyone’s interests.

– Managers may focus on the problems they see rather than the outcomes they want.

– Managers use participation too infrequently.



Key problem attributes in the Vroom, Yetton, and Jago decision making framework.– The required quality of the decision.

– The commitment needed from subordinates.

– The amount of information the leader has.

– Commitment probability.

– Goal congruence.

– Subordinate conflict.

– Subordinate information.



Authority decisions in the Vroom, Yetton, and Jago decision making framework.– Manager or team leader uses information that he or

she possesses and decides what to do without involving others.

– Variant 1 manager solves the problem or makes the decision alone.

– Variant 2 manager obtains the necessary information from others and then decides.



Consultative decisions in the Vroom, Yetton, and Jago decision making framework.– Manager or team leader solicits input from other

people and then, based on this information and its interpretation, makes a final choice.

– Variant 1 manager seeks input from others individually and then makes a decision.

– Variant 2 manager seeks input from others collectively and then makes a decision.



Group decisions in the Vroom, Yetton, and Jago decision making framework.– Manager or team leader consults with others

and allows them to help make the final choice.


Study Question 4: How do you manage the decision-making process? Knowing when to quit.

– The natural desire to continue on a selected course of action reinforces escalating commitment.

– Escalating commitment is the tendency to continue and renew effort on a previously chosen course of action, even though it is not working.

– Tendency to escalate commitments often outweighs the willingness to disengage from them.

– Good decision makers are willing to reverse previous decisions.


Study Question 5: What are some of the current issues in decision making? Workplace trends affecting organizational

decision makers.– Business units are becoming smaller in size.– New, more flexible, and adaptable

organizational forms.– Multifunctional understanding is increasingly

important.– Workers with both technical knowledge and

team skills are increasingly desirable.– The nature of “work” is in a state of flux.


Study Question 5: What are some of the current issues in decision making?

Information technology and decision making.– Artificial intelligence is the study of how

computers can be programmed to think like human beings.

– Expert systems support decision making by following “either-or” rules to make deductions.



Information technology and decision making (cont.).– Fuzzy logic and neural networks reason

inductively.– Computer support for decision making.– Information technology does not deal with

issues raised by the garbage can model.



Cultural factors and decision making.– Culture is “the way in which a group of people solves

problems.”– North American culture stresses decisiveness, speed,

and the individual selection of alternatives.– Other cultures place less emphasis on individual

choice than on developing implementations that work.– The most important impact of culture on decision

making concerns which issues are elevated to the status of problems solvable within the firm.


Study Question 6: How do you infuse ethics into the decision-making process?

Ways to infuse ethics into decision making.– Develop a code of ethics and follow it.– Establish procedures for reporting violations.– Involve employees in identifying ethical

issues.– Monitor ethical performance.– Reward ethical behavior.– Publicize ethical efforts.


Study Question 6: How do you infuse ethics into the decision-making process? Morality is involved in:

– Choosing problems.– Deciding who should be involved in making

decisions.– Estimating the impacts of decision

alternatives.– Selecting an alternative for implementation.

An effective decision needs to solve a problem as well as match moral values and help others.


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