lec decision making & techniques

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Decision Making in Groups

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Page 1: Lec   decision making & techniques

Decision Making in Groups

Page 2: Lec   decision making & techniques

People often questions the value of groups

• Why do people so frequently use groups to make decisions?

• Are groups’ decisions superior to individual decisions?• How do people, and groups, even make decisions: are

they rational or irrational?• Should decisions be made carefully or intuitively?

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The mob has no judgment,no discretion,no direction, no discrimination, no consistency.Cicero

Madness is the exception in individuals but the rule in groups. Nietzsche

When "a 100 clever heads join a group, one big nincompoop is the result.” Carl Jung

Decision Making in Groups

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None of us alone is as smart as all of us together (Myers, 2002)

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Why Use Groups? Why Not Use Groups?

Making Decisions in Groups: The Pluses and Minuses

sometimes the group doesn't recognize the correct answer, even if proposed

groups oversample shared information

sometimes work done by just a few (social loafing)

discussion can be manipulated

groups sometimes make riskier decisions

groups sometimes suffer from groupthink

more people = more information

more people to do more work

more people means people can do what they are best at

groups can discuss, process information (check for errors, etc.)

groups have standards for deciding (e.g., majority rules)

people are more likely to follow through if part of a group that decided

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Decision Making

The mental processes (cognitive process) resulting in the selection of a course of action among several alternative scenarios

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Why was all party meeting called to decide on Jan-Lokpal Bill?

Why do different organisations hold meetings for their activities?

Why do people rely on groups for decision making?

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Case

• Examine the problem faced by Mr. Nataraj, Regional Manager of Alpha Pvt. Ltd. Alpha makes and distributes products from more than 10 international pharmaceutical and health care companies. Mr. Nataraj is responsible for managing existing clients and also to get new clients. He manages a number of sales representatives. Important customers have a dedicated sales representatives, while other sales representatives try to get new clients.One day an important customer (Good Health Hospital) called Mr. Nataraj and complained that Mr. Bhavan (the sales representative) was ineffective and insisted he be removed, or else they would not give any business.

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Mr. Nataraj's thoughts

• In an internal enquiry, Mr. Nataraj found that the real reason was personal differences between Mr. Bhavan and the hospital superintendent.

• The track record of Mr. Bhavan was good and he was liked within the company. Dismissing him or even transferring him to a new region will affect the morale of the work force.

• Good Health Hospital is a major customer and gives good business. Loosing the hospital is not an option. Therefore the demands of the hospital have to be met.

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Some sample options:

1. Good Health Hospital is a major customer and cannot be displeased. I will remove or transfer Mr. Bhavan.

2. Mr. Bhavan is a loyal and hard working. I need to keep people like him even if it means loosing customers.

3. I will stop answering calls, act ignorant of the whole episode. 'Time will solve the problem'.

4. I will try to get Mr. Bhavan and the Hospital Superintendent together for discussion and try to compromise over the differences.

5. I will move Mr. Bhavan to a new and more important project - develop new business in the newly formed sub-region. Good Health Hospital will have no problem with the new sales representative.

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Individual & Group Decision Making

• People turn to groups because, in most cases, groups are better at choosing, judging, estimating, and problem solving than are individuals.

• Investment groups outperform single investors.

• Teams of physicians making a diagnosis are more accurate than single physician.

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Advantages of Group Decision making

• Collective memory• More information• More thorough discussion,

convergent/divergent thinking is possible• Members are committed to the decision as

they have jointly produced it, implementation is better

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Disadvantages of Group Decision making

• Groups do not perform well when tasks are very difficult, complex, unfamiliar, or uninteresting to members.

• Group effectiveness also depends on whether task is Intellective or Judgmental.

• Intellective task- yield soln.-Right or Wrong(e.g., Math Problem)

• Judgmental task- no authoritatively correct answer-(e.g., Jury’s decision)

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• Groups Succeed in case of intellective task—maths, objective evaluation

• Not in case of judgmental task which require evaluative judgments, subjective, no correct or wrong answer

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Anatomy of Group Decision

Functional Theory of Group Decision Making- Skilled decision making groups are more likely use procedures that enhance the way they gather, analyze, and weight information

Phases/Stages of Decision Making - Orientation

- Discussion - Decision - Implementation

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Functional Model of Decision Making

Discussion

Orientation

Implementation

Decision Reached

Decision No Decision Reached

Orientation Planning the Process

Defining theProblem

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Group Decision Making

1. Orientation- Group’s desire to identify best solution- Identifying resources needed to make decision- Enumerate obstacles that must be overcome- Specifying procedures for gathering information and

decision making- Establishing ground rules for meetings- Sets strategy & goals- More time spent in this stage the greater the performance- Tendency to skip this step

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Discussion

Remembering Information

ExchangingInformation

Processing Information

Remembering Information – 30 % of all comments made by group members are expressions of opinions and analysis of issues Collective Memory – a group’s combined memory.

It is a shared reservoir of information held in the memories of two or more members of a group.

Cross-cueing – recall of memories improved through group members’ statements

Transactive Memory – information is distributed to various members of the group

2. Discussion

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- Group members gather and process information needed to make decision.

- This results in improved memory for information, increased information exchange, and more thorough processing of inf.

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Weakness in group memory - importance of keeping records (meeting minutes)

Exchanging information: Acquiring & sharing data

Processing information: Collective review of info.

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Decision

3. Decision: Social decision schemes- Group method of combining individual members’ inputs in a single group decision. - Delegation-an individual or subgroup within the group

makes the decision for the group Authority Scheme – Leader/individual speaks Oligarchy- coalition speaks– Statistical aggregation- group members’ individual

decision are averaged– Voting- publicly or secret ballot – 50% rule is used

primarily, however, sometimes more substantial percentages are needed for a decision to become final

– Plurality Decision – Majority Wins– Consensus (discussion to unanimity)

– Random choice – final decision is left to chance- coin flipping

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4. Implementation – Evaluating the decision Adhering to the

decision: Coch and French (1948) ) clothing mill study

Participation is key in decision making – if limited,

hostility, turnover, & satisfaction

decreases

Implementation

Decision Reached

Evaluating the Decision

Adhering to the Decision

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Vroom’s normative model of decision making

– Types of procedures: Autocratic, consultative, group

– Procedure must fit the problem to be solved and the decision to be made

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Vroom’s Normative Model of Decision Making: theory of decision making that predicts the effectiveness of decisional procedures across a number of group settings

Autocratic I & II – leader solves the problem on his/her own with information available at the time or obtains information from group members and then decides

Consultative I & II – leader either shares the problem with selected group members or the entire group

Individual vs. Group Decision Making

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Normative Decision ModelVroom and Yetton Model

• Decision Procedures– AI – Leader makes decision without any additional

information– AII – Leader seeks information and makes decision

alone– CI – Leader shares problem with others

individually and makes decision alone– CII – Leader shares problem with others

collectively and makes decision alone– GII – Group discusses problem collectively and the

group makes the decision

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Vroom’s Normative Model of Decision Making: Group – the leader discusses the problem with the

members of the group. Together the leader and members devise options for a solution.

The leader acts as a chairperson of a committee & does not try to influence the group to adopt a certain solution.

Procedure must fit the problem to be solved and the decision to be made

Individual vs. Group Decision Making

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Problem faced at the time of Decision Making

• Communication• Avoiding responsibility, • Egocentric behaviour, • Attitudes & emotions,• Nonparticipation• Interruptions• Negative leader behaviour

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Group Discussion Pitfall

Information processing limitations:

- leveling ( simplify & shorten),

- Sharpening (embellish distinction made by the speaker),

- Assimilation ( Interpret messages), Poor communication skills

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Decisional avoidance Tactics-

• procrastination, • bolstering ,• denying responsibility, • ignoring alternatives/sidetracking, • satisficing (members accept low risk & easy way out • muddling through ( consider narrow range policy),• trivializing the issue ( avoids dealing with large

issues)

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Judgment errors and heuristic biases – individual’s judgments are often distorted by cognitive and motivational biases

Individuals also overestimate their judgmental accuracy because they remember all of the times their decisions were confirmed Sins of omission – overlook useful information9 general

tendencies) Sins of commission – information misused Sins of imprecision /Heuristics – oversimplify decision,

mental rules of thumb Confirmation Bias – tendency to seek out information that

confirms one’s inferences rather than disconfirms them

What Problems Undermine the Effectiveness of Decision-Making Groups?

Cognitive Limitations

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Polarization and Risk

• Group polarization: A shift in the direction of greater extremity in individuals' responses

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Groupthink

• Janis’s theory of groupthink – Example:

Kennedy’s advisory group planning the Bay of Pigs “covert op”

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Groupthink

• Janis’s theory of groupthink – Example:

Kennedy’s advisory group planning the Bay of Pigs “covert op”

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Groupthink

– The theory identifies symptoms, causes, and possible cures

Symptoms

ConcurrenceSeeking

Defective DecisionMaking

Strategies

Fiasco

Causes

Cohesion, etc

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Symptoms

– Overestimation of the group (illusions of invulnerability, illusions of morality)

– Close-mindedness (rationalizations, stereotypes about the outgroup)

– Pressures toward uniformity (self-censorship, the illusion of unanimity, direct pressure on dissenters, self-appointed mindguards). • Pluralistic ignorance and the Abilene Paradox

(Harvey, 1988)• Entrapment and sunk costs

– Defective decision-making processes

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Causes

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Causes of Groupthink

Cohesiveness Cordial relationships Lack of conflict

Structural Faults Insulation Control of the leader

Provocative Situational Context How members deal with stress Exaggerate the positive and minimize the negative

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How Can Groupthink Be Prevented?

• Limiting premature seeking of concurrence• Open style of leadership• Devil’s advocate, subgroup discussions

• Correcting misperceptions and biases• Using effective decision-making techniques

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Bay of Pigs• In October 1962, USSR was installing weapons of mass destruction

on the island of Cuba. JFK and his team negotiated for 13 days with Russians to dismantle base. They could succeed in making Russians shift the base.

• Same group had an year ago made one of the greatest blunders of all time. JFK and his advisors guided by CIA developed a plan to invade Cuba with the hope of overthrowing the country’s govt. A squad of well trained troops will capture a strip of land and later encourage civilian revolt in Havana.

• The entire attacking force was killed or captured within days and the US govt had to send food and supplies to ransom them back.

• “worst fiascoes ever perpetrated by a responsible govt.” JFK- “How could I have been so stupid?”

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Risky-Shift Phenomenon

• Groups’ decisions are more extreme than individuals’ decisions

• Groups seem to make riskier decisions than individuals— “invade cuba” or “use diplomatic means to influence Cuba”

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Group Think (Irving Janis)• Phenomenon in which the norm for consensus overrides

the realistic appraisal of alternative courses of action, a distorted style of thinking that renders group members incapable of making a rational decision

• Symptoms of group think– Overestimation of the group: unwarranted optimism– Close mindedness: not open to new ideas, shut to other

alternatives and rationalize their initial decision, sent 1400 to fight 200,000 and expected an easy success

– Pressures toward uniformity: interpersonal pressures make agreeing easy and disagreeing very difficult; Self-censorship- many had doubts about the success of plan

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Techniques of decision making• Brainstorming- any and all alternatives, free-wheeling of ideas, no

criticism, all ideas are recorded for future analysis• Nominal group technique- ideas are presented by each member and

all are recorded, discussion and evaluation, all members rank the ideas and the idea with the highest aggregate rank is selected

• Delphi technique- When gp members cannot meet, questionnaires are distributed to a panel responsible for making decision, inviting responses. A summary is sent to the panel with a follow-up questionnaire, process is repeated till consensus is reached

• Computer assisted decision making- software compiles the responses and disseminates the information to all members