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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?
Organizational Behavior: Chapter 14 3
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?
Organizational Behavior: Chapter 14 4
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.
Organizational Behavior: Chapter 14 5
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.
Organizational Behavior: Chapter 14 6
Study Question 1: What is the decision-making process in organizations?
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.
Organizational Behavior: Chapter 14 7
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
Organizational Behavior: Chapter 14 8
Study Question 1: What is the decision-making process in organizations?
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.
Organizational Behavior: Chapter 14 9
Study Question 2:What are the usefuldecision-making models?
Organizational Behavior: Chapter 14 10
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.
Organizational Behavior: Chapter 14 11
Study Question 2:What are the usefuldecision-making models?
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.
Organizational Behavior: Chapter 14 12
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.
Organizational Behavior: Chapter 14 13
Study Question 2:What are the usefuldecision-making models?
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.
Organizational Behavior: Chapter 14 14
Study Question 2:What are the usefuldecision-making models?
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.
Organizational Behavior: Chapter 14 15
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.
Organizational Behavior: Chapter 14 16
Study Question 3: How do intuition, judgment, and creativity affect decision making?
Judgmental heuristics.
– Simplifying strategies or “rules of thumb”
used to make decisions.
– Make it easier to to deal with uncertainty and
limited information.
Organizational Behavior: Chapter 14 17
Study Question 3: How do intuition, judgment, and creativity affect decision making?
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.
Organizational Behavior: Chapter 14 18
Study Question 3: How do intuition, judgment, and creativity affect decision making?
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.
Organizational Behavior: Chapter 14 19
Study Question 3: How do intuition, judgment, and creativity affect decision making?
Stages in the creative thinking process.– Preparation.
– Concentration.
– Incubation.
– Illumination
– Verification.
Organizational Behavior: Chapter 14 20
Study Question 3: How do intuition, judgment, and creativity affect decision making?
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.
Organizational Behavior: Chapter 14 21
Study Question 3: How do intuition, judgment, and creativity affect decision making?
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.
Organizational Behavior: Chapter 14 22
Study Question 3: How do intuition, judgment, and creativity affect decision making?
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.
Organizational Behavior: Chapter 14 23
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?
Organizational Behavior: Chapter 14 24
Study Question 4: How do you manage the decision-making process?
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.
Organizational Behavior: Chapter 14 25
Study Question 4: How do you manage the decision-making process?
Organizational Behavior: Chapter 14 26
Study Question 4: How do you manage the decision-making process?
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.
Organizational Behavior: Chapter 14 27
Study Question 4: How do you manage the decision-making process?
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.
Organizational Behavior: Chapter 14 28
Study Question 4: How do you manage the decision-making process?
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.
Organizational Behavior: Chapter 14 29
Study Question 4: How do you manage the decision-making process?
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.
Organizational Behavior: Chapter 14 30
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.
Organizational Behavior: Chapter 14 31
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.
Organizational Behavior: Chapter 14 32
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.
Organizational Behavior: Chapter 14 33
Study Question 5: What are some of the current issues in decision making?
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.
Organizational Behavior: Chapter 14 34
Study Question 5: What are some of the current issues in decision making?
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.
Organizational Behavior: Chapter 14 35
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.
Organizational Behavior: Chapter 14 36
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.
Organizational Behavior: Chapter 14 37
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