ch12 of org behavior by jones

8/10/2019 Ch12 of Org Behavior by Jones

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12-Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 1

Organizational Theory,Design, and Change

Sixth Edition

Gareth R. Jones

Chapter 12

Decision Making,

Learning, Knowledge

Management, and

Information Technology


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Learning Objectives

1.

Differentiate between several modelsof decision making that describe howmanagers make decisions

2.

Describe the nature of organizationallearning and the different levels atwhich learning occurs

3.

Explain how organizations can use

knowledge management andinformation technology to promoteorganizational learning to improvethe quality of their decision making


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Learning Objectives (cont.)

4.

Identify the factors, such as theoperation of cognitive biases, thatreduce the level of organizational

learning and result in poor decisionmaking

5.

Discuss some techniques that

managers can use to overcome thesecognitive biases and thus open the

organization up to new learning


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Organizational Decision Making

!

Organizational decision making:the process of responding to aproblem by searching for andselecting a solution or course ofaction that will create value fororganizational stakeholders

!

Programmed decisions:decisions

that are repetitive and routine!

Nonprogrammed decisions:decisions that are novel and

unstructured


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Models of OrganizationalDecision Making

!

The rational model:decision makingis a straightforward, three-stageprocess!

Stage 1: Identify problems that need tobe solved

! Stage 2: Design and develop a list ofalternative solutions and courses of action

to solve the problems!

Stage 3: Compare likely consequences ofeach alternative and decide which courseof action offers the best solution


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Figure 12.1: The RationalModel of Decision Making


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Models of OrganizationalDecision Making (cont.)

!

The rational model(cont.)

! Underlying assumptions

! Decision makers have all the information

they need

! Decision makers can make the bestdecision

! Decision makers agree about what needsto be done



Models of OrganizationalDecision Making (cont.)!

The rational model(cont.)! Criticisms of the assumptions

! Information and uncertainty: the

assumption that managers are aware of all

alternative courses of action and theirconsequences is unrealistic

! Managerial abilities:managers have only a

limited ability to process the information

required to make decisions!

Preferences and values: assumes managersagree about what are the most important goalsfor the organization



The Carnegie Model

!

Introduces a new set of more realisticassumptions about the decision-makingprocess!

Satisficing:limited information searchesto identify problems and alternativesolutions

! Bounded rationality:a limited capacity

to process information! Organizational coalitions:solution

chosen is a result of compromise,bargaining, and accommodation between

coalitions



Table 12.1: Differences Betweenthe Rational and Carnegie Models




!

The incrementalist model:managers select alternative courses ofaction that are only slightly, or

incrementally, different from thoseused in the past! Perceived to lessen the chances of

making a mistake

! Called the science of muddling through! They correct or avoid mistakes through a

succession of incremental changes




!

The unstructured model:describeshow decision making takes place inenvironments of high uncertainty

!

Unstructured model recognizesuncertainty in the environment

! Managers rethink their alternatives whenthey hit a roadblock

! Decision making is not a linear,

sequential process

! Tries to explain how organizations makenonprogrammed decisions



Models of OrganizationalDecision Making (cont.)!

The garbage can model:a view of decision makingthat takes the unstructured process to the extreme!

Decision makers are as likely to start decision makingfrom the solutionside as the problemside

!

Create decision-making opportunities that they cansolve with ready-made solutions based on theircompetencies and skills

! Different coalitions may champion different alternatives

!

Decision making becomes a garbage canin whichproblems, solutions, and people all mix and contend fororganizational action

!

Selection of an alternative depends on which personsor groups definition of the current situation holds sway



The Nature of OrganizationalLearning

!

Organizational learning:theprocess through which managers seekto improve organization members

desire and ability to understand andmanage the organization and its

environment

!

Creates an organizational capacity torespond effectively to the changingbusiness environment



The Nature of OrganizationalLearning (cont.)

!

Types of organizational learning! Exploration:organizational

members search for and experiment

with new kinds or forms oforganizational activities andprocedures

! Exploitation:organizationalmembers learn ways to refine andimprove existing organizationalactivities and procedures


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The Nature of OrganizationalLearning (cont.)

!

Learning organization:anorganization that purposefully designsand constructs its structure, culture,

and strategy so as to enhance andmaximize the potential for

organizational learning to take place!

Employees at all levels must be able to analyzethe way an organization performs andexperiments with change to increaseeffectiveness

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Levels of OrganizationalLearning

! Individual-level learning:managersneed to facilitate the learning of new skills,norms, and values so that individuals canincrease their own personal skills and

abilities!

Employees develop a sense of personalmastery to create and explore what they want

! Employees must develop a commitment andattachment to their job so they will enjoy

experimenting and risk taking! Organizations should encourage employees to

assume more responsibility for their decisions

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Levels of OrganizationalLearning (cont.)

! Group-level learning:managers needto encourage learning by promoting theuse of various kinds of groups so thatindividuals can share or pool their skills

and abilities!

Allows for the creation of synergy! Group routines can enhance group

effectiveness!

Group learning is even more important than

individual learning in promoting organizationallearning

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L l f O i i l




! Organizational-level learning:

managers can promote organizationallearning through the way they create anorganizations structure and culture

! Cultural values and norms are an

important influence on learning! Adaptive cultures:value innovation and

encourage and reward experimentation and

risk taking by middle and lower-levelmanagers

! Inert cultures:are cautious and

conservative, and do not encourage risktaking by middle and lower-level managers

L l f O i i l




!

Organizations can improve theireffectiveness by copying andimitating each othersdistinctive

competences! Encourages explorative and exploitative

learning by cooperating with suppliers anddistributors to discover new ways to handleinputs and outputs

! Systems thinking:argues that in order to

create a learning organization, managersmust recognize the effects of one level oflearning on another

Fi 12 2 L l f



Figure 12.2: Levels ofOrganizational Learning

K l d M t d



Knowledge Management andInformation Technology

!

Knowledge management:a type ofIT-enabled organizational relationshipthat has important implications for

both organizational learning anddecision making

! Involves sharing and integrating of

expertise within and between functionsand divisions through real-time,interconnected IT


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Knowledge Management (cont.)

!

Codification approach:knowledge iscarefully collected, analyzed, and storedin databases where it can be retrievedeasily by users who input organization-specific commands and keywords

! Suitable for standardized product or service

! Personalization approach:IT

designed to identify who in theorganization might possess theinformation required for a custom job

! More reliance on know-how, insight, and

judgment to make decisions

F t Aff ti


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Factors AffectingOrganizational Learning

!

Several factors may reduceorganizational learning over time

! Managers may develop rules and

standard operating procedures tofacilitate programmed decision making

! Past success with SOPs inhibits learning

!

Programmed decision making drives outnonprogrammed decision making

ff i


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12-Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Factors AffectingOrganizational Learning (cont.)

!

Cognitive structure:system ofinterrelated beliefs, preferences,expectations, and values that

predetermine responses to andinterpretations of situations

! These shape the way managers make

decisions and perceive environmentalopportunities and threats

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F t Aff ti


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!

Types of cognitive biases! Cognitive biases:systematically bias

cognitive structures to causemisperception and misinterpretation of

information, thereby affectingorganizational learning and decisionmaking

! Cognitive dissonance:state ofdiscomfort or anxiety experienced whenthere is an inconsistency between onesbeliefs and actions!

Managers seek or interpret information thatconfirms and reinforces their beliefs andignore information that does not

Factors Affecting


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!

Types of cognitive biases (cont.)! Illusion of control:causes managers to

overestimate the extent to which theoutcomes of an action are under their

personal control! Frequency:deceives people into

assuming that extreme instances of aphenomenon are more prevalent than they

really are! Representativeness:leads managers to

form judgments based on small andunrepresentative samples

F t Aff ti


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!

Types of cognitive biases (cont.)!

Projection:allows managers to justify andreinforce their own preferences and valuesby attributing them to others

! Ego-defensiveness:leads managers tointerpret events in such a way that theiractions appear in the most favorable light

!

Escalation of commitment:leadsmanagers to remain committed to a losingcourse of action and refuse to admit thatthey have made a mistake


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Figure 12.3: Distortion of OrganizationalDecision Making by Cognitive Biases

Imp o ing Decision Making


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Improving Decision Makingand Learning

!

Strategies for organizational learning

! Cause managers to continuously unlearnold ideas and confront errors in their

beliefs and perceptions!

Listening to dissenters

! Converting events into learning

opportunities

! Experimenting

Improving Decision Making


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Improving Decision Makingand Learning (cont.)

!

Game theory:tool to help managersimprove decision making and enhancelearning

! Interactions between organizations are viewedas a competitive game

!

Two basic types of game! Sequential move game:players move in turn,

and one player can select a strategy to pursueafter considering its rivals choice of strategies

! Simultaneous move game:the players act at

the same time, in ignorance of their rivalscurrent actions

! Useful for organizations competing againsta limited number of rivals that are highly

interdependent

Fi 12 4 A D i i T


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Figure 12.4: A Decision Treefor UPSs Pricing Strategy

I i D i i M ki


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Improving Decision Makingand Learning (cont.)!

Nature of the top-management team! The way the top management is

constructed and the type of people whoare on it affect organizational learning

! Wheel configuration decreases org

learning because managers reportseparately to the CEO

! Wheel works best when problems are simple

and require minimal coordination

! Circle configuration works best for team

and organizational learning



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12-Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall


!

Learning occurs best when there isheterogeneity of the top-management team

! Groupthink:the conformity that

emerges when like-minded peoplereinforce one anothers tendencies to

interpret events and information insimilar ways

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Figure 12 5: Types of Top


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Figure 12.5: Types of Top-Management Teams



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!

Devil

s advocate:a person who isresponsible for critiquing ongoingorganizational learning

!A method for overcoming cognitive biasesand promoting organizational learning byinstitutionalizing dissent

!

Dialectical inquiry:teams of decisionmakers generate and evaluate

alternative scenarios and providerecommendations



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!

Collateral organizationalstructure:an informal organization ofmanagers that is set up parallel to the

formal organization structure toshadowthe decision making and

actions of managers in the formal

organization!Allows an organization to maintain its

capacity for change at the same time thatit maintains its stability

Figure 12 6: How Devils Advocacy and


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Figure 12.6: How Devil s Advocacy andDialectical Inquiry Alter the Rational Approachto Decision Making

ch12 of org behavior by jones

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