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Class Notes

1-19-12

Reasons for Legal Removal:

A. Incompetence: Because of tremendous responsibility of managing the business of theshareholders, the board must be able to discharge the duties accurately, efficiently and

competently

B. Misconduct: managed badly or dishonestly or willfully engaged in wrongful behaviorC. Malfeasance wrongdoing / misconduct by an official or the commission of an act that is

illegal

D. Misfeasance: doing of a lawful act in an unlawful or improper manner that infringes onthe rights of others

E. Nonfeasance: failure to do what duty requiredCh.1

Ch. 2

Ch. 12 Individual & Decision Making

Vocabulary:

Heuristic: experience-based techniques that help in problem solving, learning and discovery; used

to rapidly come to an optimal solution. Ex. rules of thumb, educated guesses, intuitive

judgments, common sense

Escalation of commitment: first described by Barry M. Staw (1976 paper Knee deep in the big

muddy: A study of escalating commitment to a chosen course of action); term Sunk cost fallacy

also used: describes phenomenon where people justify increased investment in a decision, based

on cumulative prior investment (money, time, military: human lives), despite new evidence

suggesting the decision was probably wrong

Hindsight: bias/inclination to see occurred events as more predictable than they were before they

took place; demonstrated in politics, games, medicine. Psychology experiments: subjects tend to

remember predictions of future events as having been stronger than they actually were in the

cases where those predictions were correct

Decision making: outcome of mental processes (cognitive) leading to selection of course of action

among several alternatives; every dmp produces a final choice; output can be action of opinion of

choice


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Explicit knowledge: knowledge that can be articulated, codified, and stored in certain media; can

be readily transmitted to others (ex. encyclopedia/Wikipedia)

Knowledge management: range of practices used in an organization to identify, create, represent,

distribute and enable adaption of insights and experiences (knowledge, embodied in individuals /

embedded in organizational processes/practice); established discipline since 1991, knowledge

management included courses taught in fields of business administration, information systems,

management, and library and information sciences

Problem solving: forms part of thinking; considered most complex of all intellectual functions,

problem solving has been defined and higher-order cognitive process that requires modulation

and control of more routine or fundamental skills; occurs if an organism or artificial intelligence

system does not know how to proceed from given state to a desired goal state

Tacit knowledge: knowledge that cannot be transferred to another person as a result of it being

written down or verbalized (ability to use algebra, speak a language, design/use complex

equipment requires all sorts of knowledge not always know explicitly, even by expert practitions,

and which cannot be explicitly transferred to users

Decision tree: decision support tool uses tree-like graph / model of decisions and their possible

consequences, including chance event outcomes, resource costs, and utility; common used in

operations research, specifically in decision analysis, to help identify a strategy most likely to

reach a goal (descriptive means for calculation conditional probabilities)

Groups decision making: decision making in groups consisting of multiple members/entities;

chance of group decision is deciding what action a group should take (various systems designed

to solve this problem)

Consensus: general agreement among members of given group/community, each of which

exercises some discretion in decision making and follow-up action; theory and practice of gettingsuch agreements

Brainstorming: group creativity technique designed to generate a large number of ideas for

solution of problem; method first popularized in late 1930s by Alex Faickney Osborn inApplied

Imagination: proposed groups could double their creative output with brainstorming


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Nominal group technique: decision making method for use among groups of many sizes, who want

to make their decision quickly, as by vote, but want everyones opinions taken into account (as

opposed to traditional voting); method of tallying is difference and everyone givers their view of

solution with short explanation

Motivation: set of reasons that determines one to engage in a particular behavior

Summary of Key Concepts:

1. Rational decision-making model: ID prob, generate alternative solutions, evaluate and select

solution; research indicates decision makers do not follow series of steps in rational DMM

Simons normative model: guided by decision makers bounded rationality (restricted by variety of

constraints when making decision); normative model suggests DM char by limited information

processing, use of judgmental heuristics, and satisficing.

Garbage can model: based on assumption DM is sloppy and haphazard; decisions result frominteraction between 4 independent streams of events: problems, solutions, participants, and

choice opportunities

2. 8 decision-making biases occur as result of using judgmental heuristics: availability,

representativeness, confirmation, anchoring, overconfidence, hindsight, framing, and escalation of

commitment

3. Knowledge management involves implementation of systems and practices; increase sharing of

knowledge and information throughout an organization. Two types impact quality: tacit (observing,

participating, or working with experts or coaches) and explicit (computer systems); mentoring

informal networking, meetings and design of office space also influence knowledge sharing

4. Model of DM styles two-dimensional: value orientation and tolerance for ambiguity; when

combined, four styles: directive (low tolerance for ambiguity; oriented towards task and technical

concerns), analytic (higher tolerance for ambiguity; char by tendency to overanalyze situation),

conceptual (high threshold for ambiguity; tend to focus on people or social aspects of a work

situation), behavioral (most people oriented)

5. Intuition = insight/knowledge obtained without use of rational thought/logical inference; two

types: holistic hunches and automated experiences. Two sources of intuition: expertise

(individuals combined explicit and tacit knowledge regarding an object, person, situation, or

decision opportunity) and feelings; intuition based on interaction between ones expertise and

feelings in a given situation


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Ethical decision tree: presents structured approach for making ethical decisions

6. Pros/Cons involving groups in DM process; research shows groups typically outperform avg

individual; 5 mportant issues to consider using groups to make decisions:

1. groups are less efficient than individuals

2. groups overconfidence can fuel groupthink

3. decision quality is negatively related to group size

4. groups are more accurate when they know a great deal about issues + leader possess

ability to effectively evaluate group members opinions and judgments

5. composition of group affects DM process and performance

Final analysis: Managers encouraged to use contingency approach when determining whether to

include others in DM process

7. Group problem-solving techniques: facilitate better DM within groups

Brainstorming: groups generate multiple ideas and alternatives for solivng problems

Nominal group technique: groups generate ideas and evaluate to select solutions

Delphi technique: anonymously generates ideas/judgments from physically dispersed experts

Computer aided decision: reduces consensus roadblocks while collecting more information in a

shorter period of time

8. Creativity: process of using imagination and skill to develop a new or unique product, object,

process or thought; 5 stages: preparation, concentration, incubation, illumination, and verification

9. Organizational creativity: directly influenced by organizational characteristics and creative

behavior that occurs within work groups; groups creative behavior influenced by group

characteristics and individual creative behavior/performance of its members; individual creative

behavior is directly affected by a variety of individual characteristics. Individual group and

organizational characteristics all influence each other within this process.

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