Slide 1Making DecisionsAfter reading the material in this chapter, you should be able to:Models of Decision MakingSlide 5Rational ModelSlide 7Slide 8Slide 9Simon’s Normative ModelSlide 11Question?Slide 13Slide 14Slide 15Dynamics of Decision MakingKnowledge ManagementDecision Making StylesSlide 19Slide 20Escalation of CommitmentSlide 22Slide 23Recommendations To Reduce Escalation of CommitmentSlide 25Slide 26CreativityCreativity Innovation KillersGroup InvolvementAdvantages and Disadvantages of Group-Aided Decision MakingParticipative ManagementGroup Problem Solving TechniquesRules for BrainstormingGroup Problem Solving TechniquesSlide 35Computer-aided Decision MakingVideo: Creative CorpMaking DecisionsChapter TenCopyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinOrganizational Behavior: Key Concepts, Skills & Best Practices, 3/e10-3After reading the material in this chapter, you should be able to:•Compare and contrast the rational model of decision making and Simon’s normative model.•Discuss knowledge management techniques used by companies to increase knowledge sharing.•Explain the model of decision-making styles and the stages of the creative process.•Summarize the pros and cons of involving groups in the decision-making process.•Explain how participative management affects performance.•Contrast brainstorming, the nominal group technique, the Delphi technique, and computer-aided decision making.10-4Models of Decision Making•Decision making – identifying and choosing solutions that lead to a desired result10-5Models of Decision MakingThe Rational Model - logical four-step approach to decision making.•Identifying the problem•Generating alternative solutions•Selecting a solution•Implementing and evaluating the solution10-6Rational Model•Identifying the Problem-Problem – exists when the actual situation and the desired situation differ•Generating Solutions-For routine decisions alternatives are readily available through decision rules10-7Rational Model•Selecting a Solution-Want to maximize the expected utility of an outcome-People vary in their preferences for safety or risk-Ethics should be considered10-8Rational Model•Selecting a Solution-Evaluating alternatives assume they can be judged according to some criteria-Assumes valid criteria exists-Each alternative can be compared to these criteria-Decision maker actually uses the criteria10-9Rational Model•Implementing and Evaluating the Solution-After solution is implemented, the evaluation phase is used to evaluate its effectiveness-Optimizing – choosing the best possible solution10-10Simon’s Normative ModelDecision making is characterized by:1. Limited information processing2. Use of judgmental heuristics3. Satisficing10-11Simon’s Normative ModelLimited Information Processing•Tendency to acquire manageable rather than optimal amounts of information•Difficult for managers to identify all possible alternative solutions10-12Question?What is a rule of thumb that people use to reduce information processing demands?A. Decision makerB. Judgmental heuristicsC. Judgmental verdictD. Decision conclusion10-13Simon’s Normative Model•Judgmental heuristics - rules of thumb or shortcuts that people use to reduce information processing demands.10-14Simon’s Normative Model•Availability heuristic - tendency to base decisions on information readily available in memory.•Representativeness heuristic - tendency to assess the likelihood of an event occurring based on impressions about similar occurrences.10-15Simon’s Normative Model•Satisficing - choosing a solution that meets a minimum standard of acceptance10-16Dynamics of Decision Making•Knowledge management - implementing systems and practices that increase the sharing of knowledge and information throughout an organizationRead an article on Knowledge Management10-17Knowledge Management•Tacit knowledge - information gained through experience that is difficult to express and formalize.•Explicit knowledge - information that can be easily put into words and shared with others.10-18Decision Making Styles•Decision making styles – combination of how individuals perceive and respond to information10-19Decision Making Styles•Value orientation – reflects the extent to which an individual focuses on either task and technical concerns or people and social concerns when making decisions•Tolerance for ambiguity – extent to which a person has a high need for structure or control in his life10-20Decision Making StylesFigure 10-110-21Escalation of Commitment•Escalation of commitment - sticking to an ineffective course of action too long10-22Escalation of CommitmentPsychological and Social Determinants1. Tend to bias facts so that they support previous decisions2. Take more risks when a decision is stated in negative terms3. Get too ego-involved with the project10-23Escalation of CommitmentOrganizational Determinants•Breakdowns in communication•Workplace politics•Organizational inertia10-24RecommendationsTo Reduce Escalation of Commitment•Set minimum targets for performance, and have decision makers compare their performance with these targets.•Have different individuals make the initial and subsequent decisions about a project.•Encourage decision makers to become less ego-involved with a project.10-25RecommendationsTo Reduce Escalation of Commitment•Provide more frequent feedback about project completion and costs.•Reduce the risk or penalties of failure.•Make decision makers aware of the costs of persistence.10-26Question?What is the process of using imagination to develop a new process?A. OriginalityB. InnovationC. CreativityD. Resourcefulness10-27Creativity•Creativity – process of using intelligence, imagination, and skill to develop a new or novel product, object, process, or thought10-28Creativity Innovation Killers1. Short-term focus2. Lack of time, resources, or staff3. Leadership expects payoff sooner than is realistic4. Management incentives are not structured to reward innovation5. Lack of systematic innovation process6. Belief that innovation is inherently risky10-29Group Involvement•Minority dissent – extent to which group members feel comfortable disagreeing with other group members, and a group’s level of participation in decision making10-30Advantages and Disadvantages of Group-Aided Decision Making10-31Participative Management•Participative Management