Slide 1Slide 2Slide 3Slide 4Slide 5Slide 6Slide 7Slide 8Slide 9Slide 10Slide 11Slide 12Slide 13Slide 14Slide 15Slide 16Slide 17Compare 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.Making DecisionsLearning ObjectivesChapter NineThe Rational Model: logical four-step approach to decision making.Identifying the problemGenerating alternative solutionsSelecting a solutionImplementing and evaluating the solution9-1McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.The Rational Model of Decision MakingMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.1. Am I being honest—telling the truth, the whole truth?2. Does the decision parallel my personal values?3. Will I be keeping all promises, commitments, contracts, etc.?4. Is my decision permitting me to remain faithful?5. Would I have the other person (entity, etc.) do this to me?6. Am I willing to accept responsibility for this decision?7. Is it safe—that is, safe from liability, safe from physical, or emotional hurt, safe from danger?8. Does it promote excellence?9. Is it fair?10. Is my decision a result of genuine concern for someone else?9-2McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Skills & Best Practices: Diagnostic Questions to Assess Whether or not Your Decisions are EthicalMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.The Normative Model: based on the premise that decision making is not rational.Decision making is characterized by:Limited information processingJudgmental heuristicsSacrificing9-3McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Simon’s Normative Model of Decision MakingMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.Judgmental heuristics: rules of thumb or shortcuts that people use to reduce information processing demands.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.Satisficing: choosing a solution that meets a minimum standard of acceptance.9-4McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Judgmental HeuristicsMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.Knowledge management: implementing systems and practices that increase the sharing of knowledge and information throughout an organization.9-5McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Improving Decision Making through Effective Knowledge ManagementTacit 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.McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.9-6 Figure 9-1Decision-Making StylesMcGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Analytical ConceptualDirective BehavioralTasks and TechnicalConcernsPeople and SocialConcernsValue OrientationLowHighTolerance for AmbiguityMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.Escalation of commitment: sticking to an ineffective course of action too long.Four reasons for escalation of commitment:Psychological and social determinantsOrganizational determinantsProject characteristicsContextual determinants9-7McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Escalation of CommitmentMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.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.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.9-8McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Skills & Best Practices: RecommendationsTo Reduce Escalation of CommitmentMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.Creativity: process of developing something new or unique.9-9McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.CreativityMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.Lack of discretion and autonomyFragmented work schedule in which people are frequently interruptedInsufficient resources to get the job doneA focus on short-term goalsTime pressuresA lack of collaboration and coordination among employees9-10McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Skills & Best Practices: Avoid TheseCreativity KillersMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.9-11 Table 9-1Advantages and Disadvantages of Group-Aided Decision MakingAdvantages DisadvantagesGreater pool of knowledge Social pressureDifferent perspectives Domination by a vocal fewGreater comprehension LogrollingIncreased acceptance Goal displacementTraining ground “Groupthink” McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.Participative Management: involving employees in various forms of decision making.Setting goalsMaking decisionsSolving problemsMaking changes in the organizationHelps employees fulfill three basic needs:AutonomyMeaningfulness of workInterpersonal contact9-12McGraw-Hill© 2005 The McGraw-Hill Companies, Inc. All rights reserved.Participative ManagementMcGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.Brainstorming: process to generate a quantity of ideas.9-13McGraw-Hill© 2005
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