Decision Making ProcessStep 1: Identifying the problemMore effective to treat underlying problem rather than focusing on the symptoms that stem from itStep 2: Identifying decision criteriaWhat things are you going to look forStep 3: Allocating weights to criteriaWhat do you value mostStep 4: Developing alternativesWhat can be done differentlyStep 5: Analyzing alternativesWhat is the best optionStep 6: Selecting an alternativePeople often ignore the previous steps and go with their gut/instinctStep 7: Implementing the alternativeStep 8: Evaluate the decision effectivenessMost people skip this stepManagers Making DecisionsRational decision makingAssumes we make logical, objective, and consistent choices that maximize valueMaximizing is keySearch until we find the best option, best solutionSatisfice people tend to be happier and more fulfilled in life than the maximizes, maybe we don’t need to be rationalMaximizing leafsAssumptions of rationality (unrealistic)Rational decision maker would be fully objective and logicalProblem is clear and unambiguousDecision maker has clear and specific goalDecision maker knows all possible alternatives and consequencesRational decision making consistently leads to increased likelihood of achieving that goalDecisions are make in best interest of organizationBounded rationalityManagers make decisions rationally, but are limited (bounded) by their ability to process informationSatisfice- accept solutions that are “good enough”Maybe there isn’t enough time, or resources to find and evaluate all alternativesIntuitive decision makingMaking decisions on the basis of experience, feelings, or accumulated judgmentGood for some things, specifically personal decisions, but not always good as experiences and personal feelings can varyResearch shows that this can be a great method of decision makingComponents of Intuition:Values or ethics based decisionsSubconscious mental processingExperience based decisionsAffect initiated decisionsCognitive based decisionBiases and errors influence this, can cause problemsEvidence based management (EBMgt)The systematic use of the best available evidence to improve management practiceFour components:Decision maker’s expertise and judgmentExternal evidenceOpinions, preferences, and values of those who have a stake in the decisionDecisions are not made in isolation, effect many people, important to consider opinions/preferences of these peopleRelevant organizational factors (ex. culture)Case Study: Google’s hiring interviewAsk how many ping pong balls would fit in a busMany ways to approach this, tells company about the person’s decision making processesDecision-making Biases and ErrorsHeuristics- general rule that simplifies decision makingKahneman and TverskyThese general rules become this because they work consistentlyMGT 305 1nd Edition Lecture 16 Outline of Last Lecture I. Organizational CommunicationII. Workplace Design and CommunicationIII. Trends: Leadership as a ConversationIV. Privacy and the InternetOutline of Current LectureI. Decision making processII. Rational decision makingIII. Bounded rationalityIV. Intuitive decision makingV. Evidence based managementCurrent Lecture- Decision Making Decision Making Process- Step 1: Identifying the problemo More effective to treat underlying problem rather than focusing on the symptoms that stem from it- Step 2: Identifying decision criteriao What things are you going to look for- Step 3: Allocating weights to criteriao What do you value most- Step 4: Developing alternativeso What can be done differently- Step 5: Analyzing alternativeso What is the best optionThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Step 6: Selecting an alternativeo People often ignore the previous steps and go with their gut/instinct- Step 7: Implementing the alternative- Step 8: Evaluate the decision effectivenesso Most people skip this stepManagers Making Decisions Rational decision making- Assumes we make logical, objective, and consistent choices that maximize value- Maximizing is keyo Search until we find the best option, best solutiono Satisfice people tend to be happier and more fulfilled in life than the maximizes, maybe we don’t need to be rational - Maximizing leafs- Assumptions of rationality (unrealistic)o Rational decision maker would be fully objective and logicalo Problem is clear and unambiguouso Decision maker has clear and specific goalo Decision maker knows all possible alternatives and consequenceso Rational decision making consistently leads to increased likelihood of achieving that goalo Decisions are make in best interest of organization Bounded rationality- Managers make decisions rationally, but are limited (bounded) by their ability to process information- Satisfice- accept solutions that are “good enough”o Maybe there isn’t enough time, or resources to find and evaluate all alternatives Intuitive decision making- Making decisions on the basis of experience, feelings, or accumulated judgmento Good for some things, specifically personal decisions, but not always good as experiences and personal feelings can vary- Research shows that this can be a great method of decision making- Components of Intuition:o Values or ethics based decisionso Subconscious mental processingo Experience based decisionso Affect initiated decisionso Cognitive based decision- Biases and errors influence this, can cause problems Evidence based management (EBMgt)- The systematic use of the best available evidence to improve management practice- Four components: o Decision maker’s expertise and judgmento External evidenceo Opinions, preferences, and values of those who have a stake in the decision Decisions are not made in isolation, effect many people, important to consider opinions/preferences of these peopleo Relevant organizational factors (ex. culture) Case Study: Google’s hiring interview- Ask how many ping pong balls would fit in a bus- Many ways to approach this, tells company about the person’s decision making processes Decision-making Biases and Errors Heuristics- general rule that simplifies decision making- Kahneman and Tversky- These general rules become this because they work