Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14 C H
A
P
T
E
R
Decision Making
?CONTRAST programmed with nonprogrammed
decisions,
?IDENTIFY the steps in the decision-making process,
?DISCUSS priority setting,
?DESCRIBE the conditions governing alternative-
outcomes relationships,
?EXPLAIN the role of behavioral influences on decision
making,
?COMPARE individual and group decision making,
?IDENTIFY specific techniques for stimulating
creativity,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-3
Types of Decisions
Repetitive and routine
decisions and where a
definitive procedure is
developed to handle them,
Novel and unstructured
decisions required for
unique and complex
management problems,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-4
Attributes of of Decisions
? Decisions should be thought of as a means
rather than ends,
? Decisions are the organizational
mechanism through which an attempt is
made to achieve a desired state,
? Decisions are,in effect,an organizational
response to a problem,
? Every decision is the outcome of a dynamic
process influenced by many forces,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-5
A Rational Decision-Making
Process
Establishing
specific goals and
objectives and
measuring results
Problem
identification and
definition
Establishing
priorities Revise Revise
Consideration
of causes
Development of
alternative
solutions
Evaluation of
alternative
solutions Revise Revise
Implementation Follow-up
Revise Revise
Solution
Selection
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-6
Problem Identification
and Definition
Defining Problems in Terms of Solutions
Identifying Symptoms as Problems
Factors Affecting Problem Identification,
Perceptual Problems
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-7
Involves Considering Three Issues,
Urgency
Relates to time,
Impact
Seriousness of the problem’s effects,
Establishing Priorities
Growth Tendency
Addresses future considerations,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-8
Alternative-Outcome
Relationship
POSSIBLE CONDITIONS
Certainty
Complete knowledge of the probability of
the outcome of each alternative,
Uncertainty
Absolutely no knowledge of the
probability of the outcome of each
alternative,
Risk
Some probabilistic estimate of the
outcomes of each alternative,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-9
Bounded Rationality
Assumptions
? Rarely have all necessary or desired information
? Unaware of all alternatives or consequences
? Early adoption of solutions due to limitations common
? Organizational goals constrain decision-making
? Conflicting constituents’ goals can force compromises
March and Simon’s administrative decision-
making model depicts decision-makers as
? Operating with incomplete information
? Affected by their cognitive abilities
? Impacted by psychological and sociological factors
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-10
Intuitive Decision-Making
Using experience,self-confidence,and
self-motivation to process information,
data,and the environment or address
a problem or opportunity,
Contributing Factors,
? High levels of uncertainty
? No history or past experience to draw upon
? Intense time pressures
? Excessive number of alternatives
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-11
Behavioral Influences
Values Potential for Dissonance
Propensity
for Risk
Escalation of
Commitment
Cultural Context
Decision-
Making
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-12
Cognitive Dissonance
Conditions contributing to anxiety,
? Psychological and financial importance of
decision
? Number of foregone alternatives
? Number of favorable features of foregone
alternatives
Lack of consistency or harmony among
an individual’s various cognitions
after a decision has been made,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-13
Escalation of Commitment
? Need to turn a losing or poor decision into a winning
or good decision
? Found in decision makers who,
Are unclear of goals
Have a fear of failure
Are feeling pressured
Work in a low trust culture
An increasing commitment to a previous decision
when a,rational” decision maker would withdraw,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-14
Individual Versus Group
Decision-Making
More
Less
Individual Average individual Minority control Majority control Consensus
Method of Utilization of Group Resources
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-15
Creativity in Group
Decision- Making
Process by which a group,or team produces
novel and useful ideas to solve a problem
or capture and opportunity,
Perseverance Risk-taking Propensity
Openness Tolerance of Ambiguity
“Lateral thinking” characteristics,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-16
Techniques for
Stimulating Creativity
Brainstorming
The generation of ideas in a group through
noncritical discussion,
The Basic Rules,
? No idea is too ridiculous,
? Each idea presented belongs to the group,not to the
person stating it,
? No idea can be criticized,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-17
Techniques for
Stimulating Creativity
The Delphi Technique
? Solicitation and comparison of anonymous judgments
on the topic of interest,
? Use of a set of sequential questionnaires,
? Intersperses questionnaires with,
? Summarized information
? Feedback of opinions from earlier responses
? Retains the advantage of having several judges while
removing the biasing effects that might occur in face-
to-face interaction,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-18
Techniques for
Stimulating Creativity
Phase 1
? Individuals record
ideas but do not speak
Phase 2
? Structured sharing of
ideas takes place
? Output is a list of ideas
Phase 3
? Structured discussion of
each idea
Phase 4
? Independent and
confidential ranking/
voting
? Mathematically pooled
outcomes result
The Nominal Group Technique (NGT)
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-19
Techniques for
Stimulating Creativity
? Delphi participants typically are anonymous to one another,
while NGT participants become acquainted,
? NGT participants meet face-to-face around the table,while
Delphi participants are physically distant and never meet
face-to-face,
? In Delphi,all communication between participants is by way
of written questionnaires and feedback from the monitoring
staff,In NGT,communication is direct between participants,
The Delphi
Technique
Nominal Group
Technique Versus
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14 C H
A
P
T
E
R
Decision Making
?CONTRAST programmed with nonprogrammed
decisions,
?IDENTIFY the steps in the decision-making process,
?DISCUSS priority setting,
?DESCRIBE the conditions governing alternative-
outcomes relationships,
?EXPLAIN the role of behavioral influences on decision
making,
?COMPARE individual and group decision making,
?IDENTIFY specific techniques for stimulating
creativity,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-3
Types of Decisions
Repetitive and routine
decisions and where a
definitive procedure is
developed to handle them,
Novel and unstructured
decisions required for
unique and complex
management problems,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-4
Attributes of of Decisions
? Decisions should be thought of as a means
rather than ends,
? Decisions are the organizational
mechanism through which an attempt is
made to achieve a desired state,
? Decisions are,in effect,an organizational
response to a problem,
? Every decision is the outcome of a dynamic
process influenced by many forces,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-5
A Rational Decision-Making
Process
Establishing
specific goals and
objectives and
measuring results
Problem
identification and
definition
Establishing
priorities Revise Revise
Consideration
of causes
Development of
alternative
solutions
Evaluation of
alternative
solutions Revise Revise
Implementation Follow-up
Revise Revise
Solution
Selection
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-6
Problem Identification
and Definition
Defining Problems in Terms of Solutions
Identifying Symptoms as Problems
Factors Affecting Problem Identification,
Perceptual Problems
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-7
Involves Considering Three Issues,
Urgency
Relates to time,
Impact
Seriousness of the problem’s effects,
Establishing Priorities
Growth Tendency
Addresses future considerations,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-8
Alternative-Outcome
Relationship
POSSIBLE CONDITIONS
Certainty
Complete knowledge of the probability of
the outcome of each alternative,
Uncertainty
Absolutely no knowledge of the
probability of the outcome of each
alternative,
Risk
Some probabilistic estimate of the
outcomes of each alternative,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-9
Bounded Rationality
Assumptions
? Rarely have all necessary or desired information
? Unaware of all alternatives or consequences
? Early adoption of solutions due to limitations common
? Organizational goals constrain decision-making
? Conflicting constituents’ goals can force compromises
March and Simon’s administrative decision-
making model depicts decision-makers as
? Operating with incomplete information
? Affected by their cognitive abilities
? Impacted by psychological and sociological factors
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-10
Intuitive Decision-Making
Using experience,self-confidence,and
self-motivation to process information,
data,and the environment or address
a problem or opportunity,
Contributing Factors,
? High levels of uncertainty
? No history or past experience to draw upon
? Intense time pressures
? Excessive number of alternatives
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-11
Behavioral Influences
Values Potential for Dissonance
Propensity
for Risk
Escalation of
Commitment
Cultural Context
Decision-
Making
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-12
Cognitive Dissonance
Conditions contributing to anxiety,
? Psychological and financial importance of
decision
? Number of foregone alternatives
? Number of favorable features of foregone
alternatives
Lack of consistency or harmony among
an individual’s various cognitions
after a decision has been made,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-13
Escalation of Commitment
? Need to turn a losing or poor decision into a winning
or good decision
? Found in decision makers who,
Are unclear of goals
Have a fear of failure
Are feeling pressured
Work in a low trust culture
An increasing commitment to a previous decision
when a,rational” decision maker would withdraw,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-14
Individual Versus Group
Decision-Making
More
Less
Individual Average individual Minority control Majority control Consensus
Method of Utilization of Group Resources
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-15
Creativity in Group
Decision- Making
Process by which a group,or team produces
novel and useful ideas to solve a problem
or capture and opportunity,
Perseverance Risk-taking Propensity
Openness Tolerance of Ambiguity
“Lateral thinking” characteristics,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-16
Techniques for
Stimulating Creativity
Brainstorming
The generation of ideas in a group through
noncritical discussion,
The Basic Rules,
? No idea is too ridiculous,
? Each idea presented belongs to the group,not to the
person stating it,
? No idea can be criticized,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-17
Techniques for
Stimulating Creativity
The Delphi Technique
? Solicitation and comparison of anonymous judgments
on the topic of interest,
? Use of a set of sequential questionnaires,
? Intersperses questionnaires with,
? Summarized information
? Feedback of opinions from earlier responses
? Retains the advantage of having several judges while
removing the biasing effects that might occur in face-
to-face interaction,
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-18
Techniques for
Stimulating Creativity
Phase 1
? Individuals record
ideas but do not speak
Phase 2
? Structured sharing of
ideas takes place
? Output is a list of ideas
Phase 3
? Structured discussion of
each idea
Phase 4
? Independent and
confidential ranking/
voting
? Mathematically pooled
outcomes result
The Nominal Group Technique (NGT)
Copyright ? 2002 by The McGraw-Hill Companies,Inc,All rights reserved,McGraw-Hill/Irwin
14-19
Techniques for
Stimulating Creativity
? Delphi participants typically are anonymous to one another,
while NGT participants become acquainted,
? NGT participants meet face-to-face around the table,while
Delphi participants are physically distant and never meet
face-to-face,
? In Delphi,all communication between participants is by way
of written questionnaires and feedback from the monitoring
staff,In NGT,communication is direct between participants,
The Delphi
Technique
Nominal Group
Technique Versus
