Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Chapter 17

Decision Making

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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ObjectivesExplain why decision making is a social

processDefine and explain how bounded

rationality influences decision makingDescribe five models of decision

makingExplain groupthink and how it can be

avoided

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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…Objectives

Explain how experts make decisionsIdentify your personal approach to

organizational decision makingApply the leader-participation model of

decision making

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Are Individual Decisions Independent?

Individual decisions are not independent, solitary events

Instead They are closely connected to previous

decisions

And Are influenced by the social processes

that brought the decision point to a head

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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…Are Individual Decisions Independent?

Decision making at very high levels

– A lonely, individual struggle?

NO! Instead,

It involves information sharing and inter-dependence among organization members

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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The Manager’s Role in Decision Making

The manager’s job is to handle the decision process by assessing The information neededThe players who need to be involved

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Process of Rational Decision Making

1. Recognize anddefine problem

2. Identify decision objective and criteria

3. Allocate weights to criteria

4. List and developalternatives

5. Evaluate alternatives

6. Select the bestalternative

7. Implement thedecision

8. Evaluate thedecision

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Bounded Rationality - Defined

The theory of bounded rationality maintains that

people are restricted in making decisions and

settle for less than ideal solutions

They satisfice, selecting the first alternative that is satisfactory.

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Common Decision Biases

Anchoring and adjusting

Representativeness

Availability

Overconfidence

Bounded awareness

Emotional involvement

Self-serving reasoning

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Garbage Can ModelFactors:

– Problems

– Participants

– Solutions

– Choice opportunities

Above factors float randomly inside the organization and if they connect, a decision results

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Choice Shift

Occurs when groups make more extreme decisions than individuals

Risky shiftPeople support riskier decisions in a group setting than they would individually

Cautious shiftThe group decision is more conservative than individual positions

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Groupthink - Defined

Groupthink is the tendency for members of a highly cohesive group to seek consensus so strongly that they fail to do a realistic appraisal of other possibly better alternatives

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Traditional Groupthink ModelAntecedent Conditions

•Cohesion

•Insulation

•Directive leadership

•High stress & low esteem & low hope of finding solution

•Limited search and appraisal

Con

sens

us s

eeki

ng

DefectiveDecision Making

Symptoms

•Poor information search

•Selective information processing

•Failure to appraise risks

•Incomplete survey of alternatives and solutions

Groupthink Symptoms

•Self-censorship

•Pressure on dissenters

•Pressure toward uniformity

•Illusion of unanimity

•Illusion of invulnerability

•Belief in inherent morality

•Collective rationalization

•Outgroup stereotyping

Defective Decisions

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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How to Avoid Groupthink

Encourage all members to express their doubts Assign a devil’s advocate Adopt the perspectives of other constituencies Bring in qualified outsiders to discuss decisions “Sleep” on a tentative decision and have a

second chance meeting Leaders should listen to others’ opinions first Leaders should demonstrate willingness to be

criticized

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Escalation of Commitment

Occurs when people continue to commit resources to a failing course of action

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Leader-Participation Model

Contingency theory of leadershipContinuum of leadership styles ranges

from autocratic to participative stylesDecideConsult individuals and groupsFacilitateDelegate

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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…Leader-Participation Model

Choice of leadership style can affect outcomes of the decision-making process

DecisionQuality

DecisionImplementation

Cost ofDecision Making

Development

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Seven Questions for Managers to Ask about a

DecisionDecision

Significance

Importance ofCommitment

Leader’s Expertise

Likelihood ofCommitment

Group Support for Objectives

Group Expertise

TeamCompetence

?

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Types of Problems

Structured ProblemsRepetitive, routine problems for which definite procedures have been developed

Unstructured ProblemsNovel, infrequent and / or complex problems for which no procedures have beendeveloped

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Intuition - Defined

Intuition is a cognitive conclusion based on a decision maker’s previous experiences and emotional inputs

Thus, intuition and rational analysis are complementary aspects of good decision making

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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The Zone of Indifference

Zone of indifference– The range within which each person in which

he or she willingly accepts orders without consciously questioning authority

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Recognition PrimedDecision (RPD) Model

Components of the Model

Cue recognition and pattern matching

Action script activationMental simulation driven by mental

models

Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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Klein’s RPD Model

SituationSituationCuesCues

PatternsPatternsActionScriptsActionScripts

MentalSimulations

MentalSimulations

MentalModelsMentalModels

generatesgenerates

that letthat letyouyou

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Organizational Behavior : An Experiential Approach 8/EJoyce S. Osland, David A. Kolb, Irwin M. Rubin and Marlene E. Turner

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PreMortem Exercises

Designed to expose vulnerabilities in planning

Stage Activity1. Preparation Review the plan

2. Imagine a fiasco Imagine causes of failures

3. Generate reasons for failure

Individuals write down reasons for failures

4. Consolidate the lists

Individuals take turns listing reasons

5. Revisit the plan Address issues of major concern; schedule additional meeting

6. Review the list Periodically revisit the list of reasons for failure