Management A Practical Introduction Third Edition Angelo Kinicki & Brian K Williams Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 7: Individual & Group Decision Making How Managers Make Things Happen The Nature of Decision Making Rational & Nonrational Decision Making Evidence-Based Decision Making & Analytics Making Ethical Decisions How to Work With Others How to Overcome Barriers to Decision Making Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.1 The Nature Of Decision Making HOW DO MANAGERS MAKE DECISIONS? A choice made from available alternatives is a decision The process of identifying and choosing alternative courses of action is decision making Decisions that are repetitive and routine and made automatically are programmed Decisions that occur under nonroutine, unfamiliar circumstances and are not automatic are nonprogrammed Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.1 The Nature Of Decision Making The willingness to gamble or to undertake risk for the possibility of gaining an increased payoff is referred to as risk propensity The combination of how an individual perceives and responds to information is the individual’s decision-making style Decision-making styles differ according to value orientation (the extent to which a person focuses on either task and technical issues or people and social concerns when making a decision) and tolerance for ambiguity (the extent to which a person has a need for structure or control) Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.1 The Nature Of Decision Making When the dimensions of value orientation and tolerance for ambiguity are combined, four decision-making styles emerge: Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Knowing Your Decision Making Style…Directive  Low tolerance for ambiguity and oriented toward task and technical concerns  Efficient, logical, practical, and systematic in approach to solving problems  Tend to be autocratic, exercise power and control, and focus on the short-term McGraw-Hill/Irwin Kinicki/Williams, Management: A Practical Introduction 3eMcGraw-Hill ©2008, McGraw-Hill/Irwin © 2006 The Companies, Inc All rights reserved Knowing Your Decision Making Style…Analytical  Higher tolerance for ambiguity and is characterized by the tendency to overanalyze a situation  Careful decision makers who take longer to make decisions; also respond well to new situations McGraw-Hill/Irwin Kinicki/Williams, Management: A Practical Introduction 3eMcGraw-Hill ©2008, McGraw-Hill/Irwin © 2006 The Companies, Inc All rights reserved Knowing Your Decision Making Style…Conceptual  High tolerance for ambiguity and tends to focus on the people or social aspects of a work situation  Adopts a long-term perspective and relies on intuitions and discussions with others to acquire information  Can result in an indecisive approach to decision making McGraw-Hill/Irwin Kinicki/Williams, Management: A Practical Introduction 3eMcGraw-Hill ©2008, McGraw-Hill/Irwin © 2006 The Companies, Inc All rights reserved Knowing Your Decision Making Style…Behavioral  The most people oriented  Works well with others, enjoys social interactions in which opinions are openly exchanged; has tendency to avoid conflict, but can be indecisive and have a hard time saying no  Can lead to a wishy-washy approach to decision making McGraw-Hill/Irwin Kinicki/Williams, Management: A Practical Introduction 3eMcGraw-Hill ©2008, McGraw-Hill/Irwin © 2006 The Companies, Inc All rights reserved 7.1 The Nature Of Decision Making Figure 7.1: Decision-Making Styles Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.4 Making Ethical Decisions Companies use decision trees (graphs of decisions and their possible consequences that are used to crate a plan to reach a goal) to help them reach ethical decisions When using a decision tree, managers should ask: is the proposed action legal? if yes, does the proposed action maximize shareholder value? if yes, is the proposed action ethical? if no, would it be ethical not to take the proposed action? Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.4 Making Ethical Decisions Figure 7.4: The Ethical Decision Tree: What’s The Right Thing To Do? Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.5 Group Decision Making: How To Work With Others WHY WORK IN GROUPS? There are five advantages to using groups: groups provide a greater pool of knowledge groups offer different perspectives groups encourage intellectual stimulation groups allow for a better understanding of decision rationale groups encourage a deeper commitment to the decision Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.5 Group Decision Making: How To Work With Others WHAT ARE THE DISADVANTAGES OF GROUPS? There are several disadvantages of groups: groups can result in a few people dominating or intimidating groups encourage groupthink which occurs when group members strive to agree for the sake of unanimity and avoid accurately assessing the decision situation groups encourage satisficing groups promote goal displacement which occurs when the primary goal is subsumed by a secondary goal Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.5 Group Decision Making: How To Work With Others WHAT SHOULD MANAGERS KNOW ABOUT GROUPS & DECISION MAKING? Managers should be aware of four characteristics of groups: groups are less efficient group size affects the quality of decisions groups may be too confident about their decisions group decision making tends to be better when members know more about relevant issues, and when leaders can weight members’ opinions Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 7: Individual & Group Decision Making CLASSROOM PERFORMANCE SYSTEM Which of the following is not true of group decision making? A) it is more efficient B) group size affects decision quality C) groups are more confident of the decision D) knowledge is important Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.5 Group Decision Making: How To Work With Others SHOULD EMPLOYEES BE INVOLVED IN DECISION MAKING? One technique to improve productivity is participative management (the process of involving employees in setting goals, making decisions, solving problems, and making changes to the organization) Studies have found that participative management is effective in some cases such as when management is supportive and employees trust managers Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.5 Group Decision Making: How To Work With Others When groups make decisions, they have to reach a consensus (when members are able to express their opinions and reach agreement to support the final decision) Three techniques that can help groups solve problems are brainstorming (helps groups generate ideas and alternatives for solving problems, nominal groups (generate ideas and evaluate solutions by writing down as many ideas as possible, listing them on a blackboard, and then taking a secret vote), and delphi groups (use physically dispersed experts who fill out questionnaires to anonymously generate ideas) These can be assisted with computer-aided decision making Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 7: Individual & Group Decision Making CLASSROOM PERFORMANCE SYSTEM Which of the problem solving techniques is useful when managers want to generate as many new ideas or alternatives as possible? A) nominal group technique B) delphi technique C) brainstorming D) computer-aided decision making Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.6 How To Overcome Barriers To Decision Making HOW DO MANAGERS RESPOND TO DECISION SITUATIONS? There are four ineffective reactions: relaxed avoidance - a manager decides to take no action in the belief that there will not be great negative consequences relaxed change - a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that has low risk Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.6 How To Overcome Barriers To Decision Making defensive avoidance - the manager can’t find a good solution so procrastinates, passes the buck, or denies the risk of any negative consequences panic - a manager is so frantic to get rid of the problem that he can’t deal with the situation realistically When a manager agrees that he must decide what to about a problem or opportunity, and takes effective decision-making steps, we say he is deciding to decide Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 7: Individual & Group Decision Making CLASSROOM PERFORMANCE SYSTEM A manager that simply takes the easy way out is using the strategy A) panic B) defensive avoidance C) relaxed change D) relaxed avoidance Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.6 How To Overcome Barriers To Decision Making There are several common decision making biases (called heuristics) that simplify the process of making decisions: When managers use only information that is readily available from memory to make judgments, an availability bias exists When people seek information to support their point of view and discount data that not, a confirmation bias exists A representativeness bias refers to the tendency to generalize from a small sample or a single event Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin 7.6 How To Overcome Barriers To Decision Making When managers add up all the money already spent on a project and conclude it is too costly to simply abandon it, sunk cost bias exists The tendency to make decisions based on an initial figure is adjustment bias Escalation of commitment bias occurs when decision makers increase their commitment to a project despite negative information about it Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Chapter 7: Individual & Group Decision Making CLASSROOM PERFORMANCE SYSTEM Which type of bias occurs when a manager generalizes from a small sample? A) confirmation bias B) representativeness bias C) availability bias D) sunk cost bias Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin ... describe how a manager should actually make a decision The model also assumes that the manager has complete information Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin... Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin Rational Decisions  Rational Model of Decision Making – also called the classical model explains how managers should make... Stage 3: Evaluate alternatives & select a solution  Each alternative must be evaluated to determine whether it is ethical, feasible, and effective Kinicki/Williams, Management: A Practical Introduction