Download Not if it helps them perform better and earn more

LEARNING AND
DECISION MAKING
Dynamics of Organizational Behavior
Virginia Tech MBA Program
Andrew Watson
Agenda
• Learning and Creativity: Ch. 5
• Including Learning Organization
• Decision Making: Handout
• Break
• Decision Making: Ch. 15
• Looking ahead
Learning
• Defined as:
• relatively permanent change in knowledge or behavior
• that results from practice or experience
• Are universities good places to learn?
• Based on above (textbook) definition
• Perhaps we should get more specific:
• Undergrad vs. grad?
• Virginia Tech?
• This program?
• This course?
Learning Through Consequences
• Encourage behaviors using reinforcement
• Positive
• Negative
• Not to be confused with punishment
• Schedule: continuous or partial?
• Often depends on organizational reality, rather than on learning theory
• Discourage behaviors using
• Extinction
• Punishment
Debate About Using Consequences
• It sounds like what Taylor called “Scientific Management”
• Isn’t that demeaning to workers?
• Not if it helps them perform better and earn more
• Isn’t this what B.F. Skinner did with rats?
• In a way, yes: it is a sort of operant conditioning
• But let’s call it OB MOD
• which has improved performance in many organizational settings
• It sounds rather controlling…
Learning…
• From others
• Social learning theory (Bandura), aka social cognitive theory
• Cognitive processes process information from the social environment
• Vicarious learning: watching another person
• On your own
• Self-control, self-reinforcers, self-efficacy
• By doing
• Experiential learning
• Simulations
Creativity
• Generation of useful and novel ideas (text definition)
• Call it Invention, and it’ll be the first of three “I” words
• Others are Innovation and Imitation
• The Person/Employee
• Openness to experience
• The Situation/Workplace
• Autonomy
• Feedback, encouragement, reward…
The Learning Organization
• Members of a learning organization:
• Have the knowledge necessary to do their jobs
• Are motivated to add to this knowledge, i.e. to learn
• Know how to learn
• Peter Senge identified five “disciplines” of such orgs
• Personal mastery
• Complex mental models, or schemas
• Team learning
• Shared vision
• Systems thinking
Tacit Knowledge
• Two kinds of knowledge
• Explicit: can be documented
• Tacit: harder to capture
• Tacit knowledge presents a learning challenge
• G&J discuss tacit knowledge in Ch. 10 (Groups and Teams)
• Learn by working with others who already possess valuable
tacit knowledge
Decision Making
• Exercises in Decision Making
• Do exercises from this first section of handout
• Go on to next section if you have time
• Thinking Fast and Slow (Kahneman, 2011)
• Source of exercises
• And of the rest of the handout
• Also a source for the next slide
Expected Utility Theory
• Still “the most important theory in the social sciences”
• Decide based on answers to questions
• What options to I have?
• For each option, what outcomes are possible?
• For each outcome:
• What’s the utility to me?
• What’s the probability?
• Similar to expectancy theory of motivation
• “Economists adopted expected utility theory in a dual role:
• as a logic that prescribes how decisions should be made,
• and as a description of how Econs make choices.”
• Kahneman rejects the theory as a description of how Humans make choices
Decision Making: Ch. 15
• GJ definition: process by which members or an organization
choose a course of action to respond to:
• Opportunities: choice likely to result in gain
• Problems/threats: choice may not result in gain, since goal attainment is
threatened
• Ethical decisions: GJ again (p. 440):
• “promote well-being and do not cause harm”
• “sometimes it is difficult to determine the boundary between ethical and
unethical decisions in an organization”
Programmed vs. Nonprogrammed
• Some organizational issues are routine or recurring
• e.g., stock running low, need to hire new engineer
• Can develop a performance program (or standard operating procedure)
for such issues
• And execute it when the issue arises
• Hence: programmed decisions
• Other issues are new or novel
• e.g., opportunity to expand into new market
• Involve search for new information
• No existing program to execute
• Hence: nonprogrammed decisions
More on Decision Programs
• If similar nonprogrammed decisions are made in similar ways,
programs may emerge
• True in organizations, and groups, and individuals?
• If so, it sounds like a fractal
• a shape that, when you look at a small part of it, has a similar…
appearance to the full shape
• Quote from fractalus.com/info/layman
• Which includes an example
Classical Model of Decision Making
• Prescriptive: how people should make decisions
• Assumes that Decision makers:
• Have access to all relevant information
• Make optimal decision
• In OB today, this model is a “straw man”
• i.e. built to be demolished
• In reality, decision makers often not know:
• All relevant information
• And getting new information often has a cost
• All possible alternatives
• Let alone the outcome of each alternative
• Own preferences
Administrative Model
• Descriptive: how people actually make decisions?
• Due to Herbert Simon and colleagues
• Bounded rationality
• Limited ability to process information
• Even if all relevant information available
• Satisficing
• Choose acceptable, rather than optimal, decision
• May actually be optimal when considering costs of searching for and
processing information
Heuristics: Sources of Error and Speed
• Heuristic: “rule of thumb” used in decision making
• Faster to use heuristics than to process all information
• Experts often use heuristics
• But a real expert uses the right heuristics
• Consider some heuristics, and errors associated with them
• Availability
• Representativeness: ignoring base rate
• Anchoring and adjustment
Escalation of Commitment
• A prior decision is consuming resources without producing
hoped-for outcomes
• Current decision: expend more resources in support of the
original decision?
• May well get escalation of commitment
• Current decision: Yes
• Why?
• Don’t want to admit mistake (if it really was a mistake)
• Want to win back the losses
• Effect of negative frame
• Description of how many decisions are made
• Prescription: ignore sunk costs
Group Decision Making
• Advantages
• Diverse skills and knowledge
• Error detection
• Decision acceptance
• Disadvantages
• Time
• Potential for groupthink
• Other consequences
• Diffusion of responsibility
• Polarization: groups tend to make more extreme decisions than
individuals
• Availability of techniques such as brainstorming
Looking Ahead
• Feedback
• On Paper 1 tomorrow
• On Exam 1 by 8am on Sunday
• …
• Next week
• Exam 2
• Bring laptop