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Student Presentations 1. 2. 3. 4. 5. 6. 7. 8. Stephanie Bower Brendan Flynn Michael Giordano Kate Scarcella John Collins Sean Space Eddie Ebrahimi Beverly Peters Essentials of Organizational Behavior, 8/e Stephen P. Robbins Chapter 6 Individual Decision Making The Leader’s Responsibility in Decision Making is... 1. 2. manage time accurately identify problems 3. 4. consult with appropriate people produce effective solutions 5. 6. appropriately implement the solutions consider impact of decisions on morale of others Decision-Style Model Tolerance for Ambiguity High Analytical Conceptual Directive Behavioral Low Rational Intuitive Way of Thinking The Six-Step Rational Decision-Making Model 1) 2) 3) 4) 5) 6) Define the problem Identify decision criteria Weight the criteria Generate alternatives Rate each alternative on each criterion Compute the optimal decision Assumptions of the Model 1) 2) 3) 4) 5) 6) Problem clarity Known options Clear preferences Constant preferences No time or cost constraints Maximum payoff Common Biases and Errors Overconfidence bias Anchoring bias Confirmation bias Availability bias Common Biases and Errors Representative bias Escalation of commitment Randomness error Hindsight bias Bounded Rationality Due to the limited capacity of the mind to be fully rational; decision makers construct simplified models to extract the essential features from complex problems Typical Use of Bounded Rationality Limited list of criteria based on most conspicuous choices Final solution represents a satisficing choice, not an optimum one Satisficing - first acceptable choice Intuition Unconscious process created out of distilled experience; resulting in a rapid decision with what appears to be very limited information When is Intuition Used? 1) 2) 3) 4) 5) When a high level of uncertainty exists When there is little precedent to draw on When variables are less scientifically predictable When “facts” are limited When facts don’t clearly point the way When is Intuition Used? 6) 7) 8) When analytical data are of little use When there are several plausible alternative solutions from which to choose When time is limited and there is pressure to come up with the right decision Organizational Constraints Performance Evaluation Reward Systems Formal Regulations System-Imposed Time Constraints Historical Precedents Cultural Differences Cultural background can significantly influence Selection of problems Depth of analysis Importance placed on logic and rationality Whether decisions should be made Autocratically by individual manager Collectively in groups Implications for Managers Five suggestions to improve decision making: 1) 2) 3) 4) 5) Analyze the situation and adjust to the national culture and criteria of organization Be aware of biases Combine rational analysis with intuition Do not assume your specific decision style is appropriate for every job Use creativity-stimulation techniques Creativity - ability to produce novel and useful ideas Helps decision maker identify all viable alternatives The Three Components of Creativity Expertise Creativity Creativity Skills Task Motivation Five Organizational Factors Impeding Creativity 1) 2) 3) 4) 5) Expected evaluation Surveillance External motivators Competition Constrained choice Video Everyday Creativity Gender Differences Evidence indicates that women analyze decisions more than men Reason is not clear Decision Making Evaluation/ Training Tool Decision Style Profile, Published by Discovery Learning, www.discoverylearning.com Standardized decision making assessment Training materials to use/ deliver training Also Multi-Rater version. Decision Making Agenda The Leader’s Responsibility... Quality–Acceptance–Time 5 Decision Styles Compliance when... D1 Acceptance when... D5 7 Rules for using D1 – D5 (2 pp) Decision Making Task: (3 pp) Student Presentations 1. 2. 3. 4. 5. 6. 7. 8. Stephanie Bower Brendan Flynn Michael Giordano Kate Scarcella John Collins Sean Space Eddie Ebrahimi Beverly Peters Decision Making Agenda Models Principles/Concepts/Styles/Rules Activity Case Study Groups Application to your Workplace Reflection Strengths and Development Needs Decision Making Styles: Factors to Consider QUALITY (effectiveness) technically optimum solution rational and realistic solves the problem, fits the criteria ACCEPTANCE (effectiveness) commitment for success creative ownership support to implement consider impact on morale TIME (efficiency) implement effectively avoid waste 5 Decision Styles Type 1 = Leader depends on own knowledge & decides alone * seek no extra information from staff Type 2 = Leader seeks information, then decides alone * seek some information from selected staff Type 3 = Leader consults with individuals, then decides alone * share problem, seek information and ask advice from selected staff Type 4 = Leader consults whole team and then decides alone * meet staff to discuss possible alternatives and use their feelings/opinions as input Type 5 = Leader shares problem with whole team & they mutually decide * define the problem, provide relevant information and participate in discussion * accept group decision Compliance When... Task is routine No extra effort is required No special creativity is needed Supervision or systems are in place Acceptance When... Creativity High energy Enthusiasm Initiative or Special effort is required Close supervision is impossible Decision Making Guide Components Quality of Information Acceptance Needed to Implement Time Available Decision Process D1 Leader has all the information D2 D3 D4 D5 Not Available to Leader Not all Information Available Not all Information Available Not Available to Leader Not Necessary Not Necessary Some Acceptance Required Some Acceptance Required No Time No Time Some Time Time Available Time Available Leader decides alone Decides alone after consulting one people Decides alone after consulting a few Decides alone after consulting most or all Leader and group decide together Consensus Required Decision Making Impact High Conflict Decision Limited Manager Incongruent High Type Time Over Multiple Complexity Needed Solutions Solutions **** **** **** **** **** *** ** *** *** * Expertise Goals Type 5 Type 4 Type 3 * *** ** Type 2 ** ** * Type 1 *** * Commitment * Decision Case 1 You are the supervisor of a manufacturing operation that employees 12 workers. Due to a recent crisis, another manufacturing operation in a different part of the plant is shorthanded and cannot complete their current task. You have been asked to provide replacement workers for the next three days. All of your workers are equally skilled at the tasks required and all are motivated workers. Further, you know each of them well and are aware of no problems which would interfere with any of your workers moving to this other operation for the time required. You also know that demand on your unit is somewhat low at the moment and you can cover for the loss of three workers without significant overload for your current workers. Decision Case 2 You are the manager of a unit consisting of route delivery sales people (e.g.., beer, soda, or bakery delivery). Your sales/delivery force consistently produces good but not stellar results. Your boss has just stormed into your office for the 6th time this month to complain about seeing all the company trucks clustered around a donut shop in the east end of town. He has seen this same group of trucks, all from your unit, at the donut shop repeatedly and thinks it reflects badly on the company. He wants you to do something to change it. Decision Case 3 You are the Safety and Loss Control Manager for an underground mine. Your mine has had a long and celebrated history of a very low lost time accident rate and has recently completed 1.5 million man hours without a lost time accident. However, in the past little while it has come to your attention that there were three close calls with rock bolts in one section of the mine. You believe this situation needs to be corrected before someone gets injured but there are too many alternatives for the right answer to be obvious. You are the safety person so you don’t understand either the geology or the mechanics of rock bolts. However, the Superintendent has identified you as the person to finalize the plan of response. Decision Making Task, Group • As a group... 4. Discuss examples from your experience of recent decisions. What style was used? 5. Choose one to report that was effective. Why did it work well? 6. Choose one to report that “bombed”. Why didn’t it work? Decision Making and Expectations Decisions can be made in any style as long as expectations are clear Difficulty will arise if widely varying expectations Natural practice of good leaders Ask question, “Have I made my expectations clear. Ethics What is ethics? The right way to behave The law A set of rules The truth The greatest good for the most people Ethical Decision Making Moral Reasoning Capacity Collaboration between moral philosophy and moral psychology and has been very influential in recent literature. Kohlberg’s six identifiable stages are classified into three levels of reasoning about moral dilemmas: Pre-Conventional - reasoning based on self-interest. The individual aims to win rewards and avoid punishment. Conventional - reasoning based on conformity to social norms and expectations such as family or peer-group pressures. Post-conventional - reasoning based on universal ethical principles, centered on the notion of justice. Outcome Based Ethical Principles Beneficence - decisions should maximize potential benefits and minimize potential harm or risk to others. Egoism – decisions should maximize benefits to oneself Justice – decisions should result in a fair and equitable distribution of benefits as well as burdens Utilitarianism – decisions should result in the greatest good for the greatest number From Ethical Decision Challenge, Center for Applied Research, 1998 Rule-Based Ethical Principles Cultural Relativism – do what is consistent with the laws and norms of one’s own nation Golden Rule – do unto others as you would have others do unto you Kant’s Categorical Imperative – do what they would want anyone else to do who was facing the same set of circumstances Organizational relativism – do what is consistent wit the goals and norms of one’s own organization Professional ethic – do what would be condoned or supported by one’s professional colleagues and peers Respect for persons – do what will maintain the autonomy of others From Ethical Decision Challenge, Center for Applied Research, 1998 Stages of Moral Development Level Principled Stage Description 6. Following self-chosen ethical principles, even if they violate the law 5. Valuing rights of others; upholding non-relative values and rights regardless of the majority’s opinion Conventional Pre-conventional 4. Maintaining conventional order by fulfilling obligations to which you have agreed 3. Living up to what is expected by people close to you 2. Following rules only when it’s in your immediate interest 1. Sticking to rules to avoid physical punishment Organizational Constraints Performance Evaluation Reward Systems Formal Regulations System-Imposed Time Constraints Historical Precedents Cultural Differences Cultural background can significantly influence Selection of problems Depth of analysis Importance placed on logic and rationality Whether decisions should be made Autocratically by individual manager Collectively in groups Outcome Based Ethical Principles Beneficence - decisions should maximize potential benefits and minimize potential harm or risk to others. Egoism – decisions should maximize benefits to oneself Justice – decisions should result in a fair and equitable distribution of benefits as well as burdens Utilitarianism – decisions should result in the greatest good for the greatest number From Ethical Decision Challenge, Center for Applied Research, 1998 Rule-Based Ethical Principles Cultural Relativism – do what is consistent with the laws and norms of one’s own nation Golden Rule – do unto others as you would have others do unto you Kant’s Categorical Imperative – do what they would want anyone else to do who was facing the same set of circumstances Organizational relativism – do what is consistent wit the goals and norms of one’s own organization Professional ethic – do what would be condoned or supported by one’s professional colleagues and peers Respect for persons – do what will maintain the autonomy of others From Ethical Decision Challenge, Center for Applied Research, 1998