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Commerce 2BA3:
Communication and Individual
Decision Making
Week 5 & 6
Dr. T. McAteer
DeGroote School of Business
McMaster University
Communication
• Opening Exercise
• Basic Model of Communication
What is communication?
• The process by which information is
exchanged between a sender and a
receiver
• Effective communication is when the right
people receive the right information in a
timely manner
Organizational Communication
• Chain of Command
– Lines of authority and formal reporting relationships
– Upward, downward, horizontal communication
• Deficiencies of the Chain of Command
– Failure to consider informal communication
– Filtering (messages are watered down)
– Slowness
Barriers to Effective ManagerEmployee Communication
• Conflicting role demands
– Manager must attend to both task and socioemotional functions
• The mum effect
– The tendency to avoid communicating
unfavourable news to others
The Grapevine
• An organization’s informal communication
network
• Pros
– Can keep employees informed
– Provide a test of employee reactions to proposed
changes
– Adds a little interest and diversion to work setting
• Cons
– Pipeline for rumours
Non-verbal Language
• The transmission of messages by some
medium other than speech or writing
• Body language
• Office Décor and Arrangement
• Clothing
Gender Differences in
Communication
•
•
•
•
•
•
•
Getting credit
Confidence and boasting
Asking questions
Apologies
Feedback
Compliments
Indirectness
Information Richness
INFORMATION
MEDIUM
Face to face
INFORMATION
RICHNESS
Highest
Telephone
High
Written, personal
Moderate
Written, formal
Low
Numeric format
(computer output)
lowest
How to communicate effectively…
• Take the time
• Be accepting of the other person
• Do not confuse the person with the
problem
• Say what you feel
• Listen actively
• Give timely and specific feedback
Discussion Question
• What could organizations do to improve
communication???
Discussion Question
• 360 Degree Feedback
• Employee surveys and feedback
• Suggestion systems
• Telephone hotlines, TV Networks and Intranets
• Management Training
Individual Decision Making
Decision Making
• Opening Exercise
• The process of developing a commitment
to some courses of action
The Rational Decision Making
Process
• Identify problem
• Search for relevant information
• Develop alternative solutions to the
problem
• Evaluate alternative solutions
• Choose best solution
• Implement chosen solution
• Monitor and evaluate chosen solution
Perfect vs. Bounded Rationality
• Perfect rationality
– A decision strategy that is completely
informed, perfectly logical, and oriented
towards economic gain
• Bounded rationality
– A decision strategy that relies on limited
information and that reflects time constraints
and political considerations
Framing & Biases
• Framing
– Aspects of the presentation of information
about a problem that are assumed by
decision makers
• Cognitive Biases
– Tendencies to acquire and process
information in an error-prone way
Bounded rationality can lead to….
• Problems with problem identification
– Perceptual defence (defend against
unpleasant perceptions)
– Problems defined in terms of the solution
– Problems defined in terms of symptoms
Problems with information
search….
• Too little information
– Confirmation bias
• Too much information
– Information overload
Problems with evaluation of
alternatives…..
• Anchoring
– The inadequate adjustment of subsequent
estimates from an initial estimate that serves
as an anchor
• Satisficing
– Establishing an adequate level of acceptability
for a solution to a problem and then screening
solutions until one that exceeds this level is
found
Problems with solution
evaluation….
• Escalation of Commitment
– The tendency to invest additional resources in
an apparently failing course of action
– Examples???