Decision Making Lecture Slide
-
Upload
aristyojohans -
Category
Documents
-
view
223 -
download
0
Transcript of Decision Making Lecture Slide
-
8/10/2019 Decision Making Lecture Slide
1/29
-
8/10/2019 Decision Making Lecture Slide
2/29
Aims of the Decision Making lecture
Escalation of commitment; Group think
http://www.youtube.com/watch?v=Oc3C70p_JVs
Theories and modelsTechniques and influences
Levels of decision making
Definitions, roles and processes
RMIT University 2014 2
http://www.youtube.com/watch?v=Oc3C70p_JVshttp://www.youtube.com/watch?v=Oc3C70p_JVs -
8/10/2019 Decision Making Lecture Slide
3/29
Levels of decision-making behaviour
Organisational
Group
Individual
RMIT University 2014 3
-
8/10/2019 Decision Making Lecture Slide
4/29
Levels of decision-making behaviour
Level of
analysis
Theoretical
Approaches Key issues Constraints
Organisation
Theories of
organisation power,
conflict and decision
making
Effects of power and
conflict
1.Multiple ongoing tasks
2.Historical precedents
3.HRM systems
4.Time constraints
Group
Group conformity,
group dynamics,
group size, and
networks
Effects of group
dynamics, individual
perceptions and
behaviours
1. Group norms
2. Group think
Individual 1.Information-processing theory
2. Cognitive
psychology
1.Informationoverload
2.Personal biases
1.Information processing
failures2.Perceptual biases
3.Intuition and emotion
4.Escalation of
commitment
RMIT University 2014 4Source: Bratton et al. 2010: 409, 411
-
8/10/2019 Decision Making Lecture Slide
5/29
RMIT University 2014 5
A decision is often defined as aproductof decision making processes...Managers often seek to avoidmaking decisions or obscure them,often to avoid accountabilityfor courses of action that aresubsequently seen as misguided.
(Linstead & Fulop 2009)
Decision : a definitionSource: Linstead & Fulop, 2009: 667-708
-
8/10/2019 Decision Making Lecture Slide
6/29
Decisional Roles
Entrepreneur
Disturbance
Handler
ResourceAllocator
Negotiator
RMIT University 2014 6Source: Wilson 2014: 69
-
8/10/2019 Decision Making Lecture Slide
7/29
Decisional Roles
Seek to improve the unit and adapt tochanges
Seek and initiate new ideasEntrepreneur
Respond to pressuresDisturbance
Handler
Decide what resources go whereResourceAllocator
Negotiator
RMIT University 2014
A way of life for managers
7Source: Wilson 2014:69
-
8/10/2019 Decision Making Lecture Slide
8/29RMIT University 2014 8
Decision making isthe ability to takethe right decisions in given situations, totake responsibilityand be accountablefor them and to understand the
consequencesof particular courses ofactioninvolves being able to take anoverviewor strategicview of thesituation, see the longer term andtake a wider general perspective
(the helicopter view).(Pettinger 2010)
Decision making
-
8/10/2019 Decision Making Lecture Slide
9/29
Types of decision processes
Sporadic
InformalWill suffer fromdelays
Information fromvarious sourcesof expertise
Time delays
Fluiddecision
Flow, formallychannelled,Speedy &predictable
Information fromfewer sources
Fewer delays
Constricteddecision
Narrowlychannelled,
technicalinformation
Decision madeby experts
RMIT University 2014 9Source: Linstead & Fulop, 2009: 672
-
8/10/2019 Decision Making Lecture Slide
10/29
Traditional decision-making theories and choice
Decision making: a response to a situation requiring
a choice.
A general agreement aboutorganisational goals and thebest means to achievethem.
Unitaryapproach
Emphasises conflict & power
struggles between individuals &coalitions in organisations incircumstances where participantshave substantial knowledge andinformation.
Plural istapproach
RMIT University 2014 10Source: Linstead & Fulop, 2009: 671
-
8/10/2019 Decision Making Lecture Slide
11/29
Types of choice
Which two products to adopt.StraightforwardClear choice
Alternatives of improving profitabilityCompeting
choice
Occurs when issues arising requireresolution
Choiceavoidance
When information is distorted orsuppressed
Choicesuppression
RMIT University 2014 11Source: Linstead & Fulop, 2009: 672
-
8/10/2019 Decision Making Lecture Slide
12/29
Models of decision Making
Decisions are made after carefulevaluation of alternative courses of actionRational
Questions whether managers are capableof making fully rational decisions
Administrative/ Bureaucratic
Introduces the idea that decisions arereally problems looking for solutionsGarbage-can
Political
RMIT University 2014 12
Examines the role of powerful decision
making groups (dominant coalitions) and
why many decisions are really non-
decisions
Source: Linstead & Fulop, 2009: 667-708
-
8/10/2019 Decision Making Lecture Slide
13/29
The rat ionaldecision modelRecognition and
definition of a
problem
Search for alternativecourses of action
Gathering andanalysing data
Identification andapplication of choice
criteria
Evaluation ofalternatives in relation
to choice criteria
RMIT University 2014
Implementation of decision
Assumptions
Problem clarity
Known options
Clear preferences
Constant preferences Maximum pay-off
No time or cost constraints
Outcome will be rational
Source: Bratton et al. 2010: 411; Linstead & Fulop 2009:674;Nelson et al. 2012:150 13
-
8/10/2019 Decision Making Lecture Slide
14/29
Bureaucrat ic/ adminis trat ivemodelBased on theactual behaviour
of decisionmakers
There are cognitiveor mental limits tohuman rationality
Decision making isgoverned bybounded rationality
Influence of non-rational elements in
humans
Satisfices
RMIT University 2014
Decision made on best in
the circumstances
AssumptionsManagers:
Select the first satisfactory alternative
Are comfortable making decisions
without determining the alternatives
Make decisions by short cuts or
heuristics (managers make decisions
on what has worked in the past)
Satisficebecause of cost of best
choice
Source: Bratton et al. 2010: 411; Linstead & Fulop 2009:676; Nelson et al. 2012:151 14
-
8/10/2019 Decision Making Lecture Slide
15/29
-
8/10/2019 Decision Making Lecture Slide
16/29
Polit icaldecision modelRecognises the
role of conflict andconflict resolutionin the decision-
making process
Pluralisticin nature
Recognises therole ofstakeholders in theorganisation
Decision making isabout reconcilingstakeholdersinterests
RMIT University 2014
Implementation of decision
Difficulty
Thepluralistapproach
does not explain how
decisions can be made or
avoided in organisations
because of the influence or
pressure of external groupswho may form part of adominant coalition.
Source: Linstead & Fulop 2009:685 16
-
8/10/2019 Decision Making Lecture Slide
17/29
Z Model of Decision Making
Look at the facts
and details Sensing IntuitionWhat alternatives
do the facts suggest?
What are the facts?
Be specific and realistic.
List all relevant details.
Be clear.
Let your imagination
run wild.
Brainstorm.
Consider various solutions
Can it beanalysed
objectively?
Thinking Feeling What impact will ithave on those
involved?
Consider the
# consequences of eachalternative
# cause and effect of each
action
If you were not involved, what
would you suggest?
Is it something you
can live with?How do you feel about the
action?
What hunches do you have
about others reactions?
RMIT University 2014 17Source: Nelson et al. 2012: 148-164
-
8/10/2019 Decision Making Lecture Slide
18/29
PfeffersFourOrganisational
Decision-MakingModels
RMIT University 2014
DIMENSION
RATIONAL
(Unitary)
BUREAUCRATIC
(unitary)
GARBAGE CAN
(pluralist)
POLITICAL POWER
(pluralist)
PREFERENCES
&
GOALS
Consistent
among
participants
Reasonably consistent Unclear, ambiguous,
may be constructed
afterwardsto legitimise actions
Inconsistent, diverse
or conflicting goals
& preferences
POWER&
CONTROL
Focuses onhierarchical
authority
Less centralised ,still legitimate authority
Very decentralised,anarchic; power is also
recognised
Shifting coalitions&interest groups who
have power but not
necessarily authority
DECISION
PROCESS
Orderly,
rational
Procedural rationality
embodied in programmes&standard operating
procedures
Ad hoc
Disorderly, characterised
by push & pull of interestgroups
EXPECTED
RESULTS
& OUTCOMES
Maximisation
&
optimisation
Follow fromsatisficing mode
Unclear, ambiguous Power & stabilisation
of demands
INFORMATION
REQUIREMENTS
Extensive
&systematicinformation gathering
Reduced by the use of
rules & proceduresinformation
Haphazard collection &
use of information
Information used
&withheld strategically
RATIONALEEfficiency
&effectiveness in
achieving agreed-to
performance criteria
Stability, fairness Playfulness Conflict & power
struggles among
relatively equal
opponents
18Source: Linstead & Fulop, 2009
-
8/10/2019 Decision Making Lecture Slide
19/29
RMIT University 2014
Types of decision Traditional decision-making
techniques
Modern decision-making
techniques
1.Programmed
Routine, repetitive
decisions;
organisation develops
specific processes for
handling them.
Low uncertainty and
low ambiguity
Habit
Clerical routine: standard
operating procedures,
policies, manuals
Organisation structure
know your place
Systems of sub-goals
Well-defined information
channels
Operations research
mathematical models,
computer simulations
Electronic data
processing
Management
information systems
2. Non-programmed
One-shot, ill-
structured novel policy
decisions.
Handled by general
non-routine problem-
solving processes.
High uncertainty and
ambiguity.
Judgment, intuition ,
creativity
Rule of thumb (by top
management)
Heuristic (problem solving)
techniques applied to:
constructing computer
models
brainstorming
counter-planning
simulation
Techniques of decision making
Linstead & Fulop 2009:Table 14.1: 677 19
-
8/10/2019 Decision Making Lecture Slide
20/29
Influences of Decision Making
Influences
Risk, riskaversion
Personality,attitudes,
values
IntuitionCreativity
Organisation
Environment
RMIT University 2014 20
Individuals differ in
risk behaviour
Enablers
and
barriers tocreativity
Ability to make
judgment about a
situation based on a
hunch.
4 stages:
Preparation
Incubation
Illumination
Verification
Source: Nelson et al. 2012: 153
-
8/10/2019 Decision Making Lecture Slide
21/29
Escalation of Commitment
Limitation that all decisionmaking models share
Unwillingness toabandon a baddecision, or continuing
to support a failing
course of action, evenwhen substantial costsare incurred
The desire to win is amotivation to continue
to escalate
RMIT University 2014 21Source: Nelson et al. 2012: 151
-
8/10/2019 Decision Making Lecture Slide
22/29
Group Decision making
Synergy = 1 + 1 = 3
Advantages
More knowledge and
information
Greater understandingof the decision
Member involvement
Disadvantages
Pressure to conform
Domination by oneforceful member
Time required to makea decision
RMIT University 2014 22Source: Nelson et al. 2012: 153
-
8/10/2019 Decision Making Lecture Slide
23/29
Negative factors arising from group cohesiveness
Groupthink
Moraljudgment andreality testing
aresuspended
Often occurswith high riskdecisions inhigh-status
groups withdominantleadership
High stressconditions andthreats to self-
esteem
RMIT University 2014 23Source: Thompson & McHugh, 2009: 375
-
8/10/2019 Decision Making Lecture Slide
24/29
Symptoms of Groupthink
Excessive optimismand risk taking
Group believes itcannot make a baddecision
Illusion ofinvulnerability
Conform andreach consensus
Unpopular ideasmay besuppressed
Members who
oppose the groupare stereotyped asweak, evil orstupid.
Pressure
onindividuals
Groupconsensus
RMIT University 2014 24
Leads to discounting
warnings and negative
information.
An illusion of unanimity
emerges
Self-censorships of any
deviation from group
norms.Belief in the
inherent morality
of the group
Leads members to be
convinced of the
logical correctness ofwhat
they are dong and
ignore
the ethical or moral
consequences of
decisions.
Source: Linstead & Fulop, 2009: 691
-
8/10/2019 Decision Making Lecture Slide
25/29
Avoiding Groupthink
Can be avoided with some effort
Interactionwith other
groups
Inviteconsultantsand others
to challengethe group
Developalternative
plans
RMIT University 2014 25
Leaders need to be ref lexiveto assess their behaviour and stay impartial
Source: Linstead & Fulop, 2009: 691
-
8/10/2019 Decision Making Lecture Slide
26/29
Group Polarisation
The tendency for group discussion to produceshifts toward more extreme attitudes among
members.
Can be disastrous
If individuals areleaning towards a
dangerous decision theyare likely to support it
more strongly followingdiscussion.
RMIT University 2014 26Source: Nelson et al. 2012: 160
-
8/10/2019 Decision Making Lecture Slide
27/29
Minimising Bias and Errors in Decision Making
Generation of free flowing multiple ideas Computer mediated brainstormingBrainstorming
Variation of brainstorming , independent
contribution
Nominal group
technique
Discussion with two initial members, thenadditional members added until all groupmembers have joined the discussion
Stepladdertechnique
Delphitechnique
RMIT University 2014
Structured team decision-making process of
pooling the collective knowledge of subject
experts
Source: Bratton et al. 2010 :425 27
-
8/10/2019 Decision Making Lecture Slide
28/29
Current issuesin organisational decision making
Power-distance
Individualism-collectivismCulture
Artificial intelligence
Virtual teamworkTechnology
Profit making v social responsibility
Actions & valuesEthics
RMIT University 2014 28Source: Wood et al. 2013: 486-493
-
8/10/2019 Decision Making Lecture Slide
29/29
References Bratton, J., Sawchuck, P., Forshaw, C., Callinan, M., and Corbett, M. 2010, Work and
Organization Behaviour, 2nd edn, Palgrave MacMillan, UK. Chapter 15: Decision
Making and Ethics, pp.407-432
Haslam, S.A. 2004, Psychology in organisations: the social identity approach, 2nd edn,
Sage London. Chapter 6: Group decision making, pp.99-119
Linstead S., Fulop, L., and Lilley, S. 2009, Management and Organization: A critical
text, 2ndedn, Palgrave MacMillan, London. Chapter 14: Decision making in
organisations, pp. 667-708
Nelson, D.L., Quick, J.C., Wright, S., and Adams, C. 2012, OrgB Asia-Pacific Edition,Cengage, Sydney. Chapter 10: Decision making by individuals and groups, pp. 148-
164
Pettinger, R. 2010, Organizational Behaviour: Performance management in practice.
Routledge, London. Chapter 20
Thompson, P. & McHugh, D. 2009 Work Organisations: A critical approach, PalgraveMacmillan, London. Chapter 24: From groups to teams, pp. 369-387
Wilson, F.M. 2014, Organizational Behaviour and Work: A critical introduction, Oxford
University Press, London. Chapter 3, p.69
Wood, J. Zeffane, R. Fromholtz, M. Wiesner, Morrison, R. and Seet, P.
2013, Organisational Behaviour: Core Concepts and Applications, Wiley, Brisbane