Chapter Ten
Making Decisions

Chapter Ten Outline
Models of Decision Making
•The Rational Model
•Simon’s Normative Model
Dynamics of Decision Making
•Contingency Model of Decision Making
•Improving Decision Making
•General Decision-Making Styles
•Escalation of Commitment
•Creativity

Group Decision Making
•Advantages and Disadvantages of Group-Aided Decision
Making
•Participative Management
•When to Have Groups Participate in Decision Making:
The Vroom/Yetton/Jago Model
•Group Problem-Solving Techniques
Chapter Ten Outline (continued)

9-2
•Consists of a structured four-step sequence
* identifying the problem
* generating alternative solutions
* selecting a solution
* implementing and evaluating the solution
The Rational Model of Decision
Making

•Based on the notion of bounded rationality, i.e.
decision makers face a variety of constraints
•Decision making is characterized by
* limited information processing
* use of judgmental heuristics (rules, shortcuts)
* satisficing
Simon’s Normative Model of
Decision Making

Availability Heuristic: A decision maker’s tendency to
base decisions on information that is readily available in
memory.
Representativeness Heuristic: The tendency to
assess the likelihood of an event occurring based on one’s
impressions about similar occurrences.
Judgmental Heuristics

Satisficing: Choosing a solution that meets a minimum
standard of acceptance
Judgmental Heuristics (cont)

Improving Decision Making
Through Effective Knowledge
Management
 Systems and practices that increase the sharing of
knowledge and information
 Types of knowledge
 Tacit knowledge – intuition, experience, natural abilities
 Explicit knowledge
 Explicit knowledge requires access to large amounts of
information; tacit knowledge is obtained through
observation, mentoring, collaboration, etc.

General Decision Making Styles
 Based on how one perceives and
comprehends stimuli and chooses to
respond
 Value orientation – task and technical
concerns or people and social concerns
 Tolerance for ambiguity – need of structure
or control

Analytical Conceptual
Directive Behavioral
Tasks and Technical
Concerns
People and Social
Concerns
Value Orientation
Low
High
Decision Making Styles

Hands on
Exercise
• Which of the four styles best represents your
decision-making style? Which is least reflective of
your style?
• How do your scores compare with the following
norms: directive (75), analytical (90), conceptual
(80), and behavioral (55)?
• What are the advantages and disadvantages of
your decision-making style?
What is Your Decision Making
Style?

Escalation of Commitment
 Tendency to stick to a course of action even
when it is associated with and unlikely to reverse
a bad situation. Why?
 Psychological and social
 Bias facts to support a decision
 “Recover losses” more attractive than achieve gains
 Ego
 Organizational inertia
 Characteristics of project – long-term returns
 Contextual determinants – outside organization

9-9
1. Set minimum targets for performance, and have
decision makers compare their performance with these
targets.
2. Have different individuals make the initial and
subsequent decisions about a project.
3. Encourage decision makers to become less ego-
involved with a project.
4. Provide more frequent feedback about project
completion and costs.
5. Reduce the risk of penalties of failure.
6. Make decision makers aware of the costs of
persistence.
Skills and Best Practices: Recommendations
to Reduce Escalation of Commitment

9-10
1. Preparation: Reflects the notion that creativity starts
from a base of knowledge.
2. Concentration: Where an individual concentrates on the
problem at hand.
3. Incubation: Done unconsciously. During this stage,
people engage in daily activities while their minds
simultaneously mull over information and make remote
associations.
4. Illumination: Remote associations from the incubation
stage are ultimately generated.
5. Verification: Entails going through the entire process to
verify, modify, or try out the new idea.
Stages Underlying the Creative
Process

Group decision-making
 Data suggests that innovative groups
possessed high levels of both minority dissent
and participation in decision making
 Note four requirements of effective decision
making in a group:
 Focus on process
 Understand requirements for an effective choice
 Assess positive qualities of alternative solutions
 Assess negative qualities of alternative solutions
 Suggests openness, acceptance of dissent?

9-11
Table 9-2
Advantages Disadvantages
1. Greater pool of knowledge 1. Social pressure
2. Different perspectives 2. Minority domination
3. Greater comprehension 3. Logrolling
4. Increased acceptance 4. Goal displacement
5. Training ground 5. “Groupthink”
Advantages and Disadvantages of
Group-Aided Decision Making

Group Problem Solving Techniques
 Definition of consensus – . . . reached
when all members can say they either
agree . . . Or have had their “day in court”
and were unable to convince the others of
their viewpoint. In the final analysis,
everyone agrees to support the outcome

Group Problem Solving Techniques
 Other approaches to a group decision
Unanimity
A minority or one decides

More Formal Group Problem
Solving Techniques
 Brainstorming - disciplined process
 Silent idea (optional)
 Ideas/opinions solicited and written on a board,
disallowing criticisms, allowing piggy-backing on
ideas, clarification
 Delphi technique is another, more formal form of
brainstorming. Involves several rounds of
questionnaire, feedback, etc. Useful in cases
where participants are not in the same place.

More Formal Group Problem
Solving Techniques
 Nominal Group Technique – used to
narrow down options through voting
 Computer-aided Decision Making
Uses computers to manage brainstorming or
delphi questioning

If time permits . . .
 Discuss question on p. 248