Management a practical introduction 3rd kinicky chapter 07

Management
A Practical Introduction
Third Edition
Angelo Kinicki &
Brian K. Williams

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


Chapter 7: Individual & Group
Decision Making

How Managers Make Things
Happen
The Nature of Decision Making
Rational & Nonrational Decision Making
Evidence-Based Decision Making & Analytics
Making Ethical Decisions
How to Work With Others
How to Overcome Barriers to Decision Making
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


7.1 The Nature Of Decision Making
HOW DO MANAGERS MAKE DECISIONS?
A choice made from available alternatives is a
decision
The process of identifying and choosing
alternative courses of action is decision making
Decisions that are repetitive and routine and
made automatically are programmed

Decisions that occur under nonroutine,
unfamiliar circumstances and are not automatic
are nonprogrammed
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


7.1 The Nature Of Decision Making
The willingness to gamble or to undertake risk
for the possibility of gaining an increased payoff
is referred to as risk propensity
The combination of how an individual perceives
and responds to information is the individual’s
decision-making style
Decision-making styles differ according to
value orientation (the extent to which a person
focuses on either task and technical issues or
people and social concerns when making a
decision) and tolerance for ambiguity (the extent
to which a person has a need for structure or
control)
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


7.1 The Nature Of Decision Making

When the dimensions of value orientation and
tolerance for ambiguity are combined, four
decision-making styles emerge:

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin

Knowing Your Decision Making
Style…Directive

 Low tolerance for ambiguity and oriented
toward task and technical concerns
 Efficient, logical, practical, and
systematic in approach to solving
problems
 Tend to be autocratic, exercise power and
control, and focus on the short-term

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


Knowing Your Decision Making
Style…Analytical

 Higher tolerance for ambiguity and is
characterized by the tendency to
overanalyze a situation
 Careful decision makers who take longer
to make decisions; also respond well to

new situations

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


Knowing Your Decision Making
Style…Conceptual

 High tolerance for ambiguity and tends to focus
on the people or social aspects of a work
situation
 Adopts a long-term perspective and relies on
intuitions and discussions with others to acquire
information
 Can result in an indecisive approach to decision
making

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.

Knowing Your Decision Making
Style…Behavioral

 The most people oriented
 Works well with others, enjoys social
interactions in which opinions are openly
exchanged; has tendency to avoid conflict, but
can be indecisive and have a hard time saying
no
 Can lead to a wishy-washy approach to decision
making

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


7.1 The Nature Of Decision Making
Figure 7.1: Decision-Making Styles

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


Rational Decisions

 Rational Model of
Decision Making –
also called the
classical model
explains how
managers should
make decisions; it
assumes managers
will make logical
decisions that will be
optimum in furthering
the organization’s
best interests.
McGraw-Hill/Irwin

 The Rational Model is
based on unrealistic
assumptions:
 Complete information,
no uncertainty,
 Logical, unemotional
analysis,
 Best decision for the
organization.

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The

Companies, Inc. All rights reserved.


7.2 Two Kinds Of Decision Making:
Rational & Nonrational
Figure 7.2: The Four Steps in Rational Decision Making

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


The Four Steps in Rational
Decision Making

Stage 1

Stage 2

Stage 3

Stage 4

Identify the
problem or
opportunity

Think up
alternative
solutions

Evaluate

alternatives &
select a
solution

Implement &
evaluate the
solution
chosen

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


7.2 Two Kinds Of Decision Making:
Rational & Nonrational
There are four stages in the rational decision making
process
Stage 1: Identify the problem or opportunity
Difficulties that inhibit the achievement of goals are
called problems
Situations that present possibilities for exceeding
existing goals are called opportunities
Whether they face a problem or an opportunity,
managers need to make decisions that will improve the
firm

To do this, they need to make a diagnosis (analysis of
the underlying causes of the problem or opportunity)
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


Stage 1
Stage 1
Identify the
problem or
opportunity

Problems: difficulties that
inhibit the achievement
of goals

Diagnosis: analyzing
underlying causes

Opportunities: situations that
present possibilities for exceeding
existing goals
McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.

7.2 Two Kinds Of Decision Making:
Rational & Nonrational
Stage 2: Think up alternative solutions
Once managers have identified problems or
opportunities and diagnosed causes, they need
to come up with alternative solutions
Solutions for programmed decisions are simple
and obvious, but nonprogrammed decisions will
be more challenging

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


Stage 2
Stage 2
Think up
alternative
solutions

 For a programmed
decision — the
alternative will be easy
and obvious

McGraw-Hill/Irwin

 For a nonprogrammed
decision — the more
creative and innovative
the alternative, the better

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


7.2 Two Kinds Of Decision Making:
Rational & Nonrational
Stage 3: Evaluate alternatives & select a solution
 Each alternative must be evaluated to
determine whether it is ethical, feasible, and
effective

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


Stage 3

Stage 3
Evaluate
alternatives
& select a
solution

 Is solution ethical?

 Is solution feasible?

 Is solution ultimately effective?

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


7.2 Two Kinds Of Decision Making:
Rational & Nonrational
Stage 4: Implement & evaluate the solution chosen
It is usually more straightforward to implement
programmed decisions than nonprogrammed
decisions
To successfully implement a decision, managers
must plan carefully and be sensitive to those
affected by the decision
If a decision fails to go as planned, managers
should give it more time, change it slightly, or try
another alternative
In some cases, it might be necessary to start the
process over
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


Stage 4

Stage 4
Implement
& evaluate
the
solution
chosen

 Successful
Implementation –
you need to:
 Plan Carefully
 Be Sensitive to
those affected

McGraw-Hill/Irwin

 Evaluation – you
need to follow up
and evaluate the
results of the
decision and
take action

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.

Stage 4, cont.
Stage 4
Implement
& evaluate
the
solution
chosen

 Evaluation – Taking Action
1) Give it more time
2) Change it slightly
3) Try another alternative
4) Start over

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


7.2 Two Kinds Of Decision Making:
Rational & Nonrational
WHAT’S WRONG WITH THE RATIONAL MODEL?
The rational model describes what a manager
ought to do (it is prescriptive), it does not
describe how a manager should actually make a
decision

The model also assumes that the manager has
complete information

Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin


Some Hindrances to Perfectly
Rational Decision Making
 Complexity
 Time and money constraints
 Different cognitive capacity, values, skills, habits and
unconscious reflexes
 Imperfect information
 Information overload
 Different priorities
 Conflicting goals

McGraw-Hill/Irwin

Kinicki/Williams, Management: A Practical Introduction
3eMcGraw-Hill
©2008, McGraw-Hill/Irwin
© 2006 The
Companies, Inc. All rights reserved.


7.2 Two Kinds Of Decision Making:
Rational & Nonrational
WHY DO MANAGERS MAKE NONRATIONAL
DECISIONS?

Nonrational models of decision making assume
that decision making is usually uncertain and
risky
Nonrational models are descriptive - they
describe how managers actually make decisions
There are two nonrational models: satisficing
and incremental
Kinicki/Williams, Management: A Practical Introduction 3e ©2008, McGraw-Hill/Irwin