Lecture Organizational behavior - Chap 9: Introducing organizational behavior

Chapter 9
Decision Making and
Creativity
You have to make good choices


Chapter 9 Study Questions


What is involved in the decision-making process?



What are the alternative decision-making
models?



What are key decision-making traps and issues?



What can be done to stimulate creativity in
decision making?

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What is involved in the decisionmaking process?



Decision­making 
• The process of choosing a course of action for
dealing with a problem or opportunity.

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What is involved in the decisionmaking process?


Steps in Decision Making
• Recognize and define the problem
• Identify and analyze alternative courses of

action.
• Choose a preferred course of action
• Implement the preferred course of action
 Lack-of-participation error – occurs when
important people are excluded from the
decision-making process.
• Evaluate the results and follow-up as
necessary.
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What is involved in the
decision-making
process?

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What is involved in the decisionmaking process?




Ethics
• The philosophical study of morality or standards
regarding good character and conduct.
Moral problem 
• One that poses major ethical consequences for
the decision maker or for others.

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What is involved in the decisionmaking process?


Moral dilemma
• Decision maker faces two or
more ethically uncomfortable
alternatives.
• Either alternative is potentially
beneficial and harmful.

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Figure 9.1 The decision-making
process and ethical reasoning
model

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What is involved in the decisionmaking process?


Ethical double checks
• Criteria





Utility – all stakeholders satisfied?
Rights – are all rights and duties respected?
Justice – is it consistent with cannons of justice?
Caring – is it consistent with responsibility to care?

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What is involved in the decisionmaking process?


Ethical Double Checks
• Spotlight Questions
 How would I feel if my family found out about this
decision?
 How would I feel if the decision was published?
 What would the person you know or know of who has
the strongest character do in this situation?

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What is involved in the decisionmaking process?
Programmed decisions
• Made as standardized responses to recurring

situations and routine problems.
Nonprogrammed decisions
• Specifically crafted or tailored to fit a unique
situation.
 Crisis decision – unexpected problem threatens
major harm and disaster if not resolved quickly
and appropriately.

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What is involved in the decisionmaking process?


Decisions are made in the context of three general 
environments.
• Certainty
• Risk
• Uncertainty

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What is involved in the decisionmaking process?


A decision environment is certain
• When information is sufficient to predict

the results of each alternative in advance
of implementation.

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What is involved in the decisionmaking process?


A decision environment is risky
• When decision makers lack complete

certainty regarding the outcomes of various
courses of action, but they are aware of the
probabilities associated with their
occurrence.

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What is involved in the decisionmaking process?


 A decision environment is uncertain
• When managers have so little information on hand that

they cannot even assign probabilities to various
alternatives and their possible outcomes.

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Figure 9.2 Combinations of
decision environments and types
of decisions

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What is involved in the decisionmaking process?


Risk Management
• Involves anticipating risks and factoring
them into decision making.

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Figure 9.3 Decision making viewed
from the classical and behavioral
perspectives

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What are the alternative
decision-making models?


Classical decision model assumes a manager:
• Acts rationally and in a fully informed manner.
• Faces a clearly defined problem.
• Knows all possible action alternatives and their

consequences.
• Chooses the optimum solution that give the
absolute best solution to the problem.

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What are the alternative

decision-making models?




Behavior decision model
• Suggests that people act only in terms of their
perceptions, which are frequently imperfect.
Satisficing decisions 
• Decision makers choose the first alternative
that appears to give an acceptable or
satisfactory resolution of the problem.

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What are the alternative decisionmaking models?
Teams engage in two cognitive processes:


Systematic
• Problem approach utilizing a rational, analytic

thinking.


Intuitive
• Problem approach that is flexible and

spontaneous.
• A key element of decision-making under
risky and uncertainty conditions.

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What are key decision-making
traps and issues?


Judgmental heuristics
• Simplifying strategies or shortcuts used to make

decisions.
• Make it easier to deal with uncertainty and
limited information common to problem
situations.

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What are key decision making
traps and issues?


Availability heuristic
• Involves assessing a current event based on

past occurrences that are easily available in
one’s memory.


Representativeness heuristic
• Involves assessing the likelihood that an

event will occur based on its similarity to
one’s stereotypes of similar occurrences
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What are key decision making
traps and issues?


Anchoring and adjustment heuristic
• Involves assessing an event by taking
an initial value from historical
precedent or an outside source and
then incrementally adjusting this value
to make a current assessment.

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What are key decision making
traps and issues?
Decision Bias
• Confirmation error – only seeking cues in a situation that

support a preexisting opinion.
• Hindsight error– overestimate the degree to which an
event that has already taken place could have been
predicted .
• Framing error - tendency to evaluate and resolve a
problem in the context in which it is perceived – either
positive or negative.

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