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Explore the process and techniques of individual and group decision-making in different types of organizations. Learn about biases and errors in decision-making, ways to promote creativity, and the role of data analytics and managerialism.
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Organizational Behavior Module : Decision Making
Module Learning Outcomes Explain the process and techniques of individual and group decision-making 12.1: Describe the types of decisions made in different types of organizations 12.2: Describe the role of statistics, data analytics, data science and managerialism in contemporary decision-making
Learning Outcomes: Making Decisions in Different Organizations 12.1: Describe the types of decisions made in different types of organizations 12.1.1: Describe the decision making process 12.1.2: Compare various biases and errors in decision making 12.1.3: Discuss ways to promote creativity in decision making 12.1.4: Discuss group decision making and how organizations make decisions
Class Activity: Lost at Sea • Divide students into groups of five to seven individuals • Here’s the scenario: You are lost at sea, stranded on an island in the middle of the remote Atlantic with 15 items at your disposal. Look at the inventory and rank the items in order of importance for your survival and eventual rescue. First, take five minutes to rank the items on your own in the first column of the worksheet Second, discuss with the other members of your group, and rank the importance of the items, once you’ve all agreed, in the second column
These are the items you’ve been stranded with… • a rope • some chocolate bars • a waterproof sheet • a fishing rod • shark repellent • a bottle of rum • a VHF radio • a mosquito net • a can of fuel • a water container • a shaving mirror • a sextant • emergency rations • a sea chart • a floating seat cushion
How the Coast Guard ranks these items: • Floating seat cushion • Shark repellent • Bottle of rum • Radio • Sea chart • Mosquito net • Sextant • Shaving mirror • Can of fuel • Water container • Emergency rations • Plastic sheet • Chocolate bars • Fishing rod • Rope
Rational Decision Making Process • This process assumes • Managers have all the information about the situation. • Managers are aware of all alternative options and are equipped to evaluate them properly. • Managers are looking to make the best possible decision. • Managers are capable of eliminating misperceptions and biases. • There are no cost or time constraints.
Bounded Rational Decision Making • Early alternatives and solutions are quickly adopted because of perceptual limitations. • Managers often don’t have access to all the information they need. • Managers are not aware of all the alternatives and can’t predict the consequences of each one. • Organizational goals constrain decisions. • Conflicting goals of multiple stakeholders can force a compromise of a decision.
Other Decision Making Models Linear Model Intuitive Model Garbage Can Model
Biases and Errors in Decision Making • Overconfidence bias • Anchoring bias • Confirmation bias • Hindsight bias • Representative bias • Availability bias • Commitment errors • Randomness errors
Group Decision Making Processes • Nominal decision making process • Delphi decision making
Practice Question 1 What is the distinctive feature of the rational model of decision making? • Listing pros and cons and adding numerical value or “weight” to each. • The decision maker identifies the problem and reviews every acceptable alternative • Past experience and gut feelings are used to make the decision because no other options are available • Problems, solutions, participants and choice opportunities inform decisions
Practice Question 2 The defining characteristic of a _____________ bias is characterized by an individual looking for information to support his claim rather than making a full investigation. • Confirmation • Hindsight • Representative • Overconfidence
Practice Question 3 Which of the following is a characteristic of an organization that approaches decision making creatively? • A traditional culture • Traditional, buttoned-up leaders • An atmosphere of expertise • A willingness to take risks
Practice Question 4 What decision making technique reduces the interaction between group members and features rank voting to complete the process? • Nominal group technique • Delphi group technique • Cooperative exploration group technique • Linear group technique
Learning Outcomes: Data and Managerialism in Decision Making 12.2: Describe the role of statistics, data analytics, data science and managerialism in contemporary decision-making 12.2.1: Identify the steps to effectively use data in decision making 12.2.2: Discuss big data and its implications on decision making 12.2.3: Discuss the consequences of managerialism in decision making 12.2.4: Discuss decision making tools
Class Activity: Using Data in Decisions Students should form groups of five to seven people. This is the scenario: You are surgeons at a large hospital. Your committee must make a very important decision. Seven patients need a heart transplant. There is only one heart donor at this time. All seven patients are eligible to receive this heart, all are physically able and compatible with the donor. Which patient would you choose to receive the heart? Why? Your committee must agree on the choice.
The Patients • 31 year old male; African American, brain surgeon at the height of his career; no children • 12 year old female; Vietnamese; accomplished violinist; blind • 40 year old male; Hispanic, teacher, 2 children • 15 year old female; White, unmarried, 6 months pregnant • 35 year old male; Hispanic; Roman Catholic priest • 17 year old female; White; waitress; high school dropout; supports/cares for a brother who is severely disabled • 38 year old female; White; AIDS researcher; no children; lesbian
Using Data in Decisions • Decide on your strategy • Identify key areas and target data • Collect the data • Analyze the data • Make a decision about the data • Present your findings
Managerialism and Decision Making Management + Ideology + Expansion = Managerialism • What you need to know: • Most people feel that managerialism is pejorative. • Managerialism deprives individuals with expertise of all decision making powers.
Decision Making Tools: Pareto Diagram • Good for: Identifying beneficial opportunities and issues
Decision Making Tools: Cause and Effect Diagram • Also called the Ishikawa Diagram • Good for: honing in on the exact cause of an issue
Decision Making Tools: Feasibility Reporting • Lets you know the rate of return on an investment
Decision Making Tools: SWOT Analysis • Stands for “strengths, weaknesses, opportunities and threats” • Good for: strategic planning and decision making
Other Decision Making Tools • Decision making diagrams • Decision making software • Vroom-Jetton-Yago diagram
Practice Question 5 When an employee removes outlying data from a set to make it ready for decision-making use, he is completing which step in using data for decision making? • Analyzing the data • Collecting the data • Deciding on a strategy • Making a decision about the data
Practice Question 6 To what does the term “veracity” refer? • How much data there is • The speed at which data is generated • How accurate the data is • The type of data – structured or unstructured
Practice Question 7 Why is the concept of managerialism important to the topic of decision making? • It deprives individuals with expertise of all decision-making powers • It’s pejorative • It focuses on citizens and their needs rather than business • It’s not a very well studied concept
Practice Question 8 If you’re looking to identify your organization’s strengths and weaknesses and compare it to competitors, which is the tool you might need? • Feasibility report • Vroom-Yetton-Jago Decision Making Model* • Pareto diagram • SWOT analysis
Quick Review • Several different models exist to help individuals and groups make decisions • Be careful of decision making biases and errors – they can get you into trouble • Companies that support creative decision making are often more successful • Incorporate data into decision making when you can • Big data can make a huge impact on decisions – tune into the four Vs! • Managerialism takes decision making away from experts • Charts, diagrams, reports and software are all tools that can aid an individual in refining data to make a decision – don’t forget those tools are at your disposal!
