Chapter 9 - Managerial Decision Making

Tokoni is a student at Fresno State University who recently got his first F. Now he has to make a decision about how to get his grades back up. Having recently taken a class on decision making, Tokoni decides to follow the six-step process for deciding what to do. What problem is Tokoni most likely to face during the diagnosis and analysis of causes step in the decision-making process?

Jumping to solutions before understanding the problem Explanation: Diagnosing and analyzing the causes of a problem or opportunity requires careful analysis of the situation. Too often, people see a problem and jump to a solution, skipping the diagnosis step entirely. For example, Tokoni may immediately decide that he needs to study more to improve his grade. But if the real problem is that Tokoni isn't studying the right things, studying more won't solve the problem.

Justin is in charge of the central region, with several dozen stores reporting to him. Last year, he analyzed sales data for demographically comparable areas and decided that Greenville would be the perfect location for a store. Since the store's opening, it has had 40% less sales than stores of similar size. On the other hand, the convenience store down the block seems to be very popular. Justin believes that if the store were larger, it could stock more merchandise and then more people would shop there. He wants to build an expensive addition onto the store.

Justifying past decisions

Which of the following would not be a way for Justin to overcome this bias?

Submit a proposal to upper management to purchase the competitor's store down the block

Aaron is an administrative manager at EMC Insurance. His job includes updating the company website every morning to include the latest news articles about EMC. Aaron's decision about whether or not to update the EMC website is being made under conditions of __________, because:

The decision is routine and follows rules Explanation: This decision is being made under conditions of certainty, because Aaron does exactly the same thing every day, and the outcomes of his actions are known.

Cassie likes to make decisions after considering many alternatives and looking at as much objective data as possible.

Analytical style

Before approving a new drug, the U.S. Food and Drug Administration requires that companies submit the results of rigorous scientific testing on the drug's effectiveness. These results are reviewed by physicians, statisticians, chemists, pharmacologists, and other scientists who use logic to determine whether or not a drug is safe. These researchers are using the __________ model of decision making.

classical Explanation: The researchers at the FDA are using the classical model of decision making, which assumes that people have complete information and can use that information to make decisions rationally and logically.

Larry's company has decided to no longer lease office space and instead have all employees work from home. Larry needs to make a __________ as he figures out how the newly dispersed workforce can cost-effectively order office supplies.

nonprogrammed decisions Explanation: Nonprogrammed decisions are made in response to situations that are unique, are poorly defined and largely unstructured, and have important consequences for the organization. How to make sure employees working out of their homes get office supplies at a reasonable cost is a new problem for this company, so Larry has no precedent to fall back on as he makes his decision.

The IT manager knows she wants to improve the company's email system. However, the situation is one of __________ because she does not know the costs and potential benefits of the various options, and she is unsure how the company will be using the email system in a few years.

uncertainty Explanation: Uncertainty means that managers know which goals they wish to achieve, but information about alternatives and future events is incomplete. Factors that may affect the outcomes of a decision, such costs and future events, are difficult to analyze and predict. Managers may have to make assumptions, and if the assumptions are incorrect, then the decision will be incorrect. Risk means the alternatives are known and the chance of success or failure of each alternative can be reasonably estimated. Ambiguity means that even what the goal should be or what problem should be solved is unclear.

Tom tends to consider the personal development of others when making decisions.

Behavioral style

Following are several actions managers commonly take when confronted with turnover. Which of these actions are supported by evidence? Check all that apply.

- Make it a policy to hire employee referrals whenever possible. - Build organizational ties to the community through an active volunteer program. - Design work in teams. - Hire people who believe in the company's goals and vision. Explanation: Managers who make evidence-based decisions use research results to inform their decision making. This prevents them from making common errors, such as being swayed by the earliest or most recent information they have received, staying with a course of action just because that's the way it's always been done, and being overly influenced by emotions or intuition. In this case, all four actions are supported by evidence. If an employee believes in the company's goals and vision, he or she is likely to share company values. If employees work in teams, they are likely to form links that increase their embeddedness in the organization. If the company hires employee referrals, it will be hiring people who already have ties to the people in the organization, and if people in the organization have ties to the community, they will sacrifice more if they leave the organization.

You have been asked to lead a group of your coworkers in developing a new process for handling performance reviews at your office. Unfortunately, during your first meeting, you realize that everyone in the group is agreeing with each other — there is no debate happening, and no one is presenting different ideas. What can you do to solve this problem?

Assign one person in the group to be a devil's advocate. Explanation: Your group appears to be caught up in groupthink — they are agreeing with each other to preserve harmony, rather than engaging in rigorous debate. The best way to handle this is to appoint a devil's advocate — someone who will take an opposing stance on any idea presented in the group. This will encourage more group discussion of issues. A postmortem review will not be helpful because it would take place after a decision had been made, and if the team is affected by groupthink, that would happen in the postmortem review as well. Brainstorming may not work because it requires that team members state their ideas to the group, and in a groupthink situation, people may be less willing to voice opposing ideas.

Bill prefers simple, clear-cut solutions to problems.

Directive style

Univision Communications Inc., a Spanish language entertainment giant, hired Randy Falco as its executive vice president and chief operating officer. The decision executives at Univision made about who to pick for this position is a:

Nonprogrammed Decision

George is a manager at a local Toyota dealership who has lost five of his employees last year. Now he has to make a decision about how to retain the employees on his team. Having recently taken a class on decision making, George decides to follow the six-step process for deciding what to do. What problem is George most likely to face during the implementation of chosen alternative step in the decision-making process?

Not having the time to take all of the steps outlined in his plan Explanation: The hardest part of implementing a decision is actually doing the work associated with the decision. If a decision cannot be translated into action because of a lack of time or other resources, it will not be effective. For example, Tokoni may decide to create a more positive work environment so employees don't leave, but if he doesn't have time to talk with employees, he is unlikely to get his hoped-for results.

Last spring, your spouse surprised you with a puppy. Fortunately, the puppy (named Loki after the Norse god of mischief) gets along well with your 17 cats. The decision you make every day about whether or not to feed Loki is a:

Programmed Decision

Suppose that you are part of Alpha Pi Omega, a service fraternity that is dedicated to doing good in your community. Recently, your chapter has been trying to decide on a new project for the upcoming year. There are three possibilities. You could relandscape the grounds of your local library, so people would have a nice place outdoors to read. You could also start a book drive to replace books lost in a fire at your local elementary school. Finally, you could work with Meals on Wheels in your county to deliver food to the elderly who can't go to the grocery store. You strongly feel that the best choice would be to run the book drive. In order to make it more likely that your chapter will pick that option, you talk with a number of other fraternity members and get them to agree with you. Luckily, you also find out that another chapter of your fraternity has done something similar, and they achieved grateful recognition from their community. So you bring this fact to the attention of all of your fellow fraternity members. This is an example of __________ decision making process, guided by __________.

a political; a coalition Explanation: This is an example of a political decision making model. The decision is made with the help of a coalition, and an appreciation of external environmental factors.