MGMT 309 Chapter 8
What is EBM and how did it emerge?
Setting your mind to making rational decisions may seem like a no-brainer, but some researchers worry that managers tend all too often to slip into bad decision-making habits. As a result, some experts have recently reminded managers of the need to use rationality and evidence when making decisions. This reminder has been called evidence-based management, or EBM
What is recognizing and defining the decision situation?
Some stimulus indicates that a decision must be made. The stimulus may be positive or negative.
What is the behavioral element of risk propensity?
The behavioral element of risk propensity is the extent to which a decision maker is willing to gamble when making a decision.
What are the details of Implementing the chosen alternative?
The chosen alternative is implemented into the organizational system.
What is the classical decision model?
The classical decision model is a prescriptive approach that tells managers how they should make decisions.
What is the differentiation of the classical and administrative model?
The classical model is prescriptive: It explains how managers can at least try to be more rational and logical in their approaches to decisions. The administrative model can be used by managers to develop a better understanding of their inherent biases and limitations.
What has the emergence of the Internet done to the conditions of decision making?
The emergence of the Internet as a significant force in today's competitive environment has served to increase both revenue potential and uncertainty for most managers.
What should each decision making alternative be evaluated on?
The figure suggests that each alternative be evaluated in terms of its feasibility, its satisfactoriness (does it satisfy the conditions), and its consequences.
What are interacting groups and teams?
The format is simple—either an existing or a newly designated group or team is asked to make a decision.
What are the impact of coalitions like?
The impact of coalitions can be either positive or negative. They can help astute managers get the organization on a path toward effectiveness and profitability, or they can strangle well-conceived strategies and decisions.
What is a prime ingredient of fostering different levels of risk propensity?
The organization's culture is a prime ingredient in fostering different levels of risk propensity.
What does the work best imply when it comes to decision making?
The word best, of course, implies effectiveness.
What do the steps in rational decision making help keep the decision maker focused on?
These steps in rational decision making help keep the decision maker focused on facts and logic and help guard against inappropriate assumptions and pitfalls.
What is evidence based management?
They define evidence-based management as "a commitment to finding and using the best theory and data available at the time to make decisions,"
Is intuition arbitrary?
This feeling usually is not arbitrary, however. Rather, it is based on years of experience and practice in making decisions in similar situations
What should management decisions be based on?
"Management decisions," they argue, "[should] be based on the best evidence, managers [should] systematically learn from experience, and organizational practices [should] reflect sound principles of thought and analysis."
What is Herbert A. Simon's administrative model?
(1) use incomplete and imperfect information, (2) are constrained by bounded rationality, (3) tend to "satisfice" when making decisions.
What are the 6 steps in rational decision making?
1. Recognizing and defining the decision situation 2. Identifying alternatives 3. Evaluating alternatives 4. Selecting the best alternative 5. Implementing the chosen alternative 6. Following up and evaluating the results
What are the general conditions for decision-making?
1. Certainty 2. Risk 3. Uncertainty
What are the three indications that managers are rational and logical?
1. Decision makers have complete information about the decision situation and possible alternatives. 2. They can effectively eliminate uncertainty to achieve a decision condition of certainty. 3. They evaluate all aspects of the decision situation logically and rationally.
What are the five principles of evidence-based management?
1. Face the hard facts and build a culture in which people are encouraged to tell the truth, even if it's unpleasant. 2. Be committed to "fact-based" decision making—which means being committed to getting the best evidence and using it to guide actions. 3. Treat your organization as an unfinished prototype— encourage experimentation and learning by doing. 4. Look for the risks and drawbacks in what people recommend (even the best medicine has side effects). 5. Avoid basing decisions on untested but strongly held beliefs, what you have done in the past, or on uncritical "benchmarking" of what winners do.
What are some advantages of group and team decision making?
1. More information and knowledge are available. 2. More alternatives are likely to be generated. 3. More acceptance of the final decision is likely. 4. Enhanced communication of the decision may result. 5. Better decisions generally emerge.
What are some disadvantages to group and team decision making?
1. The process takes longer than individual decision making, so it is costlier. 2. Compromise decisions resulting from indecisiveness may emerge. 3. One person may dominate the group. 4. Groupthink may occur.
What are the most common method of groups and team decision making?
1. interacting groups 2. Delphi groups 3. nominal groups.
What are some common constraints of identifying alternatives?
1. legal restrictions 2. moral and ethical norms 3. authority constraints and constraints imposed by the power and authority of the manager 4. available technology 5. economic considerations 6. unofficial social norms.
What is a delphi group?
A Delphi group is sometimes used to develop a consensus of expert opinion. Developed by the Rand Corporation, the Delphi procedure solicits input from a panel of experts who contribute individually.
What is coalition?
A coalition is an informal alliance of individuals or groups formed to achieve a common goal.
What is a major disadvantage of interacting groups and teams?
A major disadvantage, though, is that political processes can play too big a role.
What must a manager remember when making decisions in regards to ethical beliefs?
A manager must remember, then, that, just as behavioral processes such as politics and risk propensity affect the decisions he makes, so, too, do his ethical beliefs.
What is a programmed decision?
A programmed decision is one that is relatively structured or recurs with some frequency (or both).
What is the advantage of interacting groups and teams?
An advantage of this method is that the interaction among people often sparks new ideas and promotes understanding.
What is the important part of the administrative model called satisficing?
Another important part of the administrative model is satisficing. This concept suggests that rather than conducting an exhaustive search for the best possible alternative, decision makers tend to search only until they identify an alternative that meets some minimum standard of sufficiency.
What does decision making under conditions or risk accompanied by?
As indicated in Figure 8.1, decision making under conditions of risk is accompanied by moderate ambiguity and chances of a bad decision.
What are the details of following up and evaluating the results?
At some time in the future, the manager should ascertain the extent to which the alternative chosen in step 4 and implemented in step 5 has worked.
What are the details of identifying alternatives?
Both obvious and creative alternatives are desired. In general, the more important the decision, the more alternatives should be generated.
What is bounded rationality
Bounded rationality suggests that decision makers are limited by their values and unconscious reflexes, skills, and habits. They are also limited by less-than-complete information and knowledge.
What are the details of selecting the best alternatives?
Consider all situational factors and choose the alternative that best fits the manager's situation.
Does decision making refer to a specific act or a general process?
Decision making can refer to either
What is decision making per se?
Decision making per se is the act of choosing one alternative from among a set of alternatives.
What does EBM research show for pay-per-performance policies?
EBM research shows that pay-for-performance policies get good results when employees work solo or independently. But it's another matter altogether when it comes to collaborative teams
What are evaluating alternatives?
Each alternative is evaluated to determine its feasibility, its satisfactoriness, and its consequences.
True are false: many organizational decisions are made under conditions of true certainty.
False: Few organizational decisions, however, are made under conditions of true certainty. The complexity and turbulence of the contemporary business world make such situations rare.
What is groupthink?
Groupthink occurs when the desire for consensus and cohesiveness overwhelms the goal of reaching the best possible decision.
What does the decision-making process include?
Hence, the decision-making process includes recognizing and defining the nature of a decision situation, identifying alternatives, choosing the "best" alternative, and putting it into practice.
What are the most common form of decision-making group?
Interacting groups and teams are the most common form of decision-making group.
What is intuition?
Intuition is an innate belief about something, without conscious consideration.
What assumption does the classical decision model rest on?
It rests on the assumptions that managers are logical and rational and that they make decisions that are in the best interests of the organization.
What are major factors in nonprogrammed decisions?
Managers faced with such decisions must treat each one as unique, investing enormous amounts of time, energy, and resources into exploring the situation from all perspectives. Intuition and experience are major factors in nonprogrammed decisions.
What must managers consider when implementing decisions?
Managers must also consider people's resistance to change when implementing decisions. The reasons for such resistance include insecurity, inconvenience, and fear of the unknown.
What is a state of uncertainty?
Most of the major decision making in contemporary organizations is done under a state of uncertainty.
How does a nominal group work?
Nominal groups are used most often to generate creative and innovative alternatives or ideas. To begin, the manager assembles a group of knowledgeable experts and outlines the problem to them. The group members are then asked to individually write down as many alternatives as they can think of. The members then take turns stating their ideas, which are recorded on a flip chart or board at the front of the room. Discussion is limited to simple clarification. After all alternatives have been listed, more open discussion takes place. Group members then vote, usually by rank-ordering the various alternatives. The highest-ranking alternative represents the decision of the group. Of course, the manager in charge may retain the authority to accept or reject the group decision.
What are nonprogrammed decisions?
Nonprogrammed decisions, on the other hand, are relatively unstructured and occur much less often.
Can a decision still be correct if made with little regard for logic?
On the other hand, sometimes when a decision is made with little regard for logic, it can still turn out to be correct.An important ingredient in how these forces work is the behavioral aspect of decision making.
What are the different types behavioral aspects in decision making?
Other behavioral aspects include political forces, intuition and escalation of commitment, risk propensity, and ethics.
What is the biggest drawback of group and team decision making?
Perhaps the biggest drawback of group and team decision making is the additional time and hence the greater expense entailed. The increased time stems from interaction and discussion among group or team members
What are the two categories that most decisions fall into?
Programmed and nonprogrammed.
What are two other important decision processes that go beyond logic and rationality?
Two other important decision processes that go beyond logic and rationality are intuition and escalation of commitment to a chosen course of action.
What is a state of risk?
Under a state of risk, the availability of each alternative and its potential payoffs and costs are all associated with probability estimates.
What is a nominal group?
Unlike the Delphi method, in which group members do not see one another, nominal group members are brought together in a face-to-face setting.
What is a state of certainty?
When the decision maker knows with reasonable certainty what the alternatives are and what conditions are associated with each alternative, a state of certainty exists.
What is escalation of commitment?
decision makers sometimes make decisions and then become so committed to the courses of action suggested by those decisions that they stay with them even when the decisions appear to have been wrong.
What are individual ethics?
individual ethics are personal beliefs about right and wrong behavior.
Are most of the decisions made by top managers involving strategy and organizations design programmed or nonprogrammed?
nonprogrammed
What is the Delphi procedure like?
the Delphi procedure solicits input from a panel of experts who contribute individually. Their opinions are combined and, in effect, averaged.
What is the practice of forced ranking?
the practice of "forced ranking" divides employees into three groups based on performance—the top 20 percent, middle 70 percent, and bottom 10 percent—and terminates those at the bottom.
What is the most ambiguous condition for managers and the one most prone to error?
uncertainty
