Managerial Decision Making

Three metrics used to judge the effectiveness of a decision

1. Accuracy 2. Consensus 3. Acceptability

Limitations to Intuitive Decision Making Advantages

1. Allows experts to resolve complicated issues quickly. 2. Can be used to make good decisions, especially by experts.

Five main decision-making styles.

1. Autocratic Managers may make decisions alone, without any input from others. 2. Consult Individually Managers present a problem and seek potential solutions from individual subordinates. 3. Consult the Group Managers present a problem and seek potential solutions from subordinates in a group setting. 4. Facilitative Managers share a problem with the group and work with them to reach a consensus on the final decision. 5. Delegative Managers pass the responsibility for making a final decision to subordinates.

Elements of Decision Making

1. Choosing how to deal with an unwelcome or harmful situation 2. Making choices about how to capitalize on an opportunity 3. Learning to be systematic and objective 4. Realizing there is often more than one possible solution to a problem 5. Realizing that the best decision is not always simple or obviou

Select all of the true statements regarding the five major decision making styles

1. Decision making styles vary, based on how much a manager involves subordinates in the decision making process. 2. The appropriateness of a particular decision making style depends on the situation at hand.

Which of the following are some of the questions managers should ask themselves when making decisions with the VYJ model?

1. Do the subordinates have expertise related to the problem? 2. Is it important that subordinates are committed to, or buy into, the decision?

Tasks Limited by Bounded Rationality

1. Engaging in a rational and comprehensive examination of a problem 2. Collecting and analyzing all relevant details 3. Processing information quickly

Select all of the statements that describe challenges to team decision making.

1. Heuristics and biases cloud team members' judgments. 2. Decision making involves the integration of team members' already-biased judgments into team decisions.

Rational Decision-Making Process

1. Identify the problem The decision maker works through the various symptoms to learn the underlying cause. Example: A manager determines he is dissatisfied with his job because it is not challenging. 2. Identify the decision criteria The decision maker considers what an effective decision will, and will not, involve. Example: The manager does not want to leave his job, so he decides to increase his job satisfaction. 3. Develop plausible solutions The solutions can come from various sources, but the key is to identify ideas that could potentially solve the problem. Example: The manager decides to increase his job satisfaction by asking for more responsibility or a promotion. 4. Evaluate possible solutions The decision maker analyzes the strengths and weaknesses of the possible solutions that were identified. Example: The manager determines that asking for a promotion is the best solution. 5. Implement and monitor the solution The decision maker puts the solution into place and monitors its effectiveness to determine if the problem is solved. Example: The manager presents his proposal for a promotion to his supervisor. He will wait to see if the proposal is accepted.

Modes of Decision Making

1. Intuitive Decisions a. Are nearly instantaneous judgments b. Based on past experience c. Made without conscious thought d. Can allow experts to resolve complicated issues quickly e. Can be used to make good decisions 2. Evidence-Based Decisions a. Use current, concrete evidence b.Rely less on assumptions and conventional wisdom c. Rely more on being informed and rational 3. Programmed Decisions a. Respond to a recurring problem b. Used in familiar situations c. Result from learning and experience 4. Non-Programmed Decisions a. Respond to a novel or complex problem b. Used in unfamiliar situations c. Not based on experience

Seven Questions to Consider When Making Decisions

1. Is the outcome of the decision important to the manager's unit or organization? 2. Is it important that subordinates are committed to, or buy into, the decision? 3. Does the manager have expertise in relation to the problem? 4. Will subordinates be committed to the decision if made by the manager? 5. Do subordinates support unit goals related to the problem? 6. Do the subordinates have expertise related to the problem? 7. Are the subordinates capable of working together to solve the problem?

Why is it important for a manager to put effort into developing decision-making skills

1. Learning to be systematic and objective can make decisions easier. 2. There is often more than one correct answer to the problem. 3. The best decision is not always simple or obvious.

Select all of the true statements regarding the five major decision making styles

1. Managers who use a facilitative decision making style must be sure that their input is not weighted more than the input of their subordinates. 2. The five major decision making styles are autocratic, consult individually, consult the group, facilitative, and delegative.

Select all of the true statements regarding the challenges to team decision making.

1. Social influence results in a change in behavior, while diffusion of responsibility results in a lack of action. 2. The Abilene Paradox involves assumptions about others' preferences, while groupthink involves the desire to maintain similar preferences with other group members.

Limitations to Intuitive Decision Making Limitations

1. The decision maker may not be able to provide clear rationale or justification for specific decisions. 2. The expertise on which intuition is based can become outdated and therefore no longer useful.

Complete the following sentence with all of the statements that describe the root cause of most barriers to individual decision making. When making decisions, human beings do not possess the brainpower for complete ______.

1. information processing in a reasonable amount of time 2. analysis of all relevant information 3. rational and comprehensive examination

Select all of the true statements regarding how decisions are evaluated for effectiveness.

A decision maker using acceptability to evaluate decision making effectiveness is engaging in satisficing. Three different metrics can help you decide whether you've made a good or a bad decision - accuracy, consensus, and acceptability.

Decision-Making Consensus

A panel receives various proposals from architects for an addition to a factory. The panel studies the proposals, using guidelines provided by the CEO to make a decision. Although the members of the panel have their own preferences, they share their perspectives, work through the differences, and agree on a proposal that all of them can support.

Subordinate Involvement in Decision-Making Styles

Autocratic Subordinates are not involved. Outcomes: Subordinates may resist a decision, causing managers to have to sell it. Subordinates may react negatively if they feel decisions were forced on them. Consult Individually Subordinates have low involvement. Outcomes: Subordinates may feel that they have a voice in the decision and are making an impact. However, managers may not consult with the individuals who have the most knowledge and expertise. Consult the Group Subordinates have moderative involvement. Outcomes: If the manager makes a final decision that runs counter to the group's preference, subordinates may feel that their viewpoints are not valued and their time has been wasted. Facilitative Subordinates have moderately high involvement. Outcomes: Subordinates feel like partners in the decision-making process. However, they might resent going to so many meetings to make a decision. Delegative Subordinates have high involvement. Outcomes: Subordinates are responsible for the final decision, but the manager remains accountable for the effectiveness of that decision. This style might be ineffective if subordinates lack the experise or capability to make good decisions.

Example of Bias

Because Manuel is a big, heavy man, Sandy assumes he is out of shape, so she doesn't ask him to participate in her company's annual marathon. However, Manuel was a tackle on his college football team and is in excellent physical condition.

Groupthink

Challenge Failure to challenge poor decisions or settling on mediocre solutions Counteracting Have one or more members of the team take on the role of devil's advocate—basically challenging the assumptions the group has made when it comes to solving a problem.

Abilene Paradox

Challenge Making team decisions that are not truly supported by any individual member Counteracting Have open conversations with team members to make sure your assumptions about their preferences are correct.

Social Influence

Challenge Poor decisions by popular team members being favored over quality decisions by less popular members Counteracting Separate yourself as much as possible from team members when considering their recommendations and making final team decisions.

Diffusion of Responsibility

Challenge Uneven participation, failure to share important information, and missed deadlines Counteracting Make team members' responsibilities explicit and concrete before the meeting adjourns.

You have a big meeting this week with senior management, where you've been asked to present an idea for how the company should tackle a new project. You're excited about what you've come up with and you run your idea by your best friend, who loves it. Later, you also share your idea with a couple of experienced colleagues who immediately see problems with it. You discount their negative feedback and keep thinking about the enthusiasm that you and your best friend have for the idea. This scenario is most representative of which decision making heuristic/bias?

Confirmation bias

Select all of the true statements about decision making in organizations

Decision making occurs when individuals or teams make choices or select courses of action to address specific organizational problems. Managers make decisions daily as a part of their jobs, and many of these decisions are actually ineffective.

Checking Assumptions

During a meeting to plan the company picnic, LaDamian says, "Of course, we'll go to the same forest preserve we did last time." No one disagrees. Then LaDamian remembers the Abilene Paradox, so he stops and says, "I was making an assumption. Let's discuss the pros and cons of that choice."

Evidence-Based Decisions (Evidence-Based Decisions)

Evidence-Based Decisions 1. Use current, concrete evidence 2. Rely less on assumptions and conventional wisdom 3. Rely more on being informed and rational

Evidence-Based Management

Evidence-Based Management 1. Seeks out and uses current concrete research evidence when making decisions 2. Relies less on assumptions and conventional wisdom and more on an approach that is informed and rational

Challenges to Team Decision Making

Groupthink Patterns of thoughts and behaviors that maintain harmony within the group but that also collectively serve to hinder a team's ability to make effective decisions Abilene Paradox Team decision-making behavior in which individuals act contrary to their own wishes and are likely to experience negative feelings about the outcome Diffusion of Responsibility Tendency of individual team members to withhold taking action because they believe others have done so or will in the future Social Influence Changes in individual team members' behavior that result from interactions and relationships with others

barriers to individual decision making

Human beings are unable to be completely rational and comprehensive and typically have neither the cognitive capacity nor the time to analyze all relevant information when making decisions. This sums up the root cause of most

Individual Decision Making

In individual decision making, one person is solely responsible for interpreting the problem, gathering information, considering alternatives, and making a choice.Individual decision making focuses on one person's ability to process information and make judgments and decisions.

Team Decision Making

In team decision making, team members make individual judgments that feed into team decisions. Team decisions usually involve an interaction and exchange of ideas and information among members. Team decision making requires teams to use individuals' judgments to reach a decision.

______ is characterized by nearly instantaneous judgments about a situation based on past experience and without conscious thought.

Intuition

Two main modes of decision making are intuition and evidence-based management.

Intuition 1. Involves nearly instantaneous judgments about a situation based on past experience and without conscious thought 2. Uses "gut feelings" that may be difficult to understand and explain in rational terms

Modes of Decision Making (Intuitive Decisions)

Intuitive Decisions 1. Are nearly instantaneous judgments 2. Based on past experience 3. Made without conscious thought

Which statement accurately describes some of the challenges to team decision making

Issues such as groupthink, The Abilene Paradox, diffusion of responsibility, and social influence may result in decision making errors on teams, due to the social element of team decisions.

Reviewing Team Responsibilities

Jenna's team is making brochures to help employees choose a health insurance plan. She is in charge of writing the copy and assumes someone else will choose images. When it comes time to print the brochures, there are no photographs in place. After that, Jenna makes sure to review team members' responsibilities explicitly before any planning meeting adjourns.

Delphi Method

Linnea's team is dominated by two members who intimidate others into silence. Linnea wants everyone to contribute to the decision-making process. She sends a questionnaire to each team member and then tallies the results. Then Linnea devises a second questionnaire that builds upon the first, sends it to each member, and tallies the results. She repeats this process until the team reaches a consensus decision.

Separating from the Team

Mai Lin and Beatta have worked together for years. As a result, Mai Lin feels most comfortable with Beatta's suggestions and favors them over other people's ideas. After a couple of Beatta's suggestions turn out wrong, Mai Lin adopts a policy of separating herself from team members when considering their suggestions and making final team decisions.

Decision-Making Styles

Managers can make decisions without any input from employees. Managers can tap employees to provide ideas and opinions on decisions that will impact their work as well as the overall success of the organization.

Brainstorming

Nargis's team cannot figure out how to make their deadline. Whenever someone suggests a way to speed up the workflow, another person shoots down the idea. Nargis calls them together for a brainstorming session. Using this approach, the team comes up with several ways to speed up the workflow.

Non-Programmed Decisions (Non-Programmed Decisions)

Non-Programmed Decisions 1. Respond to a novel or complex problem 2. Used in unfamiliar situations 3. Not based on experience

Example of Heuristics

Online sales pages usually include consumer reviews of a product. When Sam sees that the sales page for a product is long, he assumes the product must be high quality because it probably has many recommendations. However, there might be a high percentage of negative reviews on that page

How do the judgments of individual team members usually factor into a team's final decision?

Opinions and ideas of some individuals are often given more weight than others. The team considers thoughts and conclusions from individual members. The team's final decision incorporates the judgments of various team members.

Decision-Making Accuracy

Physicians consider patient symptoms and other information to make diagnoses and recommend treatment. A good decision by a physician means that the patient would receive the appropriate course of treatment and could heal. A poor decision by a physician means the patient would receive an inappropriate course of action and would not heal—and might even get worse or die.

Programmed Decisions (Programmed Decisions)

Programmed Decisions 1. Respond to a recurring problem 2. Used in familiar situations 3. Result from learning and experience

Programmed and Non-Programmed Decision Making

Programmed decisions are made in response to recurring situations. They tend to trigger a response that results from learning and experiences in the same or very similar situations. Decision making in such situations happens without much effort or thought. Non-programmed decisions refer to choices made regarding problems that are novel or complex. These problems are unique and may be difficult to understand, so experience does not provide much help. Non-programmed decisions require effort and complex thinking.

Comparing Decision-Making Heuristics and Biases

Representativeness Heuristic Concept-Causes us to ignore good evidence that contradicts our instincts Availability Heuristic Concept-Causes us to base decisions on whatever information is most accessible Confirmation Bias Concept-Encourages us to seek information that supports our prior beliefs or positions Escalation of Commitment Concept-Causes us to ignore information that proves us wrong or that is inconsistent with our approach

Decision-Making Acceptability

Sheila is asked to assemble a team of six accountants to travel to Singapore to conduct a year-end audit for a client. She pulls up a spreadsheet with the qualifications, work experiences, and backgrounds of her 40 coworkers. But this is too much information to sort through. As a result, Sheila selects employees who are available and work well with others. This might not be the absolute best team, but it is good enough to complete the audit.

Key Elements of Decision-Making Styles

The appropriateness of a particular decision-making style depends on the situation at hand. Decision-making styles vary based on how much a manager involves subordinates in the decision-making process. Managers retain the most control when they use the autocratic style. Managers who use a facilitative decision-making style must be sure that their input is not weighted more than the input of their subordinates. Subordinates have the most control when managers use the delegative style.

Effectiveness of Decision Making Accuracy

The degree of correspondence between a decision and the correct decision Evaluating for Effectiveness 1. Relevant in situations where an appropriate decision can be derived from combinations of specific pieces of information relevant to the decision 2. Degree of correspondence sometimes known after the fact

Accuracy

The degree of correspondence between a decision and the correct decision. Evaluating for Effectiveness 1. Relevant in situations where an appropriate decision can be derived from combinations of specific pieces of information relevant to the decision 2. Degree of correspondence sometimes known after the fact

Acceptability

The degree to which a decision is likely to meet an overall objective or goal. Evaluating for Effectiveness 1. Appropriate when it is not crucial that an optimal solution is reached 2. Good enough to allow the team to achieve its goals

Effectiveness of Decision Making Acceptability

The degree to which a decision is likely to meet an overall objective or goal. Evaluating for Effectiveness 1. Appropriate when it is not crucial that an optimal solution is reached 2. Good enough to allow the team to achieve its goals

Effectiveness of Decision Making Consensus

The degree to which members of a team generally agree with the team's choice Evaluating for Effectiveness 1. Might not be the absolute first choice of each and every member 2. Should be a choice that members can all agree with

Consensus

The degree to which members of a team generally agree with the team's choice. Evaluating for Effectiveness 1. Might not be the absolute first choice of each and every member 2. Should be a choice that members can all agree with

Devil's Advocacy

The meeting to choose a marketing strategy goes smoothly—as the group settles on an idea almost immediately. Gervais, the team leader, realizes that they may be exhibiting groupthink. He halts the discussion and asks for a volunteer to play devil's advocate—challenging the group's assumptions to force them to think more deeply.

bias

The tendency or inclination to make a certain type of decision making error when confronted with similar decision making stimuli is called ______

Why is it important for a manager to put effort into developing decision-making skills? (Select all that apply.)

There is often more than one correct answer to the problem. Learning to be systematic and objective can make decisions easier. The best decision is not always simple or obvious.

Escalation of commitment

This is an example of escalation of commitment because Samir is increasing his commitment to a decision that has failed.

The VYJ model is often referred to as being time driven

because its main focus is to help managers make decisions in a timely manner.

The Abilene Paradox is represented by ______.

behavior in which individuals act contrary to their own wishes and are likely to experience negative feelings about the outcome of the team's decision

The Vroom-Yetton-Jago model, or VYJ model

decision making identifies seven features that should be taken into account when choosing a decision-making style for a problem. These features can be presented in the form of questions.

A manager's subordinates feel that they're losing hours of productivity every week because of constant group meetings where their input is sought. Of which decision making style is this most likely to be the outcome?

facilitative

Heuristics and Biases

heuristics, or mental shortcuts is based on past experiences. A problem with the use of heuristics is that it can lead to biases, or the tendency to make certain types of decision-making errors when confronted with similar decision-making stimuli.

Managers can evaluate the effectiveness of decisions by determining ______.

how close their teams came to reaching consensus about the decisions whether the decisions were good enough to allow the team to achieve its goals whether the decisions were accurate

Biases are ______.

inclinations to make certain types of decision making errors when confronted with similar decision making stimuli

Rational decision making

involves thoughtful analysis using a series of steps triggered when a discrepancy exists between some desired state and a current state as it is understood.The process relies on the logical and objective analysis of problems and other considerations to choose between alternatives that may seem plausible

Satisficing

is a strategy in which a decision maker accepts an available option as satisfactory

Vroom-Yetton-Jago, or VYJ, model

is an effective means of choosing a decision-making style. However, this approach does have challenges. Advantages Managers are more likely to choose the correct decision-making style when they follow the VYJ model. Decisions that were consistent with the model's suggestions had a 68% success rate. Challenges Not all questions can be answered with a yes or no; at times a manager's response can be neutral. The VYJ model is complicated and time is limited. Managers might deal with situations with more than one answer in mind.

The Abilene Paradox

is characterized by behavior in which individuals act contrary to their own wishes and are likely to experience negative feelings about the outcome of the team's decision.

Bounded rationality

is the principle that a person's level of rationality is limited by the information he or she possesses. One of the biggest obstacles to effective decision making is the fact that humans often lack the information and brain power to analyze every aspect of a problem and its potential solutions.

Decision making

is the process of making a choice or selecting a course of action to address a specific problem.

Common heuristics and biases include

representative heuristic, availability heuristic, confirmation bias, and escalation of commitment.

Complete the following sentence with the statement that is the best example of diffusion of responsibility. You are part of a team project at work. The night before it's time to submit your team's work to your supervisor, you wonder if anyone on the team has proofread the report. You decide ______.

someone must have done it, since it's such an important project, and you decide you don't need to proofread it yourself before submitting

One of the biggest obstacles to effective decision making is

the fact that humans often lack the information and brain power to analyze every aspect of a problem and its potential solutions.

Complete the following sentence with the statement that is the best example of the Abilene Paradox. Your boss comments that she had dinner at a Cajun restaurant last week and ______

when it's time for your monthly lunch together, you suggest the same restaurant, even though you don't like Cajun food and don't realize that she didn't enjoy her meal there