Download - Presented by: Jehanwash kareem Noman Saleem Decision making Module 7 Framing Heuristics (availability vs representative heuristics) Escalation of.

Presented by: Jehanwash kareem

Noman Saleem

Decision makingModule 7

FramingHeuristics (availability vs representative heuristics)Escalation of commitmentIllusion of control

Types of decisions & levels of management

Programmed decision makingNon programmed decision making

Types of decisions

Group decision making

Decision making undead certaintyDecision making under riskDecision making under uncertainty

Information required for decision making

The rational modelThe administrative modelThe practical modelThe conflict modelThe garbage can model

Decision making models

Impediments to optimal indidividual decisions

General decision making styles


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Decision making

“Decision making per se is the act of choosing one alternativeFrom among a set of alternatives”

Griffin

“Decision making is the process of identifying and choosingAlternative courses of action in a manner appropriate to

The demands of situation”Krietner.

“Decision making is the process of choosing one alternativeFrom among several”

Moorhead/griffin

“Decision making is the process by which managers respondTo the opportunities and threats that confront them byAnalyzing the options and making determinations, or

Decisions, about specific organizational goals and courseOf action”

Gareth_r_jones.


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Programmed vs. non programmed decisions

Clear, specific VagueGoals

Programmed NonprogrammerCharacteristics

Well structured Poorly structuredType of decision

Readily available Not available,Unclear channels

Information

Minor MajorConsequences

Lower levels Upper levelsOrganizational level

Short Relatively longTime for solution

Repetitive, routine New & unusualFrequency


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Types of managerial decisions

Problem Procedures ExamplesDecision

CreativeProblemSolving

Complex,Novel

Business:introducingA new product.College: constructingA new class roomHospital: reacting to A regional diseaseEpidemic.Govt: solving a intenseInflation problem

Business:processingPayroll vouchers.College: processingAdmissionApplications.Hospital: preparing aPatient for surgery.Govt: using a state-Owned motor vehicle

Rules,Standard,

Procedures,Policies

Repetitive,Routine

NonProgrammed

Programmed


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Types of decisions and levels of management

Both structured and Unstructured

Frequent, structured,Repetitive, routine &

Much certainty

Broad, structure, infrequentMuch uncertainty

Middle

Lower

Top

ProgrammedDecions

Non programmedDecions

Type o

f pro

ble

m

Managem

en

t le

vels


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Decision making under certainty

Certainty

Do notPromote

Promote

AlternativesProbability

OfOccurring

OutcomeGoal: to

MaximizeProfit

InformationCondition

$200,000

$1,000,000

1.0

1.0

$200,000 profit

$1,000,000 profit


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Decision making under risk

Risk

Do notPromote

Promote


OfOccurring

OutcomeGoal: to

MaximizeProfit


$20,000Small market:0.4 $50,000 profit

Large market:0.6

Small market:0.4Large market:0.6

$200,000 profit

$200,000 profit

$1,000,000 profit

$140,000

$120,000

$80,000$680,000

$600,000

Expected value


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Decision making under uncertainty

Uncertainty

Do notPromote

Promote


OfOccurring

OutcomeGoal: to

MaximizeProfit


?UncertainUncertain Outcomes

Unknown

OutcomesUnknown

Uncertain

UncertainUncertainUncertain

?

???

?


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Capacity planning problem

Alternatives

Possible future demand

Medium facility

Large facility

Small facility

HighModerateLow

$12

$2

$10

$12

$16

$10

$7

$(4)

$10

*Present value in $ millions


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Rational model

Evaluate all alternatives

Apply decision rule

ProgrammedOr

NonprogrammerDecision?

Implementation

Control: measurement& Adjustment

Generate allPossible alternatives

Identification of problem:Criteria development

Statement of Situational goals

Rational choice of bestPossible alternative

Information

Information

Information

Information

Information

ProgrammedNon programmed


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Evaluation of alternatives

Retain for furtherConsideration

Is the alternative Feasible?

Is the alternative Satisfactory?

Is the alternative Consequences

Affordable?

Eliminate From the

Consideration

Eliminate From the

Consideration

Eliminate From the

Consideration

Yes

No

Yes

No

No

Yes


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Bases from selecting from among the alternatives courses

ExperimentationExperimentation

Research & Analysis

Research & Analysis

Choice Made

Choice Made

RelianceOn the

Past

RelianceOn the

Past

ExperimentationExperimentation


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Why information is incomplete?

AmbiguousInformation

AmbiguousInformation

Time constraint&

InformationCosts

Time constraint&

InformationCosts

Uncertainty&

Risk

Uncertainty&

RiskIncompleteInformation

IncompleteInformation


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Practical model

Evaluate all alternativesAs objectively as possible

Apply decision rule

ProgrammedOr

NonprogrammerDecision?

Implementation

Control: measurement & adjustment.Monitor environmental changes

Generate as manyPossible alternatives asTime and money permit.

Identification of problem:Criteria development

State situational goals,Which may be multiple

Rational choice of best possible alternative,Based on available information

Information

Information

Information

Information

Information

ProgrammedNon programmed


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The garbage can model of organizational decision making

Solutions

Participants

ChoiceOpportunities

Problems

Solutions

Participants

ChoiceOpportunities

Problems B

A


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A model of escalation of commitment

Organizational factors.Breakdown in communesPoliticsOrganizational inertia

Organizational factors.Breakdown in communesPoliticsOrganizational inertia

Social forces.Peer pressureSaving face

Social forces.Peer pressureSaving face

Project characteristics.A delayed return on Investment.Setbacks attributed to temporary causes

Project characteristics.A delayed return on Investment.Setbacks attributed to temporary causes

Psychological factors.Information processing ErrorsEgo defense

Psychological factors.Information processing ErrorsEgo defense Escalation

Of commitmentPoor

Results


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Decision making styles

Tole

rance

for

am

big

uit

yTole

rance

for

am

big

uit

y

Value orientation

People & socialConcern

Task & technicalConcern

Low

High

Directive

Conceptual

Behavioral

Analytical


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Decision making styles & characteristics

Prefer complex problemsCarefully analyses alternatives.Enjoy solving problems Willing to use innovative methods

Prefer simple,clear solutions.Make decisions rapidly.Do not consider many Alternatives.Rely on existing rules.

Concern for their organization.Interest in helping OthersOpen to suggestions Rely on meetings

Socially oriented. Humanistic and artistic approach.Solve problems creatively.Enjoy new ideas.

BehavioralBehavioral

AnalyticalAnalytical

ConceptualConceptual

DirectiveDirective


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Group decision making

A. Groupthink(When too much cohesiveness is dangerous)

B. Group polarization(The extreme nature of group decisions)

Advantages and disadvantages of group decision making

A. The Delphi techniqueB. The nominal group techniqueC. Brainstorming

Obstacles to quality group decision making

Improving the effectiveness of group decisions


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Advantages and disadvantages of group decision making

Domination byVocal few

Logrolling

GoalDisplacement

Group thing

Social pressure

DifferentPerspective

GreaterComprehension

Increased Acceptance

Training ground

General pool of Knowledge

ShouldGroup make Decisions?

DisadvantagesAdvantages


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The groupthink process

GroupCharacteristics.Group cohesiveness.Leader promotion of his preferred solution.Insulation of group from the opinion of expert.

GroupCharacteristics.Group cohesiveness.Leader promotion of his preferred solution.Insulation of group from the opinion of expert.

Groupthink symptoms.1. Illusion of invulnerability.2. Collective rationalization.3. Unquestioned morality.4. Excessive negative

stereotyped views of opponents.

5. Strong conformity pressures

6. Self-censorship of dissenting ideas.

7. Illusion of unanimity.8. Self-appointed mindguards

Groupthink symptoms.1. Illusion of invulnerability.2. Collective rationalization.3. Unquestioned morality.4. Excessive negative

stereotyped views of opponents.

5. Strong conformity pressures

6. Self-censorship of dissenting ideas.

7. Illusion of unanimity.8. Self-appointed mindguards

Decision makingDefects.Few alternativesNo examination of Preferred alternative.No reexamination of Rejected alternative.Rejection of expert Opinion.Selective bias of new information.

Decision makingDefects.Few alternativesNo examination of Preferred alternative.No reexamination of Rejected alternative.Rejection of expert Opinion.Selective bias of new information.

Poor

deci

sion

s

Closed style Leadership

Time pressure


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Devil’s advocacy & dialectical inquiry

Dialectical inquiryDevil’s advocacy

Critique of chosenAlternative

Presentation ofChosen alternative

Presentation ofAlternative # 2

Presentation ofAlternative#1

Debate betweenAlternatives

Debate betweenAlternatives

Reassessment of Chosen

Alternative(Accept? Modify?

Reject?)

Reassessment of Chosen

Alternative(Accept? Modify?

Reject?)

Reassessment of Alternatives

(accept#1 or #2?Combine #1 & #2?)

Reassessment of Alternatives

(accept#1 or #2?Combine #1 & #2?)


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Prescriptions for prevention of groupthink

1. Periodically break the group into subgroups to discuss the issues

2 take time to study external factors

Individual prescriptions

Process prescriptions

1. Assign everyone to the role of critical evaluator.2. Be impartial: do not state preferences.3. Assign the devil’s advocate role to at least one member4. Use outside experts to challenge the group5. Be open to dissenting points of view

Leader prescriptions

Organizational prescriptions1. Set up several independent groups to study the same

Issue.2. Train managers and group leaders in groupthink

Prevention techniques.

1. Be a critical thinker2. Discuss group deliberations with a trusted outsider;

Report back to group


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Delphi technique

Problem

Solution

Enlist the Cooperation Of experts

PresentThe

ProblemTo

Experts

PresentThe

ProblemTo

Experts

ExpertsRecord

Solutions,Recomme-Ndations

ExpertsRecord

Solutions,Recomme-Ndations

Experts’ responsesAre compiled &

Reproduced

Experts’ responsesAre compiled &

ReproducedResponses are

Shared withAll others

Experts comment on other Ideas & propose a solution

Experts comment on other Ideas & propose a solution

Solutions are compiled

If no consensusIs reached

2

5

1

4

6

7

3


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The nominal group technique (NGT)

A small groupGathers around

A table & receivesInstructions:Problem is Identified

A small groupGathers around

A table & receivesInstructions:Problem is Identified

ParticipantsPrivately

Write downIdeas about

ProblemSolving

Each participants’Ideas are Presented,

One at a time & areWritten on chartUntil all ideas are

Expressed.

Each participants’Ideas are Presented,

One at a time & areWritten on chartUntil all ideas are

Expressed.

Each idea isDiscussed, Clarified, &

Evaluated byGroup member

Each idea isDiscussed, Clarified, &

Evaluated byGroup member

ParticipantsPrivately rank the

Ideas in their orderOf preference

ParticipantsPrivately rank the

Ideas in their orderOf preference

The highs rankingIdea is taken asThe groups’ Decision

23

45

6

1


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Brainstorming

Short listing of best alternative

2

One manager describe in broad Outline the problem

The members present ideas &Clarify them with brief

Explanation

One member of the group recordsThe alternatives/ideas on

Flip chart

Group members debate the pros &Cons of ideas/alternatives

3

4

5

1

Group membersAre not allowed

To criticize &Everyone Withholds Judgments

Until AlternativesHave been

Heard

Group membersAre encouraged

To be as Innovative

And Radical asPossible