Chapter 4:

Decision-Making
Skills
 Decision Making
and Problem Solving
• Decision making
– The process of choosing from among various
alternatives.

• Problem solving
– The process of determining the appropriate
responses or actions necessary to alleviate a
problem.

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 Programmed and
Non-programmed Decisions
• Programmed decisions
– Decisions that are reached by following an
established or systematic procedure.
• Non-programmed decisions
– Decisions that have little or no precedent.
– Relatively unstructured.
– Generally require a creative approach by the
decision maker.

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 Intuitive Decision Making
• Emotional attachments that can hurt decision
makers:
– Fastening on unsubstantiated facts and sticking with
them.
– Being attracted to scandalous issues and heightening
their significance.
– Pressing every fact into a moral pattern.
– Overlooking everything except what is immediately
useful.
– Having an affinity for romantic stories and finding such
information more significant than other evidence.
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 Rational Decision Making
• The Optimizing Approach
– Recognize the need for a decision.
– Establish, rank, and weigh the decision
criteria.
– Gather available information and data.
– Identify possible alternatives.
– Evaluate each alternative with respect to all
criteria.
– Select the best alternative.
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 The Optimizing Approach
• Limitations
– People have clearly defined criteria, and the relative
weights they assign to these criteria are stable.
– People have knowledge of all relevant alternatives.
– People have the ability to evaluate each alternative with
respect to all the criteria and arrive at an overall rating
for each alternative.
– People have the self-discipline to choose the alternative
that rates the highest.

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 The Satisficing Approach
• Principle of bounded rationality
– A person’s knowledge of alternatives and criteria are
limited.
– People act on the basis of a simplified abstraction of
the real world.
– This abstraction is influenced by personal perceptions
and biases.
– People do not attempt to optimize but will take the first
alternative that satisfies their current aspirations
(Satisficing).
– Individual aspirations fluctuate upward and downward
depending on the value of the most recently identified
alternatives.

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 The Satisficing Approach
Satisfied with Yes
Best alternative DECISION
Found so far?

No
Search for
additional
alternative

Value of Current
best Value of new
previous level of
alternative
alternative aspiration
found

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 Environmental Factors Influencing
Decision Making
Organizational
groups
Advisory
committees
Labor unions
Informal groups
Individuals Personal traits
within
Decision- Personality
organization
making style Background
Subordinates
Experience
Superiors
Organization itself
Position
Structure
Purpose
Tradition 9
 Uncertainty
Approach How it Works
Optimistic or Choose the alternative whose best
gambling approach possible outcome is the best of all
(maximax) possible outcomes for all alternatives.
Pessimistic Compare the worst possible outcome of
approach (maximin) each alternative and select the
alternative whose worst possible
outcome is the least undesirable.
Risk-averting Choose the alternative that has the least
approach variation among its possible alternatives.

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 George England’s Major
Categories of Values
Pragmatic Suggest that an individual has an evaluative
mode framework that is guided primarily by success-
failure considerations.
Ethical/mor Implies an evaluative framework consisting of
al mode ethical considerations influencing behavior
toward actions and decisions that are judged to
be right and away from those judged to be
wrong.
Affect or Suggests an evaluative framework that is guided
feeling by hedonism; one behaves in ways that increase
mode pleasure and decrease pain.

Source: George England, “Personal Value Systems of Managers and Administrators,” Academy of Management 11
Proceedings, August 1973, pp. 81-94.
 Decision Making
The role of values
• George England found:
– Large individual differences in personal values exist within
every group studied.
– Personal value systems of managers are relatively stable.
– Personal value systems of managers influence the way
managers make decisions.
– Personal value systems of managers are related to their
career success as managers.
– Differences exist in the personal values of managers working
in different organizational contexts.
– Overall, the value systems of managers in the countries
studied were similar.
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 Group Decision Making
• Positive aspects:
– The sum total of the group’s knowledge is greater.
– The group possesses a much wider range of
alternatives in the decision process.
– Participation in the decision-making process increases
the acceptance of the decision by group members.
– Group members better understand the decision and the
alternatives considered.

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 Group Decision Making
• Negative aspects:
– One individual may dominate or control the group.
– Social pressures to conform can inhibit group
members.
– Competition can develop to such an extent that winning
becomes more important than the issue itself.
– Groups have a tendency to accept the first potentially
positive solution while giving little attention to other
possible solutions.

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 Making Creative Decisions

The creative process:

 Preparation – Investigate to fully understand the problem
and all relevant issues.
 Concentration – Commit to solving the problem.
 Incubation of ideas and information – Allow creative sparks
to catch fire.
 Illumination – Connect the problem with an acceptable
solution.
 Verification – Test the solution and accept the results.

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 Establishing a
Creative Environment
• Instill trust – eliminate the fear of failure.
• Develop effective internal and external
communication.
• Seek a mix of talent within the organization.
• Reward useful ideas and solutions.
• Allow for flexibility in the organization’s
structure.

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 Brainstorming

Four basic rules:

2. No criticism of ideas is allowed.
3. No praise of ideas is allowed.
4. No questions or discussion of ideas is allowed.
5. Combinations of and improvements on ideas that
have been previously presented are encouraged.

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 Nominal Group Technique
• Listing
• Recording
• Voting
• Discussions
• Final voting

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 Stimulating Creativity
• Brainwriting
– Group members anonymously record their ideas.
– Ideas are shared with others, attempting to build upon
each.
• Synectics
– Personal analogies: place yourself in the role of the
object.
– Direct analogies: make direct comparisons.
– Symbolic analogies: look at the problem in terms of
symbols.
– Fantasy analogies: imagine the perfect solution.
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 Model for Creative
Decision Making
Stage Activity
1. Recognition Investigate and eventually define a problem
2. Fact finding or decision situation.
3. Problem finding
4. Idea Finding Generate possible alternatives or solutions
(ideas).
5. Solution finding Identify criteria and evaluate ideas
generated in stage 4.
6. Acceptance Work out a plan for implementing a chosen
finding idea
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