Chapter 7 Decision Making MGMT 1500 PDF

Chapter 7 Decision Making MGMT 1500  Learning Objectives 1. Describe the elements of rational choice decision making. 2. Explain why people don’t apply rational choice decision making when identifying problems/opportunities,...

Chapter 7 Decision Making MGMT 1500  Learning Objectives 1. Describe the elements of rational choice decision making. 2. Explain why people don’t apply rational choice decision making when identifying problems/opportunities, evaluating/choosing alternatives, and evaluating decision outcomes. 3. Discuss the roles of emotions and intuition in decision making. 4. Describe employee characteristics, workplace conditions, and specific activities that support creativity. 5. Describe the benefits of employee involvement and identify four contingencies that affect the optimal level of employee involvement. © 2021 McGraw-Hill Limited. Slide 2  Decision Making Blunders Caused Target Failure Target Canada made a series of decisions that led to 17,600 people out of work, creditor protection, billions of dollars lost and a damaged reputation. © 2021 McGraw-Hill Limited. Slide 3 ©wavebreakmedia/Shutterstock  Decision Making The conscious process of making choices among alternatives with the intention of moving towards some desired state of affairs. © 2021 McGraw-Hill Limited. Slide 4 ©wavebreakmedia/Shutterstock  Decision Making is Difficult! Limited information, time Cognitive ability to take in information, process situation, evaluate alternatives Failure to scenario plan, identify potential/unintended consequences Politics – assumed favourites Perceptions / bias / self-concept Moods, emotions, intuition © 2021 McGraw-Hill Limited. Slide 5  Rational Choice Decision Process © 2021 McGraw-Hill Limited. Slide 6 Access the text alternate for slide image.  Problem Identification Challenges Problems and opportunities are constructed from ambiguous and conflicting information. Five Problem Identification Challenges: Solution-focused problems. Decisive leadership. Stakeholder framing. Perceptual defence. Mental Models. © 2021 McGraw-Hill Limited. Slide 7  Identifying Problems Effectively 1. Be aware of problem identification biases. 2. Resist temptation of looking decisive. 3. Develop a norm of “divine discontent” (aversion to complacency). 4. Discuss the situation with others. 5. Ask “why” until you find root cause © 2021 McGraw-Hill Limited. Slide 8 ©PictureLux/The Hollywood Archive/Alamy Stock Photo  Making Choices More Effectively 1. Systematically evaluate alternatives against relevant factors (don’t be too decisive). 2. Revisit decisions later when emotions/moods have changed. 3. Scenario plan. © 2021 McGraw-Hill Limited. Slide 9 ©wavebreakmedia/Shutterstock  Decision Evaluation Problems Confirmation bias (post-decisional justification). Underweight negative outcomes of the preference. Inflates valence of the selected alternative. Escalation of commitment is repeating or further investing in an apparently bad decision. Causes of escalation: Self-justification effect. Self-enhancement effect. Prospect theory effect. Sunk costs effect. © 2021 McGraw-Hill Limited. Slide 10  Causes of Escalation of Commitment 1. Self-Justification Effect Choose to not acknowledge there are problems to maintain a commitment to the decision. 2. Self-Enhancement Effect May internally acknowledge issues, but will choose the best decision that puts them in the best light. 3. Prospect Theory Effect We become more risky when faced with losses. 4. Sunk Costs Effect We’ve already come this far…. © 2021 McGraw-Hill Limited. Slide 11  Improving Decision Evaluation 1. Ensure the party evaluating the decision is not the decision maker. 2. Involve several people in the evaluation process. 3. Create a stop-loss. 4. Seek factual and social feedback. © 2021 McGraw-Hill Limited. Slide 12  Employee Involvement © 2021 McGraw-Hill Limited. Slide 13  Employee Involvement Better problem Identification Better alternatives Problem too Better decision complicated Commitment Structure / process Slows org down Risk of conflict © 2021 McGraw-Hill Limited. Slide 14