Chapter 11 – Decision Making 185

CHAPTER 11 - DECISION MAKING

OBJECTIVES

The primary objective of this chapter is to help the students understand alternative models of
decision making that will not only improve their own individual decision making, but also to
improve their ability to lead a decision-making in group and organizational settings. In
achieving these objectives, students are taught the basics of a widely used decision-making
model, and shown the key distinction and implications of normative (prescriptive) and
descriptive approaches to decision making.

The descriptive approach is presented to point out the many errors and pitfalls that occur at
various points in the basic model and numerous examples are provided. The normative model
contains a number of suggested and ideal actions that can be taken to prevent errors and improve
decisions.

Group decision-making emphases carry forward from the earlier chapters on groups, where it
was emphasized that groups are being used more often at work. The importance of groups in
decision-making also raises questions about participative approaches to management, which
connects this chapter to leadership styles and issues presented in a later chapter.

KEY POINTS

The theme of this chapter is that decision making can and should be improved, and a number of
suggestions are given for doing so. Students need to understand the errors that occur in the
decision-making process because of both individual limitations as considered by the
administrative model and the complexity of the decision-making context as demonstrated by the
garbage can model.

The points considered in the examination of individual decision-making are carried into the
discussion of decision-making within group and the organizational settings. Decision-making
processes in the organizational context introduce many complexities surrounding questions of
communication, understanding, and acceptance of decisions.

Group decision-making skills are particularly critical to learn because of the increasing use of
groups in organizations, pointed out in an earlier chapter. The first step is to have some way to
decide whether to take a problem to a group. This decision is directly related to leadership style,
and to the issues associated with power sharing in organizations, topics which are covered in our
chapter on leadership later in the text.

In deciding whether and how to use groups in decision-making, it is important to know that
groups per se have some inherent advantages and disadvantages that help and hinder effective
decisions. Some group forces are either advantages or disadvantages, depending on how the
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Chapter 11 – Decision Making

leader handles them. Also, in every group there is the possibility that the symptoms of
groupthink might arise, which have been identified as occurring even in very high and powerful
organization groups. In this edition we also consider other group decision-making phenomenon
such as risky shift and polarization. With the understanding of these issues involved when using
groups to make decisions, students should better understand the management and leadership
issues involved in improving group decision making. It is important to relate these issues back
to topics considered in the two chapters on groups and teams presented earlier in the text.

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TOPICAL OUTLINE

Characteristics of the Decision Process

Decisions within Decisions
Small Decisions Accumulate
Decisions are Partial or Temporary Solutions

Models of Decision Making

The Rational or Normative Model of Decision Making
Figure 11.1: Rational model of decision making
The Administrative Model of Decision Making
The Garbage Can Model of Decision Making

Improving Individual Decision Making

Improving Problem Selection and Definition
Improving Generating and Evaluating Solutions

Improving Decision Implementation

Summary of Improving Individual Decision Making: A Call for Systems Thinking

Improving Group Decision Making

Benefits and Disadvantages of Groups
Deciding when to Use a Group

Groupthink
Figure 11.2: A model of Groupthink

Risky Shift and Polarization

Summary

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KEY CONCEPTS
Administrative decision-making model
Bounded rationality
Brainstorming
Conformity
Escalation of commitment
Garbage can model
Groupthink
Polarization
Post-decisional dissonance
Rational or normative models of decision making
Risky shift
Satisficing
Uniformity

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EXERCISES

A. Creativity Exercise
Early in the study of creativity, one of the measures of creativity was called the Uses Test.
Participants were given an object such as a brick or a lampshade and asked to generate, working
alone or in groups, all the conceivable uses to which an object might be put. Participants should
be encouraged to free associate or brainstorm to generate as many uses as they can for the object.
Participants should be urged to keep going beyond their last idea. This exercise, once all ideas
are made visible to the total audience, usually reveals how such thinking pays off. This occurs as
people are exposed to some of the very clever possibilities that others and they themselves are
capable of generating. Further discussion can follow on the opportunities and problems of using
brainstorming in an organization, or other techniques such as putting anonymously generated
ideas onto 3x5 cards so as to separate the idea from the person who offered it. The main theme
of this exercise of course, is idea generation without evaluation.

B. Mental Blocks Exercise

J.L. Adams has an exercise which demonstrates how mental blocks damage decision-making.
Among these are cultural and environmental blocks in which feelings, taboos, mistrust,
distractions, etc., work against the decision maker.

Instructions to the Class

Tell the class that each of them is in a bare room with several other people. In the center of the
room a metal pipe is embedded in a concrete floor, and extends 4 inches above the floor level.
The inside pipe diameter is slightly larger than a ping-pong ball one of which is resting on the
floor inside this pipe. The task is to remove the ping-pong ball from the pipe without damaging
the ball, the pipe, or the floor. You have the following objects to work with:

100 feet of clothesline

A carpenter's hammer
A chisel
A box of Wheaties
A metal file
A wire coat hanger
A monkey wrench
A light bulb

A number of solutions are possible. The file can be used to make the coat hanger into tweezers
to pull the ball out. The monkey wrench can be used to smash the hammer handle into wood
splinters for possible lifting of the ball. The mental blocks that operate here is whether any
participant thinks of urinating into the pipe to float the ball to the top. Even if someone thinks of
this idea, they may be too embarrassed to suggest it openly.

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STUDY QUESTIONS

1. Interview a manager or someone you know who recently made an important decision.
Determine to what extent he or she followed the steps of an ideal or a normative model.

Here the students need to probe each stage of the decision-making process as characterized in the
model shown in Figure 11.1 in the text. The key stages include (1) problem selection and
definition, (2) solution generation and evaluation, (3) selection of alternatives, and (4)
implementation and evaluation. Overall, an attempt should be made to see if the decision
observed was made in stages or whether the decision maker skipped around the model or moved
forward through it too quickly at any stage. An effective process would include sticking to each
stage in the model to get thoroughness, for example in selecting and defining a problem before
generating alternative solutions. A number of questions can also be asked within each stage.
How was the problem selected? Was it chosen consciously over others? Was it fully and clearly
defined? Were solutions generated without premature evaluation? Were criteria to evaluate
solutions well developed and made explicit? And so forth throughout the model.

2. Evaluative behavior and creative behavior are critical at all stages of decision making. Show
why this is true.

Simply because people have values, beliefs, attitudes, perceptions, preferences, etc., they are
bound to evaluate as a routine matter. Problems will therefore be perceived and defined
differently depending on who is doing so. And, of course, solutions are selectively generated
based on individual differences, and they are certainly subjected to evaluation. Evaluation will
also enter into ways to implement and how well it succeeds.

Creative behavior can be applied to problem definition by stating the problem in new ways or
looking at it from varied perspectives. Most important, creativity techniques are especially
valuable in idea generation and in ways to implement. Creativity can also be applied to the
methods used to choose among alternatives or evaluate implementation.

3. Define the elements of the normative approach to decision making.

Normative (rational, systematic, economic) models involve (1) exploring many courses of action,
(2) surveying all objectives and relevant values desired, (3) evaluating all positive and negative
consequences in terms of costs, risks, and benefits, (4) searching for new information to evaluate
alternatives, (5) accounting for new inputs even contrary ones, (6) reevaluating positive and
negative consequences of all alternatives, even those originally judged as unacceptable, and (7)
developing detailed implementation plans, including contingency plans.

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4. What are the different ways to evaluate whether a decision or solution to a problem was
effective?

There is no universal agreement on how to measure decision effectiveness, but one can certainly
evaluate whether the decision solved the problem or achieved the goal. One can also assess costs
and unintended side effects. It is possible to assess decisions using quality and acceptance
criteria. Finally, one can examine the decision-making process, because many decisions are
imperfect and the best we can do is to use good procedure in making them.

5. Working alone or with the help of a friend, identify a problem that one of you has that will
require a decision. Was the right problem selected? Can you improve on how the problem is
defined?

Problem selection is very critical to the set of decisions a person makes, for decisions are usually
not made for problems that lie unselected or postponed. Thus problem selection is an extremely
critical point in the model, and indeed in life! Many people deal with problems as they arise or
as others communicate them. Good decision makers are less reactive, less the pawns of their
environment. It would be better periodically to list problems and after study, decide which ones
deserve attention first. Priority setting on problems can make all the difference in the world to
both personal and organizational effectiveness.

Selected problems are also too often defined too narrowly, without creativity, and quickly. Good
problem definition calls for listing all the elements of a problem, examining possible causes,
charting the sequence of events surrounding the problem, and injecting creative definitions if
possible. When this is done, solutions tend to be better because they are more likely to respond
to all problem elements, and solutions are more likely to be lasting because they deal with causes
rather than symptoms.

6. Briefly describe as many techniques as you can that are useful for generating alternative
solutions to a problem.

Good solution generation involves at least two general requirements: avoiding satisficing or any
other form of premature evaluation and using creativity techniques to generate a large number of
possible alternatives. The descriptive model can be used to identify errors typically made in
solution generation. Some guides for generating solutions include defining the problem well and
using its defined elements as catalysts for solutions, letting one's mind run free, using other
people (including naive ones) as a source of ideas, brainstorming, the nominal group technique,
deBono's dictionary technique, breaking mental and social blocks, etc.

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7. What are the advantages and disadvantages that groups have compared to individuals in
decision-making?

Disadvantages of groups include pressures for conformity, consensus pressures that suppress
disagreement, accumulation of support for bad solutions, dominance by some members, and
arguing to win, which dominates over fair and open discussion. Benefits or advantages include
more knowledge and information, more approaches to the problem and its solution, members
knocking each other out of ruts, and more understanding and acceptance of the decision.

Some factors can become disadvantages or benefits, depending on how the leader or members
behave. These include disagreement, risk-taking behavior, time pressures that may rush a
decision but jeopardize implementation, and the question of whether people with good or bad
ideas dominate.

8. What criteria should a manager use to decide whether or not to use group participation in
decision making?

Groups need not be used when mainly quality is needed and acceptance is either not critical or
can be easily achieved with an imposed decision. Also, if the problem is highly verifiable and
the solution calls for complex, interrelated stages, individuals excel over groups. If group
member goals are hostile to the organization, participation may not be indicated. If time
pressures preclude the ability to run a meeting, group decision-making may have to be avoided.

Groups should be considered for use when acceptance is critical for the success of the decision,
and when group preferences need to be discovered by the manager. When the problem is
complex and ill structured, and group members have relevant skills, a group can do well.
Participation will also work better when group members are motivated to attain organizational
goals, and when resolution of member disagreements is important. Time must also be available
for the group to meet and deliberate. It is also wise to use groups when changes are being
introduced, as a way to deal with resistance and help ensure acceptance of the change.

Students may also cite particular decisions where groups are not indicated (e.g., technical
decisions such as selecting vendors, inventory control techniques, etc.) and where they might be
strongly indicated (e.g., who works overtime, revision of an appraisal system, installing new
methods of work).

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9. Name some examples of management decisions where a group should probably not be used to
make the decision. Then give some examples where it might be best to use a group. Explain
your choices.

Examples of when to not use a group include:

• Raise or promotion decisions because groups usually don’t have information on
individual performance
• Hiring decisions are complex but are generally made by managers with input form the
group.
• When a problem is routine and standardized procedures are established for resolving the
problem.

Examples of when to use groups include:

• Helping develop criteria for raises and promotions when the subordinates know the job
well and have a good understanding of how individual performance affects organizational
success.
• Hiring decisions should be made by groups when the individual would be working
extensively with a group or team and their acceptance of the new member is critical.
• Developing new work procedures when group members have experience in performing
the task.
• Decisions about group social activities because decision quality is not usually important.

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ETHICAL, DIVERSITY AND GLOBAL ISSUES

A Question of Ethics:
Ethical Behavior in Groups

The discussion of groupthink and the behaviors that support this widely observed phenomenon
that occurs within a group decision making context may provide insight into ethical behavior.
Within group contexts, members who would normally act ethically individually may be part of a
group that makes unethical decisions. Social scientists have studied the invulnerability and
illusion of morality of individuals when acting as part of a group. These characteristics when
combined with the tendency of groups to accept greater risk should be of concern to managers.
One way of protecting against this possibility is openness and disclosure of group processes.
Groups who feel like they are accountable to others for their decisions and for the process that
arrived at those decisions are less likely to feel invulnerable. Groups should continually ask how
they could defend their decision to others and should be willing to allow others to observe the
decision process. If there is openness, there is less likely to be unethical behavior. If there is
hope within the group that some information about their activities does not become public
knowledge, there is a good chance that the group is falling into the negative pitfalls of
groupthink.

Diversity Issues:
How Gender Changes the Decision Making Process For Promotions

A recent study of corporate decision making dynamics suggests that despite an organization’s
objective to increase the diversity of senior management, aspects of the decision process can
undermine those objectives. A study prepared by the Center for Creative Leadership led to some
disturbing findings. One study finding was that male decision-makers made promotion decisions
about male candidates based on perceived comfort level with the person. Promotion decisions
about female candidates were made based on their tenure in the lower position. Managers felt
more comfortable keeping women in positions longer so that they could insure they were ready
for the higher position. The result of this type of decision process is that women do not move as
quickly as men into positions of higher responsibility. This of course leads to frustration for
women as the see male peers promoted at a faster rate and can subvert an organization’s attempt
to become more diverse.

These biases are subtle but critical components of individual decision making and can have
important organizational consequences. The authors of this study suggest that these biases must
be made visible and become a topic of discussion among decision-makers. One way to assess
current organizational practices is to carefully track decision results. Fair decision practices
should be reflected in relatively equal promotion rates for men and women. Other factors, such
as the retention of women, can provide important clues about the perceived fairness of decision
processes. When discrepancies are found, it is important to get decision-makers to discuss their
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decision strategies including assumptions, stereotypes, criteria and other factors relevant to the
process. Decision-makers can often be unaware of how certain assumptions can lead to biases
that lead to an unfair decision. Once this discussion occurs, organizational practices should be
established that provide training for managers to improve their decision processes and managers
should be held accountable for insuring their decisions are consistent with organizational policies
and objectives.

Source: Adapted from HR Magazine (1997)

Global Focus:
Escalating Commitment in Asian Managers

One recent study focused on whether the phenomena of escalating commitment, which has
received a lot of empirical support with North American managers, could be found in the
behavior of Asian managers [Sharp, 1997]. The research hypothesized that Asian managers
would be less likely to pursue losing courses of actions when the information about those actions
was framed in a negative way. As predicted, the Asian managers chose to not escalate their
commitment to the projects when faced with negative information. This suggests that some
aspects of decision behavior are culturally dependent and that some American theories of
behavior may not apply to other cultures. Perhaps in collectivist cultures such as those found in
Asian societies, individuals are likely to be less motivated by self-interest because the society as
a whole provides stronger penalties for such behavior.

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CASE: ESCAPADE TRAVEL AGENCY

Case:
Escapade Travel Agency

Diane Raymond was excited as she left her night class in Human Resource Management. Her
professor had just lectured on new work schedules that some companies were using. He had
discussed compressed work weeks where employees work all their hours on four days of the
week, and flextime, where employees worked five days but could come in later or leave earlier,
within certain limits. For example, sometimes all employees had to be at work between 10:00
a.m. and 3:00 p.m., but could alter their earlier and later hours. Other variations included putting
in more hours on some days so that other days could be shorter. Many possibilities were
discussed, including how to cover Saturdays if the organization operated on a six-day week.

Diane felt that a flextime schedule could work at Escapade Travel Agency where she was
employed full-time as a travel agent. Personally, it would help her tremendously. Diane was
married with two children, and was pursuing a business degree at the local college. With
flextime, she could run errands, take care of the children better, and even take a few daytime
classes she needed to graduate. She was sure her fellow workers would like flextime, too. They
all had problems similar to hers, and even if they did not need flextime, they could probably
work their current schedule while others altered their schedules.

Diane had the idea put on the agenda of the next meeting at Escapade. Meetings were usually
held early morning before opening time. They were usually led by the owner and manager, Mr.
Burdick. They were attended by all employees, including the two supervisors of the fifteen
agents and two receptionists. Diane hoped for a favorable reaction to her proposal. When her
turn came up on the agenda, she described flextime in general terms and paused for a reaction.

She didn't have to wait long. Many of the travel agents were favorably disposed. They saw it as
a way to meet many personal obligations with taking time off or asking others to cover for them.
They felt they could cover the hours and still complete their work without harming service to
customers. Some travel agents resisted the idea, partly because they felt they might lose status
by having to cover for receptionists. They also liked the "9 to 5" and felt no need for different
hours. The receptionists offered few opinions and Diane could not tell how they felt.

The greatest resistance came from the supervisors. All they saw was having to spend most of
their time making schedules. They just did not think it was workable, especially since they had a
hard enough time as it was covering Saturdays and extra evenings during heavy travel seasons.

Throughout all of this, Mr. Burdick sat silently and listened to the discussion. No one was sure
how he felt. As the clock reached opening time, Mr. Burdick said the meeting had to come to a
close, and promised to continue the discussion at the next meeting.

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1. What are the different elements in the flextime problem? Identify them as quality or
acceptance issues.

2. What are some alternative ways that these problem elements can be solved?

3. How should Mr. Burdick approach the various decisions that have to be made?

Case Discussion: Escapade Travel Agency

1. What are the different elements in the flextime issue? Sort them as quality or acceptance
issues.

Quality issues include covering demand by the agency's clients, hours of operation, staffing for
peak demand, techniques for preparing more complex schedules, and methods to record and
communicate hours worked.

Acceptance issues include needs for flexible free time, differences of opinion about traditional 9
to 5 days, status loss in covering for receptionists, change in responsibilities for supervisors
(schedule preparation, hours monitoring), loss of power by supervisors (participatively derived
schedule?), new demands for interpersonal cooperation, and so forth.

2. What are some of the ways these problem elements can be solved?

If Burdick at least favors further exploration of flextime, he needs to approach the supervisors as
key resources for its success. Burdick has to show appreciation for and accept their resistance
lest he solidify them against it before it even has a chance. Installing flextime means change,
and acceptance is critical, so participation and group decision making seem quite indicated. The
quality elements can be addressed as critical to the success of the agency because customer
satisfaction is key. Efficiency counts too, for flextime should not reduce but may even increase
productivity, especially if peak hours are better covered as a result. An analysis needs to be done
of demand periods to see if these can be adequately covered or get improved coverage.

3. How should Mr. Burdick approach the various decisions that have to be made?

This problem has both quality and acceptance elements, so expertise on the quality and
participation for both quality and acceptance are needed. Quality issues can be addressed in part
by visiting other organizations that use flextime, and by reading and studying reports of its use.
A group can be assigned the responsibility to do this. Ultimately, the acceptance issue will have
to be fully addressed, and Mr. Burdick will have to follow the leadership guidelines if he is to
have a good chance at successfully installing flextime.

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