Manch7

Front 1

The nature of decision making:

a) Decision

b) Decision making

Back 1

a)A choice made from among available alternatives.

b)The process of identifying and choosing alternative courses of action.

Front 2

Types of Decisions:

a)Programmed Decisions

b)Nonprogrammed Decisions

Back 2

a)Decisions that are repetitive and routine Contrast nonprogrammed decisions.

b)Decisions that occur under nonroutine, unfamiliar circumstances.

Front 3

Risk propensity

Back 3

Willingness to gamble or to undertake risk for the possibility of gaining an increased payoff.

aka.competitiveness

Front 4

Decision-Making Style

Back 4

A style that reflects the combination of how an individual perceives and responds to information

Front 5

a)value orientation

b)tolerance for ambiguity

Back 5

a)the extent to which a person focuses on either task and technical concerns or people and social concerns when making decisions.


b)the extent to which a person has a high need for structure and control in his/her life (low=Want a lot of structure)

Front 6

Four Styles of decision making

Back 6

Analytical Conceptual

Directive Behavioral

Front 7

Directive

Back 7

low tolerance for ambiguity; oriented toward task and technical concerns

-efficient, logical, practical, and systematic in problem solving

-action oriented and decisive= like facts

BAD= tend to be autocratic(power and control), focus on short term

Front 8

Analytical

Back 8

high tolerance for ambiguity; task and technical

- tendency to overanalyze
- like to consider more info. and alternatives
-careful decision makers who take longer to make decisions but respond well to new/uncertain situations

Front 9

Conceptual

Back 9

High tolerance for ambiguity; Focus on people or social aspects of the work situation

-like broad perspective to problem solving and like to consider many options and future possibilities
- long-term perspactive and rely on intuition and discussion w/others to get info.
-take risks and find creative solutions
*Bad= Indecisive

Front 10

Behavioral

Back 10

low tolerance for ambiguity; Focus on people/social aspect

-most people oriented d-m style
- supportive, receptive to suggestions, show warmth, prefer verbal to written communications
*BAD? = tendency to avoid conflict and be concerned about others = wishy washy/cant say no

Front 11

Three Ways to use knowledge of decision making styles:

Back 11

- Helps you understand yourself. Strengths and waeknesses. Self-Improvement

- Increased ability to influence others. Know how to deal with different styles.

- understand how people look at same info and arrive at different conclusions/decisions. Why conflict may have occurred.

Front 12

Rational Model of Decision Making

Back 12

Also called the classical model; the style of decision making that explains how managers should make decisions; it assumes that managers will make logical decisions that will be the optimum in furthering the organization’s best interests.
-best for programmed decisions

Front 13

Four Stages of Rational Decision Making:

Back 13

1) Identify the problem or opportunity

2) Think up alternative solutions

3)Evaluate alterantives and select a solution

4)Implement and evaluate the solution chosen

Front 14

a)Problems:

b)Opportunities

Back 14

a)Difficulties that inhibit the achievement of goals.

b)Situations that present possibilities for exceeding existing goals.

Front 15

Diagnosis

Back 15

Analyzing the underlying causes

Front 16

Step 2: consider alternatives

Back 16

-innovation is the physical expression of creativity

-programmed decisions usually have easier and more obvious solutions than nonprogrammed
-nonprogrammed= more creative the better

Front 17

Step 3: Evaluate Alternatives and Select solution

Back 17

1) is it ethical?

2) is it feasable?

3) Is it ultimately effective?

Front 18

Step 4: Implement and Evaluate

Back 18

-Implemetation more straighforward for programmed decisions

Successful Implementation= (1)Plan Carefully (2) Be sensitive to those effected

Evaluation= things may happen that wern't forseen.
-What to do if it isnt working= (1)Give it more time (2) Change it slightly (3)Try another alternative (4) Start over

Front 19

Problems w/rational model:

Assumptions

Back 19

Prescriptive, rather than considering how managers actually make decisions

1)Complet info., no uncertainty
2)Logical, unemotional analysis- No prejudices
3)Best decision for the organization

Front 20

Nonrational models of decision making

Back 20

A model of decision-making style that explains how managers make decisions; they assume that decision making is nearly always uncertain and risky, making it difficult for managers to make optimum decisions.
*Descriptive, rather than prescriptive= Actual decisions
*Herbert Simon

Front 21

I. Bounded rationality/Satisficing

a) Bounded rationality

Back 21

a)One type of nonrational decision making; the ability of decision makers to be rational is limited by numerous constraints.

Front 22

Constraints to rational decision making:

Back 22

1)Complexity

2)Time and Money Constraints

3)Different cogantive capacity, values, skills, habits, and unconscious reflexes

4)Imperfect information

5)Information overload

6)Different Priorities

7)Conflicting goals

Front 23

b) Setisficing Model

Back 23

One type of nonrational decision-making model; managers seek alternatives until they find one that is satisfactory, not optimal.

*not necessarily a weakness; better than delaying decision making in some cases

Front 24

II. Incremental Model

Back 24

One type of non rational model of decision making; managers take small, short term steps to alleviate a problem.

Front 25

Knowledge Management

Back 25

Implementation of systems and practices to increase the sharing of knowledge and information throughout an organization; also, the development of an organizational structure—and the tools, processes, systems, and structures—that encourages continuous learning and sharing of knowledge and information among employees, for the purpose of making better decisions.

Front 26

a)Explicit Knowledge

b)Tacit Knowledge

Back 26

a)textbook knowledge; Information that can be easily put into words, graphics, and numbers and shared with others. High-tech Solutions

b)Tricks of the Trade; Knowledge that is individual based, intuitive, acquired through considerable experience, and hard to express and to share.
*Sharing contributes to comparative advantage
*Best learned through direct contact= low-tech solutions (networking, Meetings)

Front 27

Evidence Based Management (not definition)

Back 27

translating principles based on best evidence into organizational practice; bringing rationality to the decision making process
*Pfeffer and Sutton= "an attitude of wisdom"
-use facts; continuously gather info.

Front 28

Three Truths of Evidence-based management:

Back 28

1)There are few really new ideas

2)True is better than new

3)Doing well usually dominates.

Front 29

Seven Implementation Principles for evidence based management:

Back 29

1)Treat your organization as an unfinished prototype
2)No brag, just facts- evaluate data before making decisions
3)See yourself and your organization as outsiders do
4)E-B Mgmt. is not just for senior execs.
5)Like everything else, you still need to sell it. Solid evidence may be unexciting, but important. Sell it!
6)If all else fails, slow the spread of bad practice.
7)Best question: what happens if people fail? No learning w/out failure

Front 30

What makes it hard to be evidence based:

Back 30

-there may be too much evidenc
-there is not enough GOOD evidence
-the evidence doesnt quite apply
-people are trying to mislead you
-YOU are trying to mislead you
-the side effects outweigh the cure
-stories are more persuasive anyway

Front 31

Analytics

Back 31

Term used for sophisticated forms of business data analysis, such as portfolio analysis or time-series forecast.

Front 32

Three Key Attributes for Analytics

Back 32

1) The Use of Modeling- Not just descriptive Statistics (Predictive Modeling)

2)Having Multiple applications (that support many parts of the business), not just one

3) Support from the top- companywide support for a quantitative approach

Front 33

Predictive Modeling

Back 33

Data mining technique used to predict future behavior and anticipate the consequences of change.

Front 34

Ethics Officer

Back 34

A person trained about matters of ethics in the workplace, particularly about resolving ethical dilemmas.

Front 35

Decision Tree

Back 35

Graph of decisions and their possible consequences, used to create a plan to reach a goal.
-Helpful when trying to make ethical decisions

Front 36

Three Questions for ethical decisions:

Back 36

1) Is the proposed action legal?

2) If YES, Does the proposed action maximize shareholder value?

3) If YES, is the proposed action ethical?

4) If NO, would it be ethical NOT to take the action? (NO= disclose effect to shareholders)

Front 37

General Moral Principles:

Back 37

1) Dignity of human life: The lives of people are to be respected.

2) Autonomy: All persons are intrinsically valuable and have a right to self-determination. People have worth, dignity and free choice.

3)Honesty: The truth should be told to those who have a right to hear it.

4) Loyalty: Promises, contracts, and commitments should be honored.

Front 38

General Moral Principles cont:

Back 38

5) Fairness: People should be treated justly.

6) Humaneness: a. Our actions should accomplish good and b. we should avoid doing evil

7) The common good: Our actions should accomplish the greatest good for the greatest number of people.

Front 39

Advantages of Group Decision Making:

*Groups mus be made up of diverse individuals

Back 39

-Greater pool of knowledge

- Different perspectives

-Intellectual Stimulation

-Better understanding of decision rationale

- Deeper commitment to the decision

Front 40

Disadvantages of Group decision making:

Back 40

- A few people ma dominate or intimidate

-Groupthink

-Satisficing: come to a decision that is just "good enough"

- Goal Displacement

Front 41

Groupthink

Back 41

A cohesive group’s blind unwillingness to consider alternatives. This occurs when group members strive for agreement among themselves for the sake of unanimity and avoid accurately assessing the decision situation.

Front 42

Goal Displacement

Back 42

The primary goal is subsumed to a secondary goal.

Front 43

4 Characteristics of Groups:

Back 43

I. They are less efficient: Making decisions takes more time

II. Their size effects decision quality: Larger = lower quality

III. They may be overconfident- Groupthink

IV. Knowledge Counts- individuals should be familiar w/the subject. Know each other= unique info. Don't know= similar info.

Front 44

When can a group help decision making:

Back 44

Use group when:
-It can increase Quality

-It can increase Acceptance

-It can increase development

Front 45

Participative Management (PM)

Back 45

The process of involving employees in
(1) setting goals,
(2) making decisions,
(3) solving problems, and
(4) making changes in the organization.

Front 46

Factors that can help PM work:

Back 46

1)Top management is continually involved
2)Middle and supervisory managers are supportive
3)Employees trust managers
4)Employees are ready
5)Employees don't work in interdependent jobs
6) PM is implemented with TQM

Front 47

Consensus

Back 47

General agreement; group solidarity. Members of a group are able to express their opinions and reach an agreement to support the final decision.
*Not "everyone agrees", just willing to work toward decision's success

Front 48

Dos and Don'ts for Achieving consensus

Back 48

DO: Be active listeners, involve many members, seek out reasons behind arguments, and Dig for facts

Dont: Avoid log rolling/horse trading, Avoid argument to avoid rocking the boat, put questions to a vote.

Front 49

A) Brainstorming

Back 49

Technique used to help groups generate multiple ideas and alternatives for solving problems; individuals in a
group meet and review a problem to be solved, then silently generate ideas, which are collected and later analyzed.

PRO= effective for encouraging expression
CON= can be waste of time , not appropriate for evaluating alternatives/selecting solutions

Front 50

Electronic Brainstorming/ Brainwriting

Back 50

Technique in which members of a group come together over a computer network to generate ideas and alternatives.

Front 51

B)Nominal Group

Back 51

A group whose purpose it is to generate ideas and evaluate solutions by writing down as many ideas as possible. The ideas are listed on a blackboard, then discussed, then voted on in a secret ballot.
*PRO= generates more ideas than brainstorming
*CON= no reason to tell why people voted the way they did

Front 52

C)Delphi Group

Back 52

A problem-solving technique in which a group of physically dispersed experts fills out questionnaires to anonymously generate ideas; the judgments are combined and averaged to achieve a consensus of expert opinion.

Front 53

Pros and Cons of Delphi group:

Back 53

PRO: better for when face-to -face discussions are impractical, when disagreements and conflict are likely to impair communication, when groupthink is possible, and when certain individuals are likely to dominate.

CON= contributors cant ask questions of one another

Front 54

D)Computer-Aided Decision Making:

a) Chauffeur-Aided Decision Making

b) Group-Driven systems

Back 54

a)ask participants to answer predetermined questions on electronic keypads or dials. Responses can be computer tabulated almost instantly

b)meeting within a room of participants who express their ideas anonymously on a computer network. people feel free to communicate

Front 55

Pros and Cons of Computer-Aided Decision Making

Back 55

PRO: Produces greater quality and quantity of ideas than traditional brainstorming/nominal group

CON: Online groups may lead to decreased group effectiveness and member satisfaction and increased time needed to complete tasks.

Front 56

Four Ineffective Reactions to decision situations:

Back 56

1)Relaxed Avoidance

2)Relaxed change

3)Defensive Avoidance

4)Panic

Front 57

1) Relaxed Avoidance

Back 57

The situation in which a manager decides to take no action in the belief that there will be no great negative consequences.

Front 58

2) Relaxed Change

Back 58

The situation in which a manager realizes that complete inaction will have negative consequences but opts for the first available alternative that involves low risk.

Front 59

3) Defensive Avoidance

Back 59

When a manager cannot find a good solution and follows by (a) procrastinating, (b) passing the buck, or (c) denying the risk of any negative consequences.

Front 60

4)Panic

Back 60

Situation in which a manager reacts frantically to get rid of a problem that he or she cannot deal with realistically.

Front 61

-3 Effective Reactions

DEF: Deciding to Decide

Back 61

A manager agrees that he or she must decide what to do about a problem or opportunity and take effective decision-making steps.
Evaluate...
1) Importance- How high a priority is situation?

2) Credibility -How believable is the info about the situation

3) Urgency- How quickly must I act?

Front 62

Heuristics

Back 62

Strategies that simplify the process of making decisions.

Rules of thumb

Front 63

1) Availability Bias

Back 63

Tendency of managers to use information readily available from memory to make judgments; they tend to give more weight to recent events.

Front 64

2) Confirmation Bias

Back 64

Biased way of thinking in which people seek information to support their point of view and discount data that does not.

Front 65

3) Representativeness Bias

Back 65

The tendency to generalize from a small sample or a single event.

Ex. Lottery winner

Front 66

4) Sunk Cost Bias

Back 66

Biased way of thinking in which managers add up all the money already spent on a project and conclude it is too costly to simply abandon it.
EX. Concorde

Front 67

5) Anchoring and Adjustment Bias

Back 67

The tendency to make decisions based on an initial figure.

EX. Base salary on previous year
EX. Real Estate

Front 68

6) Escalation of Commitment Bias

Back 68

When decision makers increase their commitment to a project despite negative information about it.

EX. escalating commitment to Vietnam War

Front 69

prospect theory

Back 69

decision makers find the notion of an actual loss more painful than giving up the possibility of a gain