Ron is the owner of a small business. He is deciding whether to expand his operation to a second location or remain only at his original site.

What is the difference between a programmed and an unprogrammed decision?  Given an example of each.

A programmed decision is a decision that occurs frequently enough that an automated response is developed for it. An unprogrammed decision is one that is unique and requires conscious thinking, information gathering and careful consideration of alternatives.

An example of a programmed decision is when a restaurant automatically re-orders napkins and placemats for use in the restaurant when the stock of those items gets to, for example, two cases in the stockroom. A nonprogrammed decision might be when a firm faces a crisis situation as when Procter and Gamble was faced with allegations that its corporate logo was supportive of the devil and had to address such charges.

138. Give an example of a strategic decision and indicate who usually makes it.

A strategic decision sets the course for the organization. An example of a strategic decision is to decide whether you should acquire another company or not.  Strategic decisions are made by CEOs, boards of directors, or other top level teams.

139. Give an example of a tactical decision and indicate who makes it.

A tactical decision is focused on how things get done. An example is how to market a new product. Tactical decisions are made by managers.

140. Give an example of an operational decision and indicate who makes it.

An operational decision is made by employees throughout the organization and refers to decisions that employees make each day to make the organization run.  An example is when an employee is expected to visit the stockroom in a retail establishment.

141. Compare the rational decision-making and the bounded rationality model.

The rational decision-making model is a series of steps that decision makers consider if their goal is to maximize the quality of their outcomes. The optimal outcome desired creates a need to thoroughly examine alternatives. The bounded rationality model recognizes the limitations of searching for alternatives and suggests that decision makers often satisfice, accepting the first alternative that meets minimum criteria because an exhaustive search is not possible.

142. Differentiate between the intuitive and creative decision-making processes.

The intuitive decision-making process is one where experts scan the environment for cues and once a pattern is discerned, choose a course of action based upon their experience. The creative decision-making process is one where problem identification is followed by immersion, incubation and then illumination and finally verified and applied. The creative process is characterized by the incubation period where the problem is set aside for a time period and illumination is the “eureka” moment when the decision is made.

143. What are the three factors that are used to evaluate the level of creativity in the decision-making process?

The three factors are: fluency or the number of ideas a person is able to generate; flexibility or how different the ideas are from one another; and originality or how unique a person’s ideas are.

144. Describe two decision-making traps and how to avoid them.

There are five decision-making traps:

Overconfidence bias is when individuals overestimate their ability to predict future events. To avoid this trap, stop and be realistic in your judgments.

Hindsight bias is the opposite of overconfidence bias as it looks backward in time where mistakes seem obvious after they have occurred. It is important that decision makers remember this bias when judging other people’s actions.

Anchoring is the tendency for individuals to rely too heavily on a single piece of information. To avoid this bias, the individual needs to gather sufficient data for assessment.

Framing bias is the tendency for decision makers to be influenced by the way a situation or problem is presented. Avoidance of this bias occurs through simple awareness of the problem and a close monitoring of actions to discern when it occurs.

Escalation of commitment is when individuals continue on a failing course of action after information reveals it may be a poor path to follow. The approach to dealing with this is to assess the scenario and make a clear decision recognizing that sometimes the best choice is to admit you failed.

145. Do groups make better decisions than individuals?

It depends on the specifics of the situation. What research does tell us however, is that groups, particularly those that are diverse, often make better decisions than individuals because more options are considered. When groups make decisions, they are often implemented much more easily because those involved in the process have already “bought into” the decision. What must be guarded against is the group becoming too cohesive and not evaluating alternatives critically but simply accepting them because the group supports them.

146. What are two symptoms of groupthink?

There are eight symptoms of groupthink: illusion of invulnerability; collective rationalization; unquestioned belief in the group’s inherent morality; stereotyped views of outgroups; direct pressure; self-censorship; illusions of unanimity and the emergence of self appointed mindguards.

147. Describe the steps in the nominal group technique.

The nominal group technique was developed to ensure all members in a group participate fully. The first step is when each member of the group silently and independently writes down ideas. Step two is going around the room in order gathering all the ideas that were generated. The third step is a discussion that focuses on each of the ideas generated and finally, the group votes on their favorite ideas.

148. What is the difference between majority rule and consensus?

Majority rule is when each individual within a group gets a vote and whatever alternative received the most votes, wins. It is considered effective and is simple, speedy, easy to use and fair.

Consensus is a decision-making rule that groups use when the goal is to gain support for an idea or plan of action. This process requires more time and focuses on the aspect of plan support.

149. Explain how group decision support systems can become counterproductive.

Individuals can only process so many ideas and so much information at one time.  As virtual meetings grow larger, it is reasonable to figure that information overload can occur and good ideas will fall through the cracks, recreating the problem that the group decision support system was designed to prevent. Also, the system could also just get too complicated.

150. What are two basic questions that can be asked to assess the ethics of a decision?

Is this decision fair?

Will I feel better or worse about myself after I make the decision?

Does this decision break any organizational rules?

Does this decision break any laws?

How would I feel if this decision was broadcast on the news?

151. Briefly describe how decision making differs around the globe.

Decision-making styles and approaches differ depending on the culture.  Research, for example, shows that Japanese and Dutch decision makers are consensus-oriented while American decision makers value quick decisions.

ESSAY

152. Using the rational decision-making model as a template, discuss a recent decision you made.

Step one:  Identify the problem.

Choosing a college to attend.

Step two:  Establish decision criteria.

Offers specific major, cost parameters, distance from home.

Step three:  Weigh decision criteria.

Prioritize each of the criteria, say the cost is the most important

  factor.

Step four:  Generate alternatives.

List the schools you are considering

Step five:  Evaluate alternatives.

What is the positive and negative of each school?

Step six:  Choose the best alternative.

Pick a school.

Step seven:  Implement the decision.

Apply to the school and gain admission.

Step eight:  Evaluate the decision.

After a semester, do you still like it?

153. Darlene is a new manager at XYZ Corporation. She is most interested in enhancing the creativity of her department. What recommendations would you suggest to her?

Four areas can be the focus of creativity enhancement efforts. They are team composition, team process, leadership and culture.

Team composition might be enhanced if you diversify the team, change group membership or use leaderless teams to allow teams freedom to create without trying to please anyone up front.

Team process can be enhanced by engaging in brainstorming, using the nominal group technique, or using analogies to envision problems and solutions.

Leadership: Challenge teams so they are engaged, not overwhelmed; let people decide how to achieve goals, support and celebrate creativity, and role model creative behavior.

Culture: institute organizational memory; build a physical space conducive to creativity; and incorporate creative behavior into the performance appraisal process.

154. You work for a company that was a sub-contractor for the Challenger space shuttle. Cognizant of the groupthink that made the fateful launch decision, you want to ensure that such a condition does not exist in your firm. The company executives have decided that a seminar is necessary to define groupthink, its causes, and provide recommendations do avoid it in the future. You are in charge of that seminar.

Groupthink is a group pressure phenomenon that increases the risk of the group’s making flawed decisions leading to a reduction in mental efficiency, reality testing, and moral judgment. The eight symptoms of groupthink are:  

illusion of invulnerability; collective rationalization; unquestioned belief in the group’s inherent morality; stereotyped views of outgroups; direct pressure; self-censorship; illusions of unanimity and the emergence of self-appointed mindguards.

To avoid groupthink, groups should: discuss the symptoms of groupthink, assign a rotating devil’s advocate, invite experts who are not part of core decision making; encourage a culture of difference; and debate the ethical implications of the decisions.

Individuals should: monitor personal behavior for signs of groupthink, check for self-censorship; carefully avoid mindguard behavior; avoid putting pressure on other group members to conform; and remind members of the ground rules for avoiding groupthink.

Finally, group leaders should break the group into subgroups from time to time; have more than one group work on the same problem; remain impartial and refrain from stating preferences at the outset of decisions; set a tone of encouraging critical evaluations throughout deliberations; and create an anonymous feedback channel through which all group members can contribute if desired.

155. Ron is the owner of a small business. He is deciding whether to expand his operation to a second location or remain only at his original site. He decides to perform a “premortem” on the project and has asked your assistance in making sure he covers all appropriate steps in the process. What recommendations would you provide him?

A premortem is designed to imagine what could go wrong and avoid it before spending any money or having to change course.

The six steps to be followed are:  

A planning team creates a plan outline for the issue.

Either the existing group or a unique group imagines the issue at its worst. The group writes down all the reasons they can imagine that led to this failure.

The list of ideas is reviewed for additional ideas.

The issues are sorted into categories in a search for themes.

The plan should be revised to account for the flaws detected