Organizational Behavior Course Notes – Decision Making

What different types of decision making techniques can be used?

Individual Decision-Making

6 steps to applying a “rational” decision-making process. This model provides a very good guide for thinking about an optimal decision making process

1. Define the problem – Huber suggests that managers often err by (a) defining the problem in terms of a proposed solution, (b) missing the big problem, or (c) diagnosing the problem in terms of its symptoms. Goal is to solve problems.
2. Identify all the criteria
3. Weight the criteria – each criterion
4. Generate alternatives – ID courses of action, but do not spend an inappropriate amount of time seeking alternatives, this only creates a barrier to effective decision making.
5. Rate each alternative on each criterion – forecast consequences of each alternative
6. Calculate and choose the alternative with the highest expected value

Group Decision-Making

BRAINSTORMING
Use of a group to identify approaches to solve a problem

• Manager must not criticize ideas
• Welcome “Freewheeling”- coming up with wild ideas
• Encourage quantify- the more ideas the better
• In addition to contributing ideas – use the group to improve ideas contributed or existing ideas.

Procedures:

• Describe the problem, and then describe the task identifying as many solutions to the problem as is possible
• Describe how privacy is to be attained- (e.g. writing ideas on piece of paper)
• State the basic rules of individual brainstorming (listed above)
• Tell the participants that they will have ten minutes to write down their solutions, ask if there are any questions, and tell them to begin

NOMINAL GROUP TECHNIQUE
This form of idea generation is what we did to structure our class format at the beginning of the semester. Everyone comes up with their own ideas and then shares them with the group and the group selects the best ideas.

Steps for Nominal Group Technique:

• Silent recording– participants generate their ideas- this is different from brainstorming in two ways. First is that we do not comment or communicate with others during the idea generation period. Second we do not suggest to the participants that their ideas will not be evaluated by the other participants
• Round robin recording– share the ideas with the group- benefits are:
• Equal participation in the presentation of ideas
• Increase in problem mindedness
• Depersonalization
• Deal with a larger number of ideas
• Initial tolerance of conflicting ideas
• Encouragement of hitchhiking or piggybacking ideas
• Provision for a written record and guide
• Maintains interest
• Interactive Discussion – group discusses each idea
• Prioritize Ideas – rank ideas
• Outcome assessment – discuss the results of the prioritization to see if any of the steps need to be repeated
• Move to closure– achieve a clear prioritization

THE DELPHI TECHNIQUE
A technique for obtaining judgments from a large panel of experts- usually done when historical data are not very good indicators of future events (e.g.- bringing a new product to market). This is usually done by sending out a survey to experts

Three features of the Delphi technique

1. Anonymity- avoids face to face communication
2. Opportunity for opinion revision- multiple rounds allows experts to “revise” opinions
3. Summary feedback- allows summary of responses before the next round

Procedures:

1. Define the problem to which the Delphi study is a solution and design the instructions and first round questionnaire
2. Determine who should participate in the Delphi process and obtain agreement to participate
3. Distribute all of the background materials and the first round questionnaire
4. Tabulate and summarize the results format the questionnaire
5. Mail the appropriate summaries feedback messages and the second round questionnaire to the participants
6. Analyze the results for the second questionnaire and report them to the decision makers

Where Should Decision Making Authority Reside in the Organization?

The “Note on Organization Structure” talks about the distribution of decision rights. Ideally, decision rights should be given to those who have the best information relevant to the decision. Typically these are people lower down or on the front lines in the organization. Yet, the employees on the front line might not have information on all of the relevant factors or may make decisions based on self-interest. The manager needs to allocate decision rights while keeping in mind the extent of goal.