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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

Procedures:

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:

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.