Chapter 12: Decision Making, Creativity, and Ethics

Transcription

1 Chapter 12: Decision Making, Creativity, and Ethics Organizational Behaviour 5 th Canadian Edition Langton / Robbins / Judge Copyright 2010 Pearson Education Canada 12-1

2 Chapter Outline How Should Decisions Be Made? How Do Individuals Actually Make Decisions? Improving Decision Making Through Knowledge Management Group Decision Making Creativity in Organizational Decision Making What About Ethics in Decision Making? Corporate Social Responsibility 12-2

3 Decision Making, Creativity, and Ethics 1. Is there a right way to make decisions? 2. How do people actually make decisions? 3. How can knowledge management improve decision making? 4. What factors affect group decision making? 5. How can we get more creative decisions? 6. What is ethics, and how can it be used for better decision making? 7. What is corporate social responsibility? 12-3

4 How Should Decisions Be Made? Rational Decision-Making The perfect world model assumes complete information, all options known, and maximum payoff. Six step decision-making process 12-4

5 Exhibit 12-1 Steps in the Rational Decision-Making Model 6. Select the best alternative 1. Define the problem 2. Identify the criteria 5. Evaluate the alternatives Making a Decision 4. Develop alternatives 3. Allocate weights to the criteria 12-5

6 Assumptions of the Rational Decision-Making Model Problem clarity The problem is clear and unambiguous. Known options The decision maker can identify all relevant criteria and viable alternatives. Clear preferences Rationality assumes that the criteria and alternatives can be ranked and weighted. 12-6

7 Assumptions of the Rational Decision-Making Model Constant preferences Specific decision criteria are constant and the weights assigned to them are stable over time. No time or cost constraints Full information is available because there are no time or cost constraints. Maximum payoff The choice alternative will yield the highest perceived value. 12-7

8 How Do Individuals Actually Make Decisions? Bounded Rationality Limitations on one s ability to interpret, process, and act on information. Satisficing Identifying a solution that is good enough. Intuition A non-conscious process created from distilled experience that results in quick decisions Relies on holistic associations Affectively charged engaging the emotions 12-8

9 Common Biases in Decision Making Overconfidence Bias Believing too much in our own ability to make good decisions especially when outside of own expertise Anchoring Bias Using early, first received information as the basis for making subsequent judgments Confirmation Bias Selecting and using only facts that support our decision Availability Bias Emphasizing information that is most readily at hand Recent Vivid 12-9

10 More Common Biases in Decision Making Escalation of Commitment Increasing commitment to a decision in spite of evidence that it is wrong especially if responsible for the decision! Randomness Error Creating meaning out of random events - superstitions Winner s Curse Highest bidder pays too much due to value overestimation Likelihood increases with the number of people in auction Hindsight Bias After an outcome is already known, believing it could have been accurately predicted beforehand 12-10

11 Knowledge Management The process of organizing and distributing an organization s collective wisdom so the right information gets to the right people at the right time. Why it s important: Organizations can use it to outsmart their competition. Baby boomers are taking their knowledge with them when leaving the workforce. A well-designed KM system reduces redundancy and makes the organization more efficient

12 Knowledge Management Recording knowledge and expertise: Develop computer databases of pertinent information that employees can readily access. Create a culture that promotes, values, and rewards sharing knowledge. Develop mechanisms that allow employees who have built up valuable expertise and insights to share them with others

13 Group Decision Making Strengths of Group Decision Making More complete information and knowledge. Increased diversity of views. Generates higher-quality decisions. Leads to increased acceptance of a solution. Weaknesses of Group Decision Making More time consuming. Conformity pressures in groups. Discussion can be dominated by one or a few members. Decisions suffer from ambiguous responsibility

14 Exhibit 12-2 Group vs. Individual Decision Making 12-14

15 Effectiveness and Efficiency Measures of Effectiveness Accuracy Speed Creativity Acceptance Efficiency groups almost always stack up as a poor second to the individual decision maker With few exceptions, group decision making consumes more work hours than if an individual were to tackle the same problem alone

16 Groupthink and Groupshift Groupthink Phenomenon in which the norm for consensus overrides the realistic appraisal of alternative courses of action. Groupshift Phenomenon in which the initial positions of individual members of a group are exaggerated toward a more extreme position

17 Symptoms of Groupthink Illusion of invulnerability Assumption of morality Rationalized resistance Peer pressure Minimized doubts Illusion of unanimity 12-17

18 Minimizing Groupthink Encourage group leaders to play an impartial role. Appoint one group member to play the role of devil s advocate. Stimulate active discussion of diverse alternatives

19 What Causes Groupshift? Discussion creates familiarization among group members. Group discussion motivates individuals to take risks. Group diffuses responsibility

20 Group Decision-Making Techniques Interacting Groups Brainstorming Nominal Group Technique Electronic Meetings 12-20

21 Exhibit 12-3 Nominal Group Technique 12-21

22 Exhibit 12-4 Evaluating Group Effectiveness 12-22

23 Creativity in Organizational Decision Making The process of creating products, ideas, or procedures that are novel or original, and are potentially relevant or useful to an organization. Creativity is important because It allows the decision maker to more fully understand and appraise the problem 12-23

24 Creative Potential Who has the greatest creative potential? Those who score high in Openness to Experience People who are intelligent, independent, self-confident, risk-taking, have an internal locus-of-control, tolerant of ambiguity, low need for structure, and who persevere in the face of frustration 12-24

25 Exhibit 12-5 The Three Components of Creativity 12-25

26 Creativity Blocks Expected evaluation Surveillance External motivators Competition Constrained choice 12-26

27 Four Criterion for Making Ethical Choices Utilitarian criterion A decision focused on outcomes or consequences that emphasize the greatest good for the greatest number of people. Rights criterion Decisions consistent with fundamental liberties and privileges as set forth in documents like the Canadian Charter of Rights and Freedoms. Justice criterion Decisions that impose and enforce rules fairly and impartially so there is an equitable distribution of benefits and costs. Care criterion Decisions that expresses care in protecting the special relationships that individuals have with each other

28 Exhibit 12-6 Factors Affecting Ethical Decision-Making Behaviour Stage of moral development Organization environment Ethical decision-making behaviour Locus of control 12-28

29 Exhibit 12-7 Stages of Moral Development Principled Preconventional 2. Following rules only when doing so is in your immediate interest. 1. Sticking to rules to avoid physical punishment. Conventional 4. Maintaining conventional order by fulfilling obligations to which you have agreed. 3. Living up to what is expected by people close to you. 6. Following self-chosen ethical principles even if they violate the law. 5. Valuing rights of others and upholding absolute values and rights regardless of the majority s opinion. Source: Based on L. Kohlberg, Moral Stages and Moralization: The Cognitive-Developmental Approach, in Moral Development and Behaviour: Theory, Research, and Social Issues, ed. T. Lickona (New York: Holt, Rinehart and Winston, 1976), pp

30 Exhibit 12-8 Is a Decision Ethical? Unethical Ethical s e Y Question 3 s e Y Question 1 Is the decision motivated by self-serving interests? N o Question 2 Does the decision respect the rights of the individuals affected? s e Y N o Is the decision fair and equitable? N o Unethical Unethical 12-30

31 Organizational Response to Demands for Ethical Behaviour Explosion in demand for more ethical behaviour: Ethics specialists Ethics officers Codes of ethics Ethics auditors In addition, many companies are creating mechanisms that encourage employees to speak up when they see wrongdoing 12-31

32 Developing a Meaningful Code of Ethics Clearly state basic principles and expectations. Realistically focus on potential ethical dilemmas that employees face. Distribute the code to all employees. Enforce violations of the code. Source: Based on W. E. Stead, D. L. Worrell, and J. G. Stead, An Integrative Model for Understanding and Managing Ethical Behavior in Business Organizations, Journal of Business Ethics 9, no. 3 (March 1990), pp

33 Corporate Social Responsibility An organization s responsibility to consider the impact of its decisions on society

34 Summary and Implications 1. Is there a right way to make decisions? The rational decision making model describes six steps: define the problem, identify the criteria, allocate weights to the criteria, develop alternatives, evaluate alternatives, select the best alternative. 2. How do people actually make decisions? Decision makers may rely on bounded rationality, satisficing, and intuition. There are also shortcuts that are used. 3. How can knowledge management improve decision making? By electronically storing information that employees have, organizations make it possible to share collective wisdom. 4. What factors affect group decision making? Group decisions are time-consuming, lead to conformity pressures, can be dominated by one or few members, and suffer from ambiguous responsibility