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Lecture 4

MGHB02H3 Lecture 4: Decision Making and Communication

Course Code
Brian Connelly

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January 24, 2017 Lecture 4: Decision Making and Communication
Decision making
o Process of developing a commitment to some course of action
o Two types
Well structured
Return policies in stores
Ill structured
Motivating employees, no clear solution
A rational decision making model
Identify the problem
o Problem identification fails because:
Lack of experience/ knowledge
Knowledgeable people can see a problem coming
before it comes
Defined based on the solution
Parsed into symptoms rather than sources
Expertise and searching for information
o Brought people into a lab: memorize chess arrangement
o Group 1: expert chess master
o Group 2: regular people
o Conditions: set up of pieces possible in a game, impossible
arrangements in game
o In condition 2 experts were no better than novices
o In condition chess masters were better
Expertise guiding them and help them attend to certain
Develop and evaluate alternative solutions, and selecting best solution
A small auto company is trying to decide whether to continue
manufacturing gasoline engines or whether to switch to hydrogen fuel
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cells. With gasoline engines, they project to earn $250 million over the next
five years. With fuel cells, they project to earn $500,000 million over the
next five years, but there is a 50% chance that the technology will fail and
they will make $0.
o What should the organization do?
Factors affecting decisions
o Framing: the way a question is framed can change how people
view it
o Positive frame: people prefer certain outcomes
o Negative frame: people prefer probable outcome
Selecting among alternatives
o Satisficing: consider alternatives until you get to the one that is
Have to generate solutions
Another decision
o You have just finished scheduling all employee holidays for the
summer. You have done your best to account for each employee’s
requests, however not all were able to be accommodated. In your
business, there are 40 employees and there must always be at least
30 in the office to sustain daily operations. Therefore, if more than 10
people want the same week off during the summer, you can not
accommodate them. If more than 10 people want the same week
off, your policy is to make the decision on the basis of seniority. This
summer you had two weeks that were in high demand, and as a
result, 6 employees did not receive their first choice of time off. You
have completed the schedule and are going to post it tomorrow
morning. Today an employee has come to you to make a special
request that he be given his request week off. He tells you that he
and his wife have reserved a cottage at the lake for their family
holiday this year. He was required to pay in full when he reserved
the cottage, and he had to reserve it months early because it’s
peak season in cottage country. He is appealing to you because if
he can’t have his requested week, then his family will have to go
without him.
The emotion factor
o Emotion
Important for effective decision-making
Strong emotions can negatively impact decision-making
Increased use of heuristics
Empathy can yield unfair decision-making
o Mood
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