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Chapter 8

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Department
Human Resources
Course
MHR 405
Professor
Frank Miller
Semester
Fall

Description
Chapter 8: Decision Making Creativity – A process influenced by individual and organizational factors that result in the production of novel and useful idea, products, or both The four stages of creativity  Preparation  Incubation  Illumination  Verification Divergent Thinking – An individual’s ability to generate several potential solutions to a problem Organizational Facilitators of creativity:  Leadership  Organizational Structure  Physical Environment and communication  Recognition  Culture Barriers to Creativity:  Focusing on how work is going to be evaluated  Being watched while you are working  Competing with others in a win-lose situation  Internal Politic problems  Harsh criticism of new ideas  Destructive internal competition  Avoidance of risk Decision making – A conscious process of making choices among one or more alternatives and developing a commitment to a course of action Programmed decision – A simple, routine matter for which a manager has an established decision rule Non-programmed decision – A new, complex decision that requires a creative solution Effective Decision – A timely decision that meets a desired objective and is accepted by the individuals affected by it Page 1 of 5 Ethical Decision – A decision that is made after exploring alternatives and their consequences so that actions are consistent with one’s personal values and commonly help values of the organization and society Decision making Models  Rational Model  Bounded Rationality model  Garbage can model  Intuitive decision making model Rational Model of Decision Making  Rationality – A logical step by step approach to decision making, with a thorough analysis of alternatives and their consequences 1. The outcome will be completely rational 2. The decision maker has a consistent system of preferences, which used to choose the best alternative 3. The decision maker is aware of all the possible alternatives 4. The decision maker can calculate the probability of success for each alternative 8 Steps of Rational decision making  Recognizing the problem  identifying the objective  Gathering and evaluating data and diagnose the situation  Listing and evaluating alternatives  Selecting best course of action  Implement the decision  Gathering feedback  Follow up Bounded Rationality – A theory that suggests that there are limits to how rational a decision maker can actually be  The 4 assumptions of bounded rationality 1. Managers select the first alternative that is satisfactory 2. Managers recognize that their conception of the world is simple 3. Managers are comfortable making decisions without determining all the alternatives 4. Managers make decisions by rule of thumb or heuristics  Satisfice – To select the first alternative that is good enough, because the costs in time and effort are too great to optimize  Heuristics – Shortcuts in decision making that save mental activity Like past experiences Page 2 of 5 The Garbage can Model – The theory that contends that decisions in organizations are random and unsystematic  Influenced by: o Problems or concern o Solutions or methods o Participants more or less ready to be active in the decision-making matter o Choice Opportunities Intuitive Decision Making Model  Managers make decisions based on hunches  Intuition – The internal reservoir of cumulative experience, from which one distils, at a level below consciousness, a direction or an urge to do or not do something o A sophisticated form of reasoning based on “chunking” that an expert hones after years of job-specific experience o Being able to bring to bear on a situation everything you’ve seen, felt, tasted, and experienced in an industry o The ability to know or recognize quickly and readily the possibilities of a situation o Accessing the internal reservoir of cumulative experience and enterprise developed over a period of years, and distilling out of that response, or an urge to-do or not do something, or choose from some alternatives—again without being able to understand consciously how we got the answers Individual Influences Decision making:  Risk Aversion – The tendency to choose options that entail fewer risks and less uncertainty o Discouraging risk taking w
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