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11.1 RATIONAL AND NONRATIONAL MODELS OF DECISION MAKING

MAJOR QUESTION

How can people integrate rational and nonrational models of decision making?

THE BIGGER PICTURE

Decision making is a key process within the Integrative Framework for Understanding and Applying OB. We have been encouraging you to use this framework throughout this book in order to enhance your ability to solve problems. Use of the framework helps you identify and choose alternative solutions that lead to a desired outcome. This process varies along a continuum of rational to nonrational. Four steps in making rational decisions are (1) identify the problem, (2) generate alternative solutions, (3) evaluate alternatives and select a solution, and (4) implement and evaluate the solution. Examples of nonrational models include (1) satisficing and (2) intuition.

Decision making matters deeply in your personal and work life. Let's consider the impact of decisions made by a few college graduates during the interview process. One job applicant took a nonemergency call on his smartphone 15 minutes into the interview. Do you think this decision made a positive impression? Another decided to bring his father into a 45-minute interview: The recruiter was shocked. Paula Welch, a Cigna HR representative, similarly noted how one recent grad asked his father to call and negotiate a higher salary after receiving a job offer. Here's a really good decision: A college senior brought her cat to the interview in a cage, and then proceeded to play with it during the interview. The end results of these decisions were bad in all cases.6

Decision making entails identifying and choosing alternative solutions that lead to a desired state of affairs. The above examples illustrate how one's decision making affects the chances of getting a job after graduation, but the importance of decision making is much broader. As a case in point, the annual Global Leadership Development study conducted by Training magazine uncovered that critical thinking/problem solving was the second most important competency desired by organizations in 2012 and 2013.7 You would be well served to improve your decision-making skills.

Let's look at two different methods managers can use to make decisions. They can follow a rational model or several nonrational models.

Rational Decision Making: Managers Make Logical and Optimal Decisions

The rational model of decision making explains how managers should make decisions. It assumes that managers are completely objective and possess complete information when making decisions. Decisions thus demonstrate excellent logic and optimize the organization's best interests.

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There are four generic stages associated with rational decision making (see Figure 11.1).

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FIGURE 11.1THE FOUR STAGES IN RATIONAL DECISION MAKING

Stage 1: Identify the Problem or Opportunity—Determining the Actual versus the Desirable We defined a problem in Chapter 1 as a difference or gap between an actual and desired situation. By now you know that problem identification is the first stop in solving any type of problem. We did not mention in our earlier discussion, however, that managers also have to make decisions regarding opportunities. An opportunity represents a situation in which there are possibilities to do things that lead to results that exceed goals and expectations. For example, US medical schools must prepare to produce 5,000 more graduates a year by 2019. Unfortunately, this wonderful opportunity will require some tough decisions because the number of funded residencies has been frozen since 1997. Residencies entail the three to seven years of additional on-the-job training that medical students need before they can practice medicine on their own. Without more residency positions, the Association of American Medical Colleges predicts a shortage of 62,900 doctors by 2015, and potentially as many as 140,000 by 2025.8

Whether you face a problem or an opportunity, the goal is always the same: to make improvements that change conditions from their current state to a more desirable one. This requires you to diagnose the causes of the problem (or the nature of the opportunity).

Stage 2: Generate Alternative Solutions—Both the Obvious and the Creative For many people this is the exciting part of decision making, the step where you get to be creative, think outside the box, and share your ideas of how things should be done. Brainstorming, for instance, is a common technique used by both individuals and groups to generate potential solutions. Brainstorming is discussed later in this chapter. Unfortunately, a research study of 400 strategic decisions revealed that managers struggled during this stage because of three key decision-making blunders:

1. Rushing to judgment. Managers simply make decisions too quickly without considering all relevant information.

1. Selecting readily available ideas or solutions. Managers take the easy solution without rigorously considering alternatives. This can tend to happen when emotions are high about the problem at hand.

1. Making poor allocation of resources to study alternative solutions. Managers don't invest the resources to properly study the problem and alternative courses of action.

Decision makers thus are encouraged to slow down when making decisions, to evaluate a broader set of alternatives, and to invest in studying a greater number of potential solutions.9 The Problem-Solving Application on the next page illustrates how these blunders may have impacted J.P. Morgan Chase's response to the “London whale” trading problem in 2012 and 2013.

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problem solving application

J.P. Morgan Chase Is Trying to Resolve the London Whale Trading Fiasco

J. P. Morgan Chase is one of the largest banks in the world, and it ran afoul of regulators in 2012 and 2013 in what is dubbed the “London whale” fiasco. Since that time, US regulators have been rigorously investigating the situation.

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Jamie Dimon of J.P. Morgan Chase testifying to a governmental committee.

What Happened? Three former London-based traders made large investment bets that led to a nearly $6 billion loss for the company. A French-born employee named Bruno Michel Iksil was called the “London whale” because his bets created the most losses. After the news originally broke, Chase CEO Jamie Dimon referred to the scandal as a “tempest in a teapot.” He later described it as an isolated risk that the bank had taken care of. He wanted the problem to go away.

Regulators are investigating whether or not these three former employees, and the bank itself, “tried to hide some of the mounting losses during the first quarter of this year [2013].”10 They think there was a cover-up.

The Company's Response Over time Dimon concluded that he underestimated the losses because he “relied on advice from colleagues that losses wouldn't worsen.” A US Senate panel did not agree with this interpretation. The committee concluded that Chase “brushed off internal warnings and misled regulators and investors about the score of the losses tied to the trades.”

Dimon denies these charges, saying that no one at the company “thought we had a big problem” but rather “we knew we had a small problem.” The company estimated the problem at $300 million, not $6 billion. In response to the comment that the company withheld information from regulators, Dimon said, “We tried to tell them but we didn't know sometimes.”

Dimon is now vigorously defending the company's integrity and decisions. He said, “I don't know what more I can say. Bad strategy, badly vetted, badly monitored, badly controlled. Embarrassing. Terrible. Sorry.” He also told investors at a conference hosted by Morgan Stanley that “there was no hiding, there was no lying, there was no b—s—.”11 He further promised to fight any lawsuits that are filed against the company.

YOUR CALL

1. Stop 1: What is the problem in this case from CEO Dimon's perspective?

1. Stop 2: Which of the above stage 2 blunders were committed by Chase?

1. Stop 3: Rolling back time, what decisions do you think Chase should have made when it first discovered the losses?

Stage 3: Evaluate Alternatives and Select a Solution—Ethics, Feasibility, and Effectiveness In this stage, you need to evaluate alternatives in terms of several criteria. Not only are costs and quality important, but you should consider the following questions: (1) Is it ethical? (If not, don't consider it.) (2) Is it feasible? (If time is an issue, costs are high, resources are limited, technology is needed, or customers are resistant, for instance, then the alternative is not feasible.) (3) Will it remove the causes and solve the problem?

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Stage 4: Implement and Evaluate the Solution Chosen Once a solution is chosen, it needs implementation. And after implementation, stakeholders need to evaluate how effectively the solution solves the problem. To be effective, the solution should eliminate or significantly reduce the difference between the earlier, actual problem state and the desired outcome. If the gap is not closed, the implementation fails, and either the problem was incorrectly identified or the solution was inappropriately conceived or executed. If the solution fails, management can return to the first step, problem identification. If the problem was correctly identified, management should consider implementing one of the previously identified, but untried, solutions. This process can continue until all feasible solutions have been tried or the problem has changed.

What's Good and Bad about the Rational Model? The rational model is prescriptive, outlining a logical process that managers should use when making decisions. As such, the rational model is based on the notion that managers optimize when making decisions. Optimizing involves solving problems by producing the best possible solution and is based on a set of highly desirable conditions—having complete information, leaving emotions out of the decision-making process, honestly and accurately evaluating all alternatives, having abundant and accessible time and resources, and having people willing to implement and support decisions. Practical experience, of course, tells us that these conditions are all rarely met, and assumptions to the contrary are unrealistic. Herbert Simon in 1978 earned the Nobel Prize for his work on decision making. He put it this way: “The assumptions of perfect rationality are contrary to fact. It is not a question of approximation; they do not even remotely describe the processes that human beings use for making decisions in complex situations.”12

That said, there are three benefits of trying to follow a rational process as much as realistically possible:

1. Quality. The quality of decisions may be enhanced, in the sense that they follow more logically from all available knowledge and expertise.

1. Transparency. It makes the reasoning behind a decision transparent and available to scrutiny.

1. Responsibility. If made public, it discourages the decider from acting on suspect considerations (such as personal advancement or avoiding bureaucratic embarrassment) and therefore encourages more responsible decisions.13

Nonrational Models of Decision Making: Decision Making Does Not Follow an Orderly Process

Nonrational models of decision making explain how managers actually make decisions. The models typically build on assumptions that decision making is uncertain, that decision makers do not possess complete information, and that managers struggle to make optimal decisions. Two nonrational models are Herbert Simon's normative model and the intuition model.

Simon's Normative Model: “Satisfactory Is Good Enough” Herbert Simon proposed this model to describe the process that managers actually use when making decisions. The process is guided by a decision maker's bounded rationality. Bounded rationality represents the notion that decision makers are “bounded” or restricted by a variety of constraints when making decisions. These constraints include any personal characteristics or internal and external resources that reduce rational decision making. Personal characteristics include the limited capacity of the human mind, personality, and time constraints. Consider gender: Males tend to make more risky decisions than females.14 Examples of internal resources are the organization's human and social capital, financial resources, technology, plant and equipment, and internal processes and systems. External resources include things the organization cannot directly control such as employment levels in the community, capital availability, and government policies.15 Tom Albanese, former CEO of Rio Tinto, the second largest mining company in the world, experienced these constraints when he decided to acquire Riverside Mining Ltd. (see the Example box).

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EXAMPLEBounded Rationality Dooms an Acquisition Decision

In 2013 Tom Albanese stepped down as Rio Tinto's CEO after a series of bad decisions. One involved the acquisition of Riverside Mining Ltd. for $3.7 billion. Albanese was interested in Riverside's coking-coal operations in Africa.

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Through its Diavik Diamond Mine subsidiary, Rio Tinto operates the Diavik mine in the subarctic tundra of Canada's Northwest Territories.

THE FATAL DECISION There were few bidders for Riverside because of “concerns about getting the steel ingredient out of Mozambique's bush country.” The price of coking was $290 a ton at the time of the acquisition decision in 2011. The price was $165 a ton in January 2013.

“Rio Tinto had planned to ship the coal along the Zambezi River, but that strategy proved unworkable when the company ran into trouble dredging the river and failed to secure government approval for shipments.” The effects of this decision resulted in the company writing down $3 billion of lost costs, and the resignation of Albanese and the company's head of strategy, Doug Ritchie.16

YOUR THOUGHTS?

1. How does bounded rationality explain what happened in this example?

1. What constraints of internal and external resources—directly identified or implied—acted as boundaries to the decisions made?

1. What could Albanese have done differently?

Ultimately, these limitations result in the tendency to acquire manageable rather than optimal amounts of information. In turn, this practice makes it difficult for managers to identify all possible alternative solutions. In the long run, the constraints of bounded rationality cause decision makers to fail to evaluate all potential alternatives, thereby causing them to satisfice.

Satisficing consists of choosing a solution that meets some minimum qualifications, one that is “good enough.” Satisficing resolves problems by producing solutions that are satisfactory, as opposed to optimal. Finding a radio station to listen to in your car is a good example of satisficing. You cannot optimize because it is impossible to listen to all stations at the same time. You thus stop searching for a station when you find one playing a song you like or do not mind hearing.

The Intuition Model: “It Just Feels Right” Many entrepreneurs start businesses on the basis of intuition. Consider the following:

EXAMPLE Ignoring recommendations from advisers, Ray Kroc purchased the McDonald's brand from the McDonald brothers: “I'm not a gambler and I didn't have that kind of money, but my funny bone instinct kept urging me on.” Ignoring the fact that 24 publishing houses had rejected the book and her own publishing house was opposed, Eleanor Friede gambled on a “little nothing book,” called Jonathan Livingston Seagull: “I felt there were truths in this simple story that would make it an international classic.”17

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Intuition represents judgments, insights, or decisions that “come to mind on their own, without explicit awareness of the evoking cues and of course without explicit evaluation of the validity of these cues.”18 Unfortunately, the use of intuition does not always lead to blockbuster decisions such as those by Ray Kroc or Eleanor Friede. To enhance your understanding of the role of intuition in decision making, this section reviews a model of intuition and discusses the pros and cons of using intuition to make decisions.

A Model of Intuition Figure 11.2 presents a model of intuition. Note that the model shows two forms of intuition:

1. A holistic hunch represents a judgment that is based on a subconscious integration of information stored in memory. People using this form of intuition may not be able to explain why they want to make a certain decision, except that the choice “feels right.”

1. Automated experiences represent a choice that is based on a familiar situation and a partially subconscious application of previously learned information related to that situation. For example, when you have years of experience driving a car, you react to a variety of situations without conscious analysis.

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FIGURE 11.2A MODEL OF INTUITION

SOURCES: Based in part on D. Kahneman and G. Klein, “Conditions for Intuitive Expertise,” American Psychologist, September 2009, 515–526; E. Sadler-Smith and E. Shefy, “The Intuitive Executive: Understanding and Applying ‘Gut Feel’ in Decision Making,” Academy of Management Executive, November 2004, 76–91; and C. C. Miller and R. D. Ireland, “Intuition in Strategic Decision Making: Friend or Foe in the Fast-Paced 21st Century,” Academy of Management Executive, February 2005, 19–30.

In Figure 11.2, you can see that intuition is represented by two distinct processes. One is automatic, involuntary, and mostly effortless. The second is quite the opposite in that it is controlled, voluntary, and effortful. For example, when trying to answer one of the Your Thoughts? questions at the end of the Example boxes, you may spontaneously have an answer pop into your mind based on your recollection of what you previously read (an automatic process). Upon further reflection (controlled process), however, you may decide your initial thought is wrong and that you need to go back and reread some material to arrive at another answer. This in turn may cause novel ideas to come to mind, and the two processes continue. These intuitive processes are influenced by two sources: expertise and feelings (see Figure 11.2). Expertise represents an individual's combined explicit knowledge (i.e., information that can easily be put into words) and tacit knowledge (i.e., information gained through experience that is difficult to express and formalize) regarding an object, person, situation, or decision opportunity.

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EXAMPLE Steve Jobs used a combination of explicit and tacit knowledge to create new products. The feelings component reflects the automatic, underlying effect one experiences in response to an object, person, situation, or decision opportunity. An intuitive response builds on the interaction between one's expertise and feelings in a given situation.

1. Pros and Cons of Using Intuition. There are two benefits of using intuition to make decisions. (1) It can speed up the decision-making process, which is valuable when you are under time constraints.19 (2) It is useful when resources are limited. On the downside, however, intuition is subject to the same types of biases associated with rational decision making, biases we discuss in the next section of this chapter. In addition, the decision maker may have difficulty convincing others that the intuitive decision makes sense, so a good idea may be ignored.

1. What Is the Bottom Line on Intuition? We believe that intuition and rationality are complementary and that managers should attempt to use both when making decisions.20 We thus encourage you to use intuition when making decisions. You can develop your intuitive awareness by using the recommendations in Table 11.1.

TABLE 11.1GUIDELINES FOR DEVELOPING INTUITIVE AWARENESS

RECOMMENDATION

DESCRIPTION

1. Open up the closet

To what extent do you experience intuition; trust your feelings; count on intuitive judgments; suppress hunches; covertly rely upon gut feel?

2. Don't mix up your I's

Instinct, insight, and intuition are not synonymous; practice distinguishing among your instincts, your insights, and your intuitions.

3. Elicit good feedback

Seek feedback on your intuitive judgments; build confidence in your gut feel; create a learning environment in which you can develop better intuitive awareness.

4. Get a feel for your batting average

Benchmark your intuitions; get a sense for how reliable your hunches are; ask yourself how your intuitive judgment might be improved.

5. Use imagery

Use imagery rather than words; literally visualize potential future scenarios that take your gut feelings into account.

6. Play devil's advocate

Test out intuitive judgments; raise objections to them; generate counterarguments; probe how robust gut feel is when challenged.

7. Capture and validate your intuitions

Create the inner state to give your intuitive mind the freedom to roam; capture your creative intuitions; log them before they are censored by rational analysis.

SOURCE: From E. Sadler-Smith and E. Shefy, “The Intuitive Executive: Understanding and Applying ‘Gut Feel’ in Decision Making,” Academy of Management Executive, November 2004, 88. Reproduced with permission of The Academy of Management, via Copyright Clearance Center.

Improving Your Intuitive Awareness Do you think being intuitive is a good thing? Would you like to become more intuitive? If yes, then you will find the Self-Assessment on the next page valuable.

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http://textflow.mheducation.com/figures/1259187799/connect.pngSELF-ASSESSMENT 11.1

Am I Intuitive?

Go to connect.mheducation.com and complete Self-Assessment 11.1 to assess your intuitiveness. Then answer the following questions:

1. What is your level of intuitiveness? Do you agree with this assessment?

1. What are the two highest items driving your intuition? When do you tend to use these characteristics?

1. What are your two lowest items that detract from your intuition? When do they get in the way of your making intuitive decisions?

TAKE-AWAY APPLICATION—TAAP

Use the results of Self-Assessment 11.1 and Table 11.1 to answer the following:

1. Examine the recommendations in Table 11.1 and evaluate each one as either a strength of yours—something you do—or a weakness—something you tend not to do.

1. For those recommendations in Table 11.1 that you think might be your weaknesses, consider whether results from the intuition Self-Assessment can help you to turn the weaknesses to strengths.

1. Develop a plan to further develop your self-assessment strengths on the basis of the recommendations in Table 11.1 for increasing your intuitive awareness.

Integrating Rational and Nonrational Models Applying the idea that decisions are shaped by characteristics of both problems and the contexts in which decision makers have to solve the problems, consultants David Snowden and Mary Boone have come up with their own approach that responds to the challenging environments facing today's organizations. They essentially integrate rational and nonrational models by identifying four kinds of decision environments and an effective method of decision making for each.21

1. Simple. A simple context is stable, with clear cause-and-effect relationships, so the best answer can be agreed upon.

Effective: The rational model. Decision makers gather information, categorize it, and respond in an established way.

1. Complicated. There is a clear relationship between cause and effect, but some people may not see it, and more than one solution may be effective.

Effective: The rational model. Decision makers investigate and analyze options.

1. Complex. There is one right answer, but many unknowns obscure cause-and-effect relationships.

Effective: Intuition. Decision makers start by experimenting, testing options, and probing to see what might happen as they look for a creative solution.

1. Dynamic/Chaotic. Cause-and-effect relationships change so fast that no pattern emerges.

Effective: Both intuition and evidence-based decision making, discussed in Section 11.3 of this chapter. Decision makers act first to establish order and then find areas where it is possible to identify patterns so that aspects of the problem can be managed.22

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11.2 DECISION-MAKING BIASES: RULES OF THUMB OR “HEURISTICS”

MAJOR QUESTION

It's hard to be rational. What are the biases that get in the way?

THE BIGGER PICTURE

You and everyone else use “heuristics” when making decisions. By better understanding the nature of these various rules of thumb, you can improve your ability to make more rational decisions. Heuristics fall into eight categories: availability bias, representativeness bias, confirmation bias, anchoring bias, overconfidence bias, hindsight bias, framing bias, and escalation of commitment bias.

Ever had a hard time explaining why you made a particular decision? It would be normal because all of us use shortcuts or “rules of thumb” when making decisions. Academics call them judgmental heuristics, pronounced “hyur-ris-tiks.” Judgmental heuristics represent cognitive shortcuts or biases that are used to simplify the process of making decisions.23

There are both pros and cons to the use of heuristics. Because these shortcuts derive from knowledge gained from past experience, they can help managers make decisions. At the same time, however, they can lead to bad decisions, particularly for people facing severe time constraints, an unfortunately notorious example being primary health care doctors. For example, a recent study of medical malpractice claims showed that diagnostic errors, which are partly caused by misapplied judgmental heuristics, result in up to 160,000 deaths per year. Bad decisions are very costly in this context, in human suffering and in plain dollars. Between 1986 and 2010, diagnosis-related errors cost doctors and hospitals about $38.8 billion.24

Here are eight biases that commonly affect decision making:

1. Confirmation bias

1. Overconfidence bias

1. Availability bias

1. Representativeness bias

1. Anchoring bias

1. Hindsight bias

1. Framing bias

1. Escalation of commitment bias

Knowledge about these biases or heuristics can help you to avoid using them in the wrong situation or being blinded by not knowing you are in fact using them.

1. Confirmation Bias. The confirmation bias has two components. The decision maker (1) subconsciously decides something even before investigating why it is the right decision, for example, making a snap decision to purchase a particular smartphone; and (2) seeks information that supports purchasing this particular phone while discounting information that does not.25

1. Overconfidence Bias. Most of us tend to be overconfident about estimates or forecasts. For example, most of us regard ourselves as better than average drivers.26 This bias grows in strength when people are asked moderate to extremely difficult questions rather than easy ones. (See the Problem-Solving Application on the BP Oil Spill.) Entrepreneurs especially fall prey to this bias when deciding to start and sustain new ventures. Sadly, one entrepreneurial success frequently leads to investing in a poor opportunity later on. Experienced investment analysts also were found to be more prone to overconfidence.27 Our advice: Don't assume that overconfident and assertive people have the best recommendations.

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problem solving application

Heuristics Partly to Blame for BP Oil Spill

CNN summed up the months of bad news this way: “The drill rig Deepwater Horizon exploded and sank in April 2010, killing 11 men aboard and unleashing an undersea gusher from a BP-owned well called Macondo a mile under water. It took three months to cap the well, and federal officials estimate nearly 5 million barrels of oil—more than 200 million gallons—poured into the Gulf in that time.”28

What Happened? According to Bob Bea, an engineering professor at the University of California, Berkeley, “Technological disasters, like the BP oil spill, follow a well-worn ‘trail of tears.’” Bea has investigated 630 different types of disasters and is an expert on offshore drilling.

The Associated Press interviewed Bea in the spill's aftermath. Bea thinks the BP spill falls into the category of disasters that result when an organization simply ignores warning signs through overconfidence and incompetence. He pointed to congressional testimony: BP ignored problems with a dead battery, leaky cement job, and loose hydraulic fittings.

“Disasters don't happen because of ‘an evil empire,’” Bea said. “It's hubris, arrogance, and indolence.”

Because cutting-edge technology often works flawlessly, Bea said, people get lulled into complacency. “Corners get cut, problems ignored. Then boom.”29

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The Deepwater Horizon oil rig disaster.

The Confirmation Bias at Work The finance industry saw the disaster as resulting from BP's failure to “debias” its investigation. “Transocean workers conducted two pressure tests, a positive pressure test and a negative pressure test,” according to the Quarterly Journal of Finance. “The positive pressure test involves increasing the pressure inside the well by pumping fluid, to see whether fluids leak from the well. . . . The result was favorable.

“The negative pressure test involves decreasing pressure from the well, to see whether fluids leak. . . . The test results were unusual, and Transocean workers struggled to interpret the readings. Pressure built up unexpectedly with no clear reason as to why.” This situation was deemed to be “non-problematic.”

“However, other Transocean workers were not persuaded that the problems had been resolved. For example, Wyman Wheeler, who supervised the drilling crew for twelve hours per day, was not convinced that all was in order. Yet, when Wheeler's shift ended at 6 pm his replacement, Jason Anderson, assured both his Transocean coworkers (and for that matter, his BP colleagues) that the pressure readings were normal.”30

The Final Outcome? BP settled charges with the US Department of Justice by pleading guilty to “11 counts of manslaughter, two misdemeanors, and a felony count of lying to Congress. BP also agreed to four years of government monitoring of its safety practices and ethics. . . . As of February 2013, criminal and civil settlements and payments to a trust had cost the company $42.2 billion.”31

YOUR CALL

1. Stop 1: What was the problem in this example?

1. Stop 2: How did the confirmation bias and overconfidence bias contribute to this disaster?

1. Stop 3: What would you recommend that BP do differently in the future to avoid such disasters?

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Some people are afraid of flying because they overestimate the chances of being in a plane crash. Plane crashes are “low probability” events. There was only one large airplane flying passengers that crashed in 2014, the Malaysian Boeing 777. If you consider all airplanes flying around the world, there were 138 and 155 crashes in 2013 and 2012, respectively.

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1. Availability Bias. The availability heuristic represents a decision maker's tendency to base decisions on information that is readily available in memory. This leads us to overestimate the importance of information we recently received or thought about. The problem, of course, is that recent information is not necessarily the best or most accurate information.

This bias can be fueled by news media, which likes to emphasize negative or unusual events, like plane crashes or high-school shootings. This heuristic is likely to cause people to overestimate the occurrence of these unlikely events.32 This bias also is partially responsible for the recency effect noted in Table 4.1 in Chapter 4. For example, a manager is more likely to give an employee a positive performance evaluation if the employee exhibited excellent performance over the last few months.

1. Representativeness Bias. The representativeness heuristic is used when people estimate the probability of an event occurring. It reflects the tendency to assess the likelihood of an event occurring based on one's impressions about similar occurrences. A manager, for example, may hire a graduate from a particular university because the past three people hired from this university turned out to be good performers. In this case, the “school attended” criterion is used to facilitate complex information processing associated with employment interviews. Unfortunately, this shortcut can result in a biased decision. Similarly, an individual may believe that he or she can master a new software package in a short period of time because a different type of software was easy to learn. This estimate may or may not be accurate. For example, it may take the individual a much longer time to learn the new software because it involves learning a new programming language.

1. Anchoring Bias. How would you answer the following two questions? Is the population of Iraq greater than 40 million? What's your best guess about the population of Iraq? Was your answer to the second question influenced by the number 40 million suggested by the first question? If yes, you were affected by the anchoring bias. The anchoring bias occurs when decision makers are influenced by the first information received about a decision, even if it is irrelevant. This bias happens because initial information, impressions, data, feedback, or stereotypes anchor our subsequent judgments and decisions.

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Hostess Twinkies have been produced in a Chicago bakery since the 1930s. The company recently closed the plant as part of its re-organization strategy. Employees and the union were devasted as they thought the production of Twinkies was part of the company's future.

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1. Hindsight Bias. Imagine yourself in the following scenario: You are taking an OB course that meets Tuesday and Thursday, and your professor gives unannounced quizzes each week. It's the Monday before a class, and you are deciding whether to study for a potential quiz or to watch Monday night football. Two of your classmates have decided to watch the game rather than study because they don't think there will be a quiz the next day. The next morning you walk into class and the professor says, “Take out a sheet of paper for the quiz.” You turn to your friends and say, “I knew we were going to have a quiz; why did I listen to you?” The hindsight bias occurs when knowledge of an outcome influences our belief about the probability that we could have predicted the outcome earlier. The danger of this bias is that, in retrospect, we get overconfident about our foresight, which leads to bad decisions.33 For example, investors prone to this bias will confidently think they are predicting good investment opportunities, on the basis of such experiences, only to find out that they invested in dogs.34

1. Framing Bias. This bias relates to the manner in which a question is posed or framed. For example, customers have been found to prefer meat that is framed as “85% lean meat” instead of “15% fat,” although, of course, they are the same thing. Framing is important because it shows that our decisions are influenced by the manner in which a problem or question is framed.35 You are encouraged to frame decision questions in alternative ways in order to avoid this bias.

1. Escalation of Commitment Bias. The escalation of commitment bias refers to the tendency to stick to an ineffective course of action when it is unlikely that the bad situation can be reversed. Personal examples might include investing more money into an old or broken car and putting more effort into improving a personal relationship that is filled with conflict. A business example would be Hostess asking investors to reinvest in the company during its second bankruptcy. One of the company's lenders described it this way: “If you look in the dictionary at the definition of throwing good money after bad, there should be a picture of Hostess beside it.”36

Researchers recommend the following actions to reduce the escalation of commitment:

5. Set minimum targets for performance, and have decision makers compare their performance against these targets.

5. Regularly rotate managers in key positions throughout a project.

5. Encourage decision makers to become less ego-involved with a project.

5. Make decision makers aware of the costs of persistence.37

TAKE-AWAY APPLICATION—TAAP

Using the list of decision-making biases, answer the following questions:

1. Think of a bad decision you made in the last 6 to 12 months.

1. Now consider which of the eight decision-making biases may have influenced your decision.

1. Based on your answer, and your knowledge of judgmental heuristics, what could you have done differently to avoid the bad decision?

Chapter 11. Decision Making and Creativity

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11.3 EVIDENCE-BASED DECISION MAKING

MAJOR QUESTION

How can I more effectively use evidence-based decision making?

THE BIGGER PICTURE

You can improve the quality of your decisions by looking for the best evidence and the best available data to make, inform, or support the decision. This section of the chapter will help you understand the role of evidence in decision making and the move toward “big data.”

Interest in the concept of evidence-based decision making stems from two sources. The first is the desire to avoid the decision-making biases discussed previously, and the second is research done on evidence-based medicine.38 In health care, the goal is to increase the quality of care while reducing costs. Proponents believe that evidence-based decision making (EBDM), which is defined as a process of conscientiously using the best available data and evidence when making managerial decisions, can help make this happen. Results from its application in other industries suggests that this is possible.

Consider the applications to dairy farming and professional sports.

EXAMPLE “A Canadian company, Dairy Quality, unveiled a new product called Milk Guardian, a small black box that slides onto the back of an iPhone. A farmer inserts a plastic slide containing a milk sample from one of his cows, and the device counts the number of somatic cells. (A high somatic cell count can be an indicator of mastitis, an infection of the udder tissue.) Counting somatic cells used to require sending milk to an offsite lab and waiting a week or more for results; using a microscope and an app, Milk Guardian can analyze a sample on location in six seconds or less. The accessory and app cost $1,800.”39

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(Left) Milk Guardian provides hardware and an app to modify an iPhone so it can count somatic cells from a sample to identify udder infection; (right) the Lely Astronaut a4 robot milks cows so farmers can sleep through pre-dawn milking.

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EXAMPLE More than 50 percent of NBA basketball teams use EBDM to improve their team's performance.

1. Wearable monitors. During practice, for example, players wear a silver dollar–sized chip to monitor their physiological indicators, movements, and posture. Coaches leverage the data to customize a training regiment for each player, all to improve each player's conditioning and range of motion.

1. Camera analysis. During games, cameras track players' movements, and software converts the images to data points like “contested rebounds (with an opponent within 3½ feet), catch-and-shoot success rates, live-ball turnovers and the speed and distance players travel. . . . The cameras detect the percentage players walk, jog, run and sprint, and use those motions to determine the ‘mechanical load’ on players' legs.” Teams use the data to customize how players train on off days and how they can prevent injuries.40

A Model of Evidence-Based Decision Making (EBDM)

Figure 11.3 illustrates a model of EBDM. You can see that evidence is used in three different ways: to make a decision, to inform a decision, and to support a decision.

http://textflow.mheducation.com/figures/1259187799/ch11_fig3.png

FIGURE 11.3THE USE OF EVIDENCE IN DECISION MAKINGIn each of the three scenarios following, the role of evidence is increasingly diminished, until in the final scenario evidence becomes an output of the decision process. Note also that the risks increase with each succeeding scenario.

SOURCE: From P. M. Tingling and M. J. Brydon, “Is Decision-Based Evidence Making Necessarily Bad?,” MIT Sloan Management Review, Summer 2010, 73. Copyright © 2010 from MIT Sloan Management Review/Massachusetts Institute of Technology. All rights reserved. Distributed by Tribune Content Agency, LLC.

“Evidence is used to make a decision whenever the decision follows directly from the evidence.” For example, if you wanted to purchase a particular used car (e.g., Toyota Prius) based on price and color (e.g., red), you would obtain data from the Internet and classified ads and then choose the seller offering the lowest-priced red Prius. “Evidence is used to inform a decision whenever the decision process combines hard, objective facts with qualitative inputs, such as intuition or bargaining with stakeholders.” For instance, in hiring new college graduates, objective data about applicants' past experience, education, and participation in student organizations would be relevant input to making a hiring decision. Nonetheless, subjective impressions garnered from interviews and references would typically be combined with the objective data to make a final decision. These two uses of evidence are clearly positive and should be encouraged. The same cannot be said about using evidence to support a decision.

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“Evidence is used to support a decision whenever the evidence is gathered or modified for the sole purpose of lending legitimacy to a decision that has already been made.”41 This application of evidence has both positive and negative effects. On the positive side, manufactured evidence can be used to convince an external audience that the organization is following a sound course of action in response to a complex and ambiguous decision context. This can lead to confidence and goodwill about how a company is responding to environmental events. On the negative side, this practice can stifle employee involvement and input because people will come to believe that management is going to ignore evidence and just do what it wants. You know how discouraging this can be if it ever happened to you. There are two takeaways about using evidence to support a decision. First, this practice should not always be avoided. Second, because this practice has both pros and cons, management needs to carefully consider when it “might” be appropriate to ignore disconfirming evidence and push its own agenda or decisions.

Big Data: The Next Frontier in EBDM

A recent study says that the digital universe will reach 40 zettabytes (ZB) by 2020. This reflects a 50 percent growth in information from 2010. To put this in perspective, there are 700,500,000,000,000,000,000 grains of sand on the beaches around the world. Forty ZB is equal to 57 times the number of grains of sand.42 The term big data reflects the vast quantity of data available for decision making. It also encompasses “the collection, sorting, and analysis of that information, and the techniques to do so.”43 The analysis of big data is expected to revolutionize all aspects of our lives, and many companies are not prepared for this change. For example, a survey of 800 people by the American Management Association revealed that only 1 in 4 organizations has the ability to handle big data.44

Experts estimate that there will be a need for 1.5 million experts in data analytics over the next 5–10 years. Guess who is responding to this need? Universities. More and more universities are offering majors in data analytics. These degrees will train people to use quantitative and statistical tools to analyze and interpret big data. Do you think that you are suited for this career?

Managers and companies that effectively utilize big data, such as Kroger (see the Problem-Solving Application), are expected to gain competitive advantage. Big data creates value in the following ways:

1. It can make information more transparent and usable.

1. It allows organizations, like Kroger, to measure and collect all types of performance information, enabling them to implement initiatives to enhance productivity.

1. It allows more narrow segmentation of customers.

1. It can be used to develop new products.45

One problem with big data is that private or sensitive information is more easily obtained, which means it can be leaked to others. This is precisely what NSA contractor Edward Snowden did in 2013. He leaked information about what the NSA was doing with big data.46

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problem solving application

Kroger Uses Big Data to Improve Customer Service and Profits

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Behind the scenes at this Kroger supermarket, computers, using infra-red cameras, count shoppers in line to alert managers when to open new lanes and even to predict future traffic.

Kroger is using big data from infrared cameras to reduce the wait time in checkout lines. Kroger's system, which is referred to as QueVision, is operating in roughly 95 percent of its stores. Sales have increased since the system was installed, reports The Wall Street Journal.

How Does the System Work? The cameras detect body heat and they are placed “at the entrances and above cash registers at most of Kroger's roughly 2,400 stores. Paired with in-house software that determines the number of lanes that need to be open, the technology has reduced the customer's average wait time to 26 seconds. That compares with an average of four minutes before Kroger began installing the cameras in 2010.”

The data also uncovered some additional trends that led to increased sales. “The system showed that there were more customers than Kroger realized buying a small number of items in the morning and during lunchtime, and that the express lanes were backing up. So Kroger added 2,000 new express lanes to its stores nationwide, which it credits with growing the number of those small orders over the last two years.”47

YOUR CALL

1. Stop 1: What problem was Kroger trying to solve by installing QueVision? Based on Figure 11.3, how is Kroger using the data it is capturing?

1. Stop 2: What are the causes of different spending patterns and customer service responses?

1. Stop 3: What is your evaluation of Kroger's use of QueVision? Briefly summarize ethical and privacy issues around their customer service effort.

Chapter 11. Decision Making and Creativity

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11.4 FOUR DECISION-MAKING STYLES

MAJOR QUESTION

How do I decide to decide?

THE BIGGER PICTURE

Your decision-making style reflects the manner in which you perceive and comprehend information. You will find it as an input in the Integrative Framework. Knowing the four general styles of decision making will help you understand how your managers and coworkers are making their decisions; and it will help you know yourself that much better, too. The four decision-making styles are directive, analytical, conceptual, and behavioral.

We make countless decisions on a daily basis—from what to wear, to what to eat, to what route to take driving to school, to whether or not to confront a negative colleague. These decisions are guided by our decision-making style. A decision-making style is how an individual perceives and comprehends stimuli and the general manner in which he or she chooses to respond to such information.48 A team of researchers developed a model of decision-making styles that is based on the idea that styles vary along two different dimensions: value orientation and tolerance for ambiguity.49

Value Orientation and Tolerance for Ambiguity

Value orientation reflects the extent to which an individual focuses on either task and technical concerns or people and social concerns when making decisions. Some people, for instance, are very task focused at work and do not pay much attention to people issues, whereas others are just the opposite. The second dimension pertains to a person's tolerance for ambiguity.

This individual difference indicates the extent to which a person has a high need for structure or control in his or her life. Some people desire a lot of structure in their lives (a low tolerance for ambiguity) and find ambiguous situations stressful and psychologically uncomfortable. In contrast, others do not have a high need for structure and can thrive in uncertain situations (a high tolerance for ambiguity). Imagine the ambiguity faced by brain surgeons when doing surgery. Ambiguous situations can energize people with a high tolerance for ambiguity.

When the dimensions of value orientation and tolerance for ambiguity are combined, they form four styles of decision making: directive, analytical, conceptual, and behavioral (see Figure 11.4).

http://textflow.mheducation.com/figures/1259187799/ch11_fig4.png

FIGURE 11.4DECISION-MAKING STYLES

SOURCE: Based on discussion in A. J. Rowe and R. O. Mason, Managing with Style: A Guide to Understanding, Assessing, and Improving Decision Making (San Francisco: Jossey-Bass, 1987), 1–17.

The Directive Style: Action-Oriented Decision Makers Who Focus on Facts

People with a directive style have a low tolerance for ambiguity and are oriented toward task and technical concerns when making decisions. They are efficient, logical, practical, and systematic in their approach to solving problems. People with this style are action oriented and decisive and like to focus on facts. In their pursuit of speed and results, however, these individuals tend to be autocratic, exercise power and control, and focus on the short run.

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Interestingly, a directive style seems well suited for an air-traffic controller. Here is what Paul Rinaldi, president of the National Air Traffic Controllers Association, had to say about his decision-making style to a reporter from Fortune:

It's not so much analytical as it is making a decision quickly and sticking with it. . . . You can't back out. You've constantly got to be taking into account the speed of the airplane, its characteristics, the climb rate, and how fast it's going to react to your instructions. You're taking all that in and processing it in a split second, hoping that it'll all work together. . . . We can't make mistakes.50

The Analytical Style: Careful and Slow Decision Makers Who Like Lots of Information

People with this style have a much higher tolerance for ambiguity and tend to overanalyze a situation. They like to consider more information and alternatives than do those with a directive style. Analytical individuals are careful decision makers who take longer to make decisions but who also respond well to new or uncertain situations. They can often be autocratic.

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Elon Musk, on the right, is CEO of SpaceX, CEO of Tesla Motors, and chair of SolarCity. Musk believes that SpaceX will commercialize space travel. He is known to have both an analytical and conceptual style of decision making.

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Chinese consumer Zhang Guangming is a good example of someone with an analytical style. BusinessWeek sees in him an exemplar of other potential car buyers on the mainland. Zhang “has spent hours poring over Chinese car buff magazines, surfing Web sites to mine data on various models, and trekking out to a dozen dealerships across Beijing.” Once he settled on a car (either a Volkswagen Bora or a Hyundai Sonata sedan) he started all over again on getting the best deal.51

The Conceptual Style: Intuitive Decision Makers Who Involve Others in Long-Term Thinking

People with a conceptual style have a high tolerance for ambiguity and tend to focus on the people or social aspects of a work situation. They take a broad perspective to problem solving and like to consider many options and future possibilities. Conceptual types adopt a long-term perspective and rely on intuition and discussions with others to acquire information. They also are willing to take risks and are good at finding creative solutions to problems. On the downside, however, a conceptual style can foster an idealistic and indecisive approach to decision making.

The Behavioral Style: Highly People-Oriented Decision Makers

This style is the most people oriented of the four styles. People with this style work well with others and enjoy social interactions in which opinions are openly exchanged. Behavioral types are supportive, are receptive to suggestions, show warmth, and prefer verbal to written information. Although they like to hold meetings, people with this style have a tendency to avoid conflict and to be too concerned about others. This can lead behavioral types to adopt a wishy-washy approach to decision making and to have a hard time saying no to others and to have difficulty making difficult decisions.

Which Style Are You?

Research reveals that very few people have only one dominant decision-making style. Rather, most managers have characteristics that fall into two or three styles. Studies also show that decision-making styles vary by age, occupations, personality types, gender, and countries.52 The following self-assessment will enhance your understanding about your decision making style.

http://textflow.mheducation.com/figures/1259187799/connect.pngSELF-ASSESSMENT 11.2

What Is My Decision-Making Style?

Go to connect.mheducation.com and complete Self-Assessment 11.2 to measure your decision-making style. Then answer the following questions:

1. Do you agree with your results? Explain.

1. Which of these styles is most important in your role as a student and in your current job?

1. Based on your answer to question 2, what might you do to modify your decision-making style?

© Dr. Alan J. Rowe, Distinguished Emeritus Professor. Revised December 18, 1998. Reprinted with permission.

11.5 A ROAD MAP TO ETHICAL DECISION MAKING

MAJOR QUESTION

How can I assess the ethics of my decisions?

THE BIGGER PICTURE

Sometimes you may find yourself confused about the ethics of a situation. One way to gain some certainty is to graph the situation with a decision tree. A decision tree provides a framework for ethical decision making.

In Chapter 1 we discussed the importance of ethics and the growing concern about the lack of ethical behavior among business leaders and students. Unfortunately, research shows that many types of unethical behavior go unreported, and unethical behavior is negatively related to employee engagement.53 While this state of affairs partially explains the passage of laws to regulate ethical behavior in corporate America, we believe we can turn to another place to look for improvement—the decision-making process people engage in. Ethical acts ultimately involve individual or group decisions. It thus is important to consider the issue of ethical decision making. Harvard Business School Professor Constance Bagley suggests that a decision tree can help managers to make more ethical decisions.54

A decision tree is a graphical representation of the process underlying decisions, and it shows the consequences of making various choices. Decision trees are used to aid in decision making. You can follow Bagley's decision tree, shown in Figure 11.5, by asking the following questions:

1. Is the proposed action legal? This may seem like common sense, but you would be surprised how some managers and companies overlook this question. For example, Synthes, a medical device maker, decided to market Norian XR, a cement that potentially turns into bone when injected into humans, for spine surgeries despite being told not to by the Food and Drug Administration. At least five people died on the operating table after being injected with Norian.55

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The 2013 building collapse in Rana Plaza in Bangladesh is the largest garment factory accident in history. Sadly, 1,129 people died in this tragedy. This tragedy could have been prevented by better management.

1. If “yes,” does the proposed action maximize shareholder value? A decision maximizes shareholder value when it results in a more favorable financial position (e.g., increased profits) for an organization. Whether or not an action maximizes shareholder value, the decision tree shows that managers still need to consider the ethical implications of the decision or action.

1. If “yes,” is the proposed action ethical? The answer to this question is based on considering the positive effect of the action on an organization's other key constituents (customers, employees, the community, the environment, suppliers) against the benefit to the shareholders. For example, Bangladesh factory owners bullied employees to work in a building despite warnings from engineers that an exterior crack made it unsafe. They did this out of fear of losing business, a negative impact on shareholder value.

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As you may know, the building collapsed, killing 1,129 people. In this case, the decision to force workers to enter the building may have benefited the shareholders, but it was very bad for employees and the country.56 Ethically, then, managers should not have encouraged workers to enter the building, obviously.

1. If “no,” would it be ethical not to take the proposed action? If an action would not directly benefit shareholders, you need to consider whether it would be ethical not to take the proposed action.

Returning to the example of factory owners bullying workers to enter a damaged building in Bangladesh, this decision was harmful to other stakeholders—employees and the country. Thus, the ethical conclusion might be to ask employees to enter the building after fixing the structural problems and to ask customers for some leeway in filling orders.

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FIGURE 11.5AN ETHICAL DECISION TREE

SOURCE: Reprinted by permission of Harvard Business Review. Exhibit from “The Ethical Leader's Decision Tree” by C. E. Bagley, February 2003. Copyright © 2003 by the Harvard Business School Publishing Corporation; all rights reserved.

It is important to keep in mind that the decision tree cannot provide a quick formula that managers and organizations can use to evaluate every ethical question. Ethical decision making is not always clear-cut and is affected by cross-cultural differences. Organizations are encouraged to conduct ethics training and to increase awareness about cross-cultural issues when the work involves people with mixed cultural backgrounds.57 That said, the decision tree does provide a framework for considering the trade-offs between managerial and corporate actions and managerial and corporate ethics. Try using this decision tree the next time you are faced with a significant ethical question or problem.

11.6 GROUP DECISION MAKING

MAJOR QUESTION

What are the pros and cons of group decision making and the various problem-solving tools?

THE BIGGER PICTURE

You've probably seen both good and bad come out of a group decision. OB confirms that group decisions can lead to mixed results. It identifies five potential advantages and four disadvantages. Knowing them arms you with information to help you maximize the advantages and minimize the disadvantages. In this section you will find contingency recommendations for involving groups in decision making and three helpful group problem-solving techniques: brainstorming, the nominal group technique, and computer-aided decision making.

The popular press and movies celebrate individual heroes like Robert Downey Jr. (aka Tony Stark) in Iron Man. Stark made his own decisions in saving the planet from ruin. Most managers, however, work with others and make decisions by involving others. Although groups don't generally make as effective decisions as the best individual acting alone, research reveals that groups make better decisions than most individuals acting alone.58 It thus is valuable for you to learn about decision making in groups.

Advantages and Disadvantages of Group Decision Making

We often have to decide whether to make a decision alone or to consult with others. The following list of advantages and disadvantages can help you decide what to do.

Advantages The following five advantages are most likely to be found when the group has experience with the issue at hand and when it is diverse in terms of characteristics like personalities, gender, attitudes, and experience.59

1. Greater pool of knowledge. A group possesses more information and knowledge than one individual acting alone.

1. Different approaches to a problem. Individuals with different backgrounds and experiences bring varied perspectives to diagnosing and solving problems.

1. Greater commitment to a decision. Participation and a voice in decision making are more likely to result in commitment to a decision. This in turn leads group members to accept and feel responsible for implementing a proposed solution.

1. Better understanding of decision rationale. Participating in a decision increases group members' understanding about why a decision is being made and what must occur to implement it. This in turn reduces miscommunication among people.

1. More visible role modeling. Less experienced group members learn about group dynamics and how to solve problems.60

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Disadvantages The disadvantages of group-aided decision making involve group dynamics and interpersonal interactions.61

1. Social pressure. The desire to remain in good standing within the group leads to conformity and stifles creativity.

1. A few people dominate. The quality of a group's decision can be influenced by a few vocal people who dominate the discussion. This is particularly problematic when the vocal person is perceived as a powerful individual.

1. Goal displacement. When evaluating alternatives, secondary considerations such as winning an argument, getting back at a rival, or trying to impress the boss can override the primary goal of solving a problem. Goal displacement occurs when the primary goal is overridden by a secondary goal.

1. Groupthink. Groupthink is “a mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when members' strivings for unanimity override their motivation to realistically appraise alternative courses of action.”62 Groupthink is thoroughly discussed in the next section.

Groupthink

The term groupthink, defined above, originated from an analysis of the decision-making processes underlying the war in Vietnam and other US foreign policy fiascoes. Modern managers can all too easily become victims of groupthink (e.g., space shuttle Challenger disaster, Enron debacle, and Iraq war after 9/11) if they passively ignore the danger. Groupthink happens when members fail to exercise sufficient reality testing and moral judgment due to pressures from the group. Groupthink is more likely when there are high levels of cohesiveness or a sense of “we-ness” that overrides individual differences and motives. Members of groups tend to be cohesive for two fundamental reasons: (1) simply because they like and enjoy each other's company and (2) because they need each other to achieve a common goal. When described this way, you can easily see how cohesiveness is a double-edged sword and how it affects group-level outcomes in the Integrative Framework. It can help you and your team reduce conflict, but it can also reduce performance if it limits questioning and critical thinking and results in groupthink.63 It therefore is important to be aware of groupthink.

http://textflow.mheducation.com/figures/1259187799/ch11_unfig12.png

Swissair (Schweizerische Luftverkehr) was the national airline for Switzerland and thrived for decades, but poor decisions sealed its doom in the economic downturn of 2001. Swissair went bankrupt, and most of its planes, routes, and personnel were taken over by Swiss International Air Lines. Which of the groupthink symptoms may have contributed to the company's demise?

Symptoms of Groupthink There are eight common symptoms of groupthink. The greater the number of symptoms, the higher the probability of groupthink:

1. Invulnerability. An illusion that breeds excessive optimism and risk taking.

1. Inherent morality. An assumption groups are prey to that encourages the group to ignore ethical implications.

1. Rationalization. Protects personal or “pet” ideas and assumptions.

1. Stereotyped views of opposition. Cause group to underestimate opponents.

1. Self-censorship. Stifles critical debate.

1. Illusion of unanimity. Silence of members interpreted to mean consent.

1. Peer pressure. Loyalty of dissenters is questioned.

1. Mindguards. Self-appointed protectors against adverse information.64

Prevention Is Better than Treatment Prevention is better than treatment or cure when dealing with groupthink. Table 11.2 provides some excellent recommendations. Using the techniques shown in Table 11.2 should remove barriers to minority dissent. Minority dissent reflects the extent to which group members feel comfortable disagreeing with other group members. Research reveals that minority dissent is positively related to participation in decision making and job satisfaction.65

TABLE 11.2TECHNIQUES FOR PREVENTING GROUPTHINK

1. Each member of the group should be assigned the role of critical evaluator. This role involves actively voicing objections and doubts.

2. Top-level executives should not use policy committees to rubber-stamp decisions that have already been made.

3. Different groups with different leaders should explore the same policy questions.

4. Managers should encourage subgroup debates and bring in outside experts to introduce fresh perspectives.

5. Someone should be given the role of devil's advocate when discussing major alternatives. This person tries to uncover every conceivable negative factor.

6. Once a consensus has been reached, everyone should be encouraged to rethink his/her position to check for flaws.

SOURCE: Adapted from discussion in I. L. Janis, Groupthink, 2nd ed. (Boston: Houghton Mifflin, 1982), ch. 12.

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Are you working on any project teams at school or work? If yes, you may be interested in assessing the level of minority dissent and participation in decision making. Results from the following Self-Assessment can help you to improve your effectiveness within these teams.

http://textflow.mheducation.com/figures/1259187799/connect.pngSELF-ASSESSMENT 11.3

What Is the Level of Minority Dissent and Participation in Group Decision Making in One of My Work Groups?

Go to connect.mheducation.com and complete Self-Assessment 11.3. Then answer the following questions:

1. What is your level of minority dissent and participation in decision making?

1. Are you happy with these results?

1. How might you increase the level of minority dissent and participation in this group? Consider the ideas in Table 11.2.

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