Chapter 12: Decision making, Creativity, and Ethics

Question 1

Steps in Rational Decision Making Model

Answer 1

•	This involves
o	Defining problem clearly
o	Identifying criteria
o	Allocating weights to the criteria
o	Developing alternatives
o	Evaluate alternatives
o	Then select best alternative

•	Assumptions
o	1. Clear preferences
	Know the issue, what you want
o	2. Perfect information
	All the information you need to make the decision
o	3. Unlimited time
o	4. Maximize outcomes
	Selecting the best alternative

Example: University Decision

Question 2

Reality of Rational Decision-Making in Organization

Answer 2

• Why rational decision-making is hard to do:
o 1. Bounded rationality
o 2. Judgement shortcuts in the decision-making process
o 3. Use of intuition to make some decisions

Question 3

Bounded Rationality

Answer 3

• Bounded Rationality
o Individuals make decisions by constructing simplified models that extract the essential features from problems without capturing all their complexity
• Satisficing
o Identifying a solution that is “good enough”
• Decision-maker will choose a final solution that satisfices
- Attempt to be rational, but don’t have the time to seek out/consider all information considered in decision making process. We only capture most essential information

Question 4

4 Different Judgement Shortcuts

Answer 4

• Confirmation bias- example of selective perception
o Because we seek out information we already believe, our decision making is biased, since we make decision that support our prior beliefs
• Availability bias- use most recent information
o That’s what we can recall more easy
o Example: Performance evaluations
• Escalation of commitment-stay committed to course of action
o Even though a person from outside may make more of a rational decision, but since we invested so much time/energy to prior decision we stick with it
• Overconfidence bias- irrational belief in own abilities and ideas
o Example: Start ups, coffee shops etcc “we’re gonna do it”- but end up failing

Question 5

Intuitive Decision Making

Answer 5

• Intuitive Decision Making
o Subconscious process created out of experience
o Example: Venture Capitalists
 Make investments in small businesses, fund ideas from small companies
 SharkTank- small business owners who have ideas about a product, sharktank people have to make decision of making an investment quickly. They’ll say when asked why did you investment “My gut told me to do it”
• When used:
o When it’s hard to make any kind of rational analysis of the information
o When there is time pressure

Question 6

Group vs Individual Decision Making

Answer 6

• Strengths of Group Decision Making
o Generates more complete information and knowledge
o Offers increased diversity of views
o Generates higher-quality decisions
o Leads to increased acceptance of a solution
• Weaknesses of Group Decision Making
o More time consuming
o Risks of groupthink
o Discussion can be dominated by one or a few members
o Decisions suffer from ambiguous responsibility

Question 7

Groupthink

Answer 7

• Phenomenon in which group pressures for conformity prevent the group from critically appraising unusual, minority, or unpopular views.
• Why does this occur?
o Self-censorship
o Illusion of unanimity: Everyone in group agrees, make group look stronger
o Peer pressure
• How to minimize?
o Managed conflict: Conflict is okay
o Designated roles (e.g., devil’s advocate)
-Censor themselves so they don’t go against the group, leads to poor decision making, or even a devastating decision for an employee who didn’t deserve to get layedoff.

Question 8

Group Decision-Making Techniques

Answer 8

• Interacting Groups (regular groups)
o Groupthink may often happen in face-face, but with tech it may happen less
• Brainstorming
o Larger groups
o Don’t make or implement decisions
• Nominal Group Technique
o Write down ideas and read them out loud anonymously
o Takes away having person who made the idea influence whether you like the idea or not, eliminates relationship conflict

Question 9

Creativity

Answer 9

• The ability to produce novel (original ) and useful ideas.

-Organizations wonder who are more creative, what we can do to enhance creativity

Question 10

Causes of Creative Behaviours

Answer 10

• Creative Potential-Factors in the individual
o Personality: Openness to experience, proactive personality…
o Self-Esteem: Peoples belief to be creative
o Experience
• Creative Environment-factors in the situation
o Creates motivation (JCM): You need extrinsic motivation, more people working hard
o Rewards and recognition: Do you reward creative behaviour and do you not punish behaviour/ Creativity bonus may not make people creative, rather giving autonomy/time, their intrinsic motivation will lead them to be more motivated
o Fewer rules

Question 11

Ethics

Answer 11

• The study of moral values or principles that guide our behaviour and inform us whether actions are right or wrong
• Ethical considerations should be an important criterion in organizational decision making
o Important to understand criteria people are using, because it can differ in what people determine is ethical or not

Question 12

Four Ethical Decision Criteria

Answer 12

• Utilitarian criterion
o Decision that emphasizes the greatest good for the greatest number of people (e.g., prohibit sick from returning to Canada)
• Rights criterion
o Decisions consistent with fundamental liberties and privileges as set forth in documents like the Canada Charter of Rights and Freedoms (e.g., can’t keep out sick Canadians)
• Justice criterion
o Decisions that impose and enforce rules fairly and impartially so there is an equitable distribution of benefits and costs (e.g., laws)
o Ex: Big White saying they’re going to stay open until the law tells them to close
• Care criterion
o Decisions that express care in protecting the special relationships that individuals have with each other (e.g., hoarding toilet paper for family)
o We might make decisions that are good for immediate family, but may not be good for other people

Question 13

Corporate Social Responsibility

Answer 13

• An organization’s responsibility to consider the impact of its decisions on society (e.g., ski resorts closing voluntarily to limit spread of virus)
o Weren’t told by government, but closed due to the impact of the virus
o CSR: make decisions good for society, but may not be good for bottom line of a company in short term, but in long term it will benefit