Organizational Behavior: Managing
People and Organizations,
Ninth Edition
Gregory Moorhead, Ricky W. Griffin
Chapter 8
Problem Solving &
Decision Making
The Nature of Decision Making
Decision Making
The process of choosing from among several
alternatives
Problem Solving
A special form of decision-making in which the issue
is unique
it requires developing and evaluating alternatives
Decisions Based on Frequency
Programmed Decision
One that recurs often enough for a decision rule to be
developed
Decision Rule
A statement that tells a decision-maker which
alternative to choose based on the characteristics of
the decision situation
Nonprogrammed decision
One that recurs infrequently and for which there is no
previously established decision rule
Decisions Based on Information Conditions
Information Required for Decision Making
Information ranges across endpoint conditions
Condition of Certainty
Outcomes of each alternative are known
Condition of Risk
Certainty of an outcome is unknown but there is
enough information to estimate probabilities of
various outcomes
Condition of Uncertainty
There is insufficient information to estimate the
probability of possible outcomes
Figure 8.2
Alternative Outcomes Under Different Information Conditions
The Decision-Making Process (contd)
Approaches
Approachesto
to
Decision
Decision Making
Making
Rational
Rational
Approach
Approach
Behavioral
Behavioral
Approach
Approach
Practical
Practical
Approach
Approach
Personal
Personal
Approach
Approach
The Decision-Making Process (contd)
The Rational Approach
A systematic, step-by-step process for making
decisions
State the situational goal
Identify the problem
Determine the decision type
Generate alternatives
Evaluate alternatives
Choose an alternative
Implement the plan
Control: measure and adjust
The Decision-Making Process (contd)
The Rational Approach (contd)
Strengths
Forces decision in a logical, sequential manner
In-depth analysis enables choose on the basis of
information rather than emotion or social pressure
Weaknesses
Rigid underlying assumptions often unrealistic
Information limited by time or cost constraints,
managers ability to process information
Not all alternatives easily quantified
Outcomes unknown due to unpredictability of future
The Decision-Making Process (contd)
The Behavioral Approach
Assumes decision makers operate with bounded
rationality rather than with perfect rationality
Bounded rationality: decision making based upon a
meaningful subset of relevant information
Characteristics
Procedures and rules of thumb reduce uncertainty
Sub-optimizingaccepting less than best outcome
Satisficingchoosing first-encountered alternative
that solves the problem
The Decision-Making Process (contd)
The Practical Approach
Combines the steps of the rational approach with the
conditions in the behavioral approach to create a
more realistic approach
Hybrid Approaches
Managers use a combination of rational, behavioral,
and practical approaches to make decisions
Research has shown that speed in decision making is
not indicative of the consideration of fewer
alternatives by managers.
The Decision-Making Process (contd)
The Personal Approach
Individual decision making can be viewed as a
process of conflict resolution
The Janis-Mann Conflict Model Characteristics
1. Deals only with important life decisions
2. Procrastination and rationalization are human
mechanisms for avoiding decision making
3. The fear of making an unsound decision can be a
deterrent to making any decision
4. It provides for self-reactions
5. Decision makers can be ambivalent about
alternatives
Related Behavioral Aspects
of Decision Making
Political
Forces
Ethics
Risk
Propensity
Intuition
Escalation of
Commitment
Creativity, Problem Solving,
and Decision Making
Creativity
The ability to generate new ideas or to conceive of new
perspectives on existing ideas
Key issues
Creativity and the individual
The creative process
Steps in the Creative Process
Preparation
Incubation
Insight
Verification
Creativity, Problem Solving,
and Decision Making
Descriptors of Creative Individuals
Background Experiences
Personal Traits
Cognitive Abilities
Enhancing Creativity in Organizations
Methods
Using explicit goals to make creativity a part of the
organizational culture
Rewarding creative successes
