Decision Making and Negotiation

Nature of Decision
Making
-can be classified
according to frequency and
information condition.
Programmed Decision – is a decision that
recurs often enough for a decision rule to
be developed.
Decision Rule – is a statement that tells a decision
maker which alternative to choose based on the
characteristics of the decision situation.
Decision usually are highly structured.
The goal are clear and well known.
Decision making is already established.
The sources and channels of information
are clearly defined.
Nonprogrammed Decision – is a decision that
recurs infrequently and for which there is no
previously established decision.
Problem Solving – is a special form of decision
making in which the issue is unique – it requires
developing and evaluating alternatives without the
aid of decision rule.
Poorly structures because information is
ambiguous .
there's is no clear procedures.
goals are often vague.
Characteristics of Programmed and Nonprogrammed
Characteristics Programmed Decisions Nonprogrammed Decision

Type of Decision Well structured Poorly Structured

Frequency Repetitive and routine New and unusual

Goals Clear, specific Vague

Information Readily available Not available, unclear

channels
Consequences Minor Major

Organizational Level Lower levels Upper levels

Time for Solution Short Relatively long

Basis for solution Decision rules, set procedures Judgment and creativity
The Decision – Making Process
The Rational Approach – is
a systematic, step
by step process for making decisions ;
• State the situational Goal
• Identify the Problem
• Determining decision type
• Evaluate alternatives
• Choose an alternatives
• Implement the Plan
– Cognitive dissonance
• Control: Measure and Adjust
• State the Situational Goal – rational decision – making
process begins with the statement of situational goal,
or goal for a particular situation.

• Identify the Problem – purpose of problem

identification is to gather information that bears on
the goal.

• Determining Decision Type – decision makers must

determine if the problem represents a programmed or
a non programmed decision.

• Evaluate Alternatives – evaluation involves assessing

all possible alternative in terms of predetermined
decision criteria.
• Choose an Alternative – choice of an alternative is
usually the most cial step in the decision – making
process.

• Implement the Plan – implementation puts the

decision into action.
– Cognitive Dissonance - is the anxiety a person
experiences when two sets of knowledge or perceptions
are contradictory or incongruent.

• Control: Measure and Adjust – in the final stage

of the rational decision making process, the
outcomes of the decision are measured and
compared with the desired goal.
Strengths and Weakness of the Rational Approach

The rational approach has several strengths. It

forces the decision maker to consider a
decision in a logical, sequential manner, and
the in – depth analysis of alternatives
enables the decision maker to choose on the
basis of information rather than emotion or
social pressure.
 The Behavioral Approach
• Bounded Rationality – is the idea that decision makers cannot
deal with information about all the aspects and alternatives
pertaining to a problem and therefore choose to tackle some
meaningful subset of it.

Behavioral Approach is characterized by ;

1) the use of procedures and rules of thumbs

2) suboptimizing – knowingly accepting less than the best

possible outcome to avoid unintended negative effects on other
aspects of the organization.

3) satisficing – is examining alternatives only until a solution that

meets minimal requirements in found.
The Practical Approach to decision making
combines the steps of the rational approach
with the conditions in the behavioral approach
to create a more realistic process for making
decisions in organization.
The Personal Approach
Conflict model - is a very personal approach to
decision making because it deals with the
personal conflicts that people experience in
particularly difficult decision situatuions.
 State situational Goal, which
maybe multiple and changing.

Information
Identification of problem
Develop adequate criteria

Information
Programmed or
nonprogrammed
decision
Potential for
Nonprogrammed Programmed
Information misdiagnosis
Information
Generate as many alternatives as
possible as time and money
permit
Apply Decision Rule
Information
Evaluate alternatives as
objectively as possible

Rational choice of best possible alternative

based on available information
Develop contingency plans

Implementation Support the decision by

actions.
Information
Control:
Measure and Adjust
Monitor Environmental changes
 Practical Approach to
Decision Making and
Guidelines
1. It deals only with important life decisions – marriage, schooling, career
major organizational decisions – that commit the individual or the
organization to a certain course of action following the decision.
2. It recognizes that procrastination and rationalization are mechanisms
by which people avoid making difficult decisions and coping with the
associated stress.
3. It explicit acknowledges that some decisions probably will be wrong
and that the fear of making an unsound decision at all.
4. It provides for self – reaction – comparisons of alternatives with
internalized moral standard.
5. It recognizes that at times the decision maker is ambivalent about
alternative courses of action; in such circumstances, it is very difficult
to make a wholehearted commitment to a single choice.
Unconflicted Adherence entails continuing with current
activities if doing so does not entail serious risks.
Unconflicted Change involves making changes in present
activities if doing so present no serious risks.
Defensive Avoidance entails making no changes in present
activities and avoiding any further contact with associated
issues because there appears to be no hope of finding a better
solution.
Hyper vigilance is frantic, superficial pursuit of some
satisficing strategy.
Vigilant information processing involves thoroughly
investigating all possible alternatives, weighing their cost and
benefits before making decision, and developing contingency
plans.
 Antecedent Condition Mediating Processes Consequences

Start:
Challenging or
negative feedback or
an opportunity

Q. 1
Additional Information Are the risks serious No Unconflicted
about losses from continuing if I don’t change? Adherence
unchanged

Maybe or Yes

Q.2
Information about losses Are the risks serious No Unconflicted
from changing if I do change? Change
End:
Incomplete
Maybe or Yes search appraisal,
and contingency
planning
Q.3
Signs of more information No Defensive
Is it realistic to hope to
available and of other Avoidance
find a better
unused resources
solution?
Maybe or Yes

Q.4
Information about deadline Is there sufficient No
time to search and Hyper vigilance
and time pressure
deliberate? End:
Incomplete
Maybe or Yes search appraisal,
Vigilance and contingency
planning
Janis – Mann Conflict Model of Decision Making
 Related Behavioral Aspects of Decision
Making

Ethics- are an individual’s personal beliefs

about what is right and wrong or good and
bad.
Escalation of commitment-is the tendency to
persist in an effective course of action when
evidence reveals that the project cannot
succeed.
 Group Decision Making
• Group Polarization is the tendency for a
group’s average post-discussion attitudes to be
more extreme than its average pre-discussion
attitudes.
• Group Think- is a mode of thinking that
occurs when members of a group are deeply
involved in a cohesive in-group desire for
unanimity offsets their motivation to appraise
alternative courses of action.
 Symptoms of Groupthink

1. An illusion of invulnerability, shared by most of all members, that

creates excessive optimism and encourages extreme risk taking.

2. Collective efforts to rationalize or discount warnings that might led

members to reconsider assumptions before recommitting themselves
to past past policy decisions.

3. An unquestioned belief in the group’s inherent morality, inclining

members to ignore the ethical and moral consequences of their
decisions.

4. Stereotyped views of ”enemy” leaders as too evil to warrant genuine

attempts to negotiate or as too weak or stupid to counter whatever
risky attempts are made to defeat their purposes.
5. Direct pressure on a member who expresses strong arguments against
any of the group’s stereotypes, illusions, or commitments, making clear
that such dissent is contrary to what is expected of loyal members.

6. Self-censorship of deviations from the apparent group consensus,

reflecting each members inclination to minimize the importance of his
or her doubts and counterarguments.

7. A shared illusion of unanimity, resulting partly from self-censorship of

deviations, augmented by the false assumption that silence means
consent.

8. The emergence of self-appointed “mindguards”, members who protect

the group from adverse information that might shatter their shared
complacency about the effectiveness and morality of their decisions.
 The Groupthink Process

Time

Group Groupthink Decision - Making Decision

Characteristics Symptoms Defects Outcomes

Leadership
Style
 Decision – Making Defects and Decision
Quality
 The group is less likely to survey a full range of alternatives
and may focus on only a few (often one or two).

 The group may not reexamine previously rejected

alternatives for nonobvious gains or some means of reducing
apparent cost even when they receive new information.

 The group may reject expert opinion that run counter to its
own views and may choose to consider only information that
supports its preferred solution.
Group Problem Solving
Brainstorming-is a technique used in the idea
generation phase of decision making that assist
in development of numerous alternative
courses of action.

The Nominal Group Technique

 another means of improving group decision making.
 group members follow a generate discussion-vote cycle
until they reach an appropriate decision.

The Delphi Technique -is a systematically

gathering judgments of experts for use in
developing forecasts.
A.Leader prescriptions
1. Assign everyone the role of critical evaluator.
2. Be impartial; do not state preferences.
3. Assign the devil’s advocate role to at least one group member.
4. Use outside experts to challenge the group.
5. Be open to dissenting points of view.
B.Organizational prescriptions
1. Set up several independent groups to study the same issue.
2. Train managers and group leaders in groupthink prevention techniques.
C. Individual prescription
1. Be a critical thinker.
2. Discuss group deliberations with a trusted outsider; report back to the group.
D.Process prescriptions
1. Periodically break the group into subgroups to discuss the issues.
2. Take time to study external factors.
3. Hold second – chance meeting to rethink issues before making a commitment.
Negotiation
Negotiation is the process
in which two or more parties
(people or groups) reach
agreement even though they
have different preferences.
 
Four Approaches to Negotiation
Individual Differences – the early psychological approaches
concentrated the personality traits of the negotiators.
Situational Characteristics – are the context within which
negotiation take place.
Game Theory – was developed be economist using
mathematical models to predict the outcome of
negotiation situations.
Cognitive Approaches – which recognizes that negotiators
often depart from perfect rationality during negotiation.
 Win - Win Negotiation
The Win - Win approach does not treat
negotiation as a game in which there are
winners and losers.
It approaches negotiation as an opportunity for
both sides to be winners, to get what they
want out of agreement.
 PRAM four – step Approaches
PLANNING – requires that each negotiator set his or her own
goal, anticipate the goal f the other, determine areas of
probable agreement, and developed strategies for reconciling
areas of probable disagreement.
RELATIONSHIP - requires that negotiators plan activities that
allow positive relationship to developed, cultivate a sense of
mutual trust.
AGREEMENT – requires that each party confirm the other party's
goals, verify areas of agreement, propose and consider
positive solutions to reconcile areas of disagreement and
jointly resolve any remaining differences.
Maintenance – entails providing meaningful feedback based on
performance, holding up your end of the agreement, keeping
in contact, and reaffirming trust between the parties.
 PLANS
P

WIN
MAINTENANCE RELATIONSHIPS
M P R
WIN

AGREEMENTS
A

THE PRAM MODEL