MET AD715 BU Managerial Decision-Making Based on examples from one of the recommended articles selected by you, the lecture notes, the text, and other sour

MET AD715 BU Managerial Decision-Making Based on examples from one of the recommended articles selected by you, the lecture notes, the text, and other sources, discuss one or several of the themes: the nature of managerial decision making, the steps in the managerial decision making, organizational learning and creativity, judgmental heuristics, common biases in managerial decision making, bounds of human judgment, strategies for making better decisions. AD 715:
Quantitative and Qualitative Decision-Making
Week 3, Class 3 (09/18/2018)
AGENDA
A
Week 1 & Week 2: Summary
B
Lecture 3: Managing Group Decisions & Negotiations
C
In-Class Exercise: Team Discussion – Preparation for Assignment 1
D
Bb Discussion Forum W3 & W4: Q & A
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A
Week 1 & Week 2: Summary
W1 Discussion Forum — Main Themes:
W2 Discussion Forum — Main Themes:
Init. Posts
Init. Posts
CLASS GRADE CENTER (overall)
Quiz 1:
X.XX/5 XX.X%
Bb Discussion Forum W1&W2:
X.XX/4 XX.X%
Sub-Total (Q1 + Bb D-F W1&W2): X.XX/9 XX.X%
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B
Preparation for Week 3, Class 3
Boston University MET AD715 © Dr. Zlatev, 2018
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B
Week
Date
Preparation for Week 3
Lectures & Topics
Readings
Discussion Topics
Bb Discussion Forum
W3 & W4
W3
9/18 – 9/24
Lecture 3 – Managing
Group Decisions and
Making Rational Decisions
in Negotiations
D
Bazerman, Ch.10, 11
e-Reserve
In-Class Exercise – Team
Robbins & Judge, Ch.9,
Discussion &
Ch. 14
Preparation for A1
Assignments & Quizzes
Individual Work: Prepare a first draft of A1 by 9/24
and contribute with questions & suggestions
during our in-class discussion in Class 4 on 9/25,
2018
C
C
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LECTURE 3:
Managing Group Decision and Making
Rational Decisions in Negotiations
1-1
FOUNDATIONS
OF MDM
DECISION
ANALYSIS &
SUPPORT IN
BUSINESS
APPLICATIONS
OF MANAGERIAL
DECISION
MAKING
1-2
1-3
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Defining and Classifying Groups
•
•
Formal and Informal Groups
Stages in Group Development
1. Forming
2. Storming
3. Norming
4. Performing
5. Adjourning
Group Properties
•
•
•
•
•
•
Roles
Norms
Status
Size
Cohesiveness
Diversity
Group Decision Making
•
•
2-1
Conflict and Negotiation
•
•
•
•
2-2
Conflict Process
Conflict and Unit
Performance
Negotiation
The Negotiation Process
Making Rational Decisions
in Negotiations
•
•
•
•
Decision-Analytic Approach
to Negotiations
Claiming Values in
Negotiation
Creating Value in
Negotiation
The Tools of Value Creation
Debating Society, Groupthink,
Group Shift
Group Decision-Making Techniques
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Defining & Classifying Groups
Group: Two or more individuals, interacting and interdependent, who have come together to
achieve particular objectives.
Formal Group: A designated work group defined by an organization’s structure.
Informal Group: A group that is neither formally structured nor organizationally determined; such
a group appears in response to the need for social contact.
Why do people form groups? Individuals tend to identify themselves socially as members of a
group for the following reasons:
• Similarity – group members have the same values, beliefs, and/or demographic similarities
• Distinctiveness – group members share uncommon or rare characteristics (e.g. demographic,
alma mater)
• Status – group members share non-economical qualities, such as honor, prestige, and religion
• Uncertainty reduction – group membership helps some people to understand who they are
and how they fit into the world
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Defining & Classifying Groups
FIVE-STAGE-GROUP-DEVELOPMENT MODEL
1. Forming; 2. Storming; 3. Norming; 4. Performing; 5. Adjourning
EXAMPLE:
Temporary Groups with Time-Constrained Deadlines
(Punctuated-Equilibrium Model)
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Defining & Classifying Groups
Some temporary groups with time-constrained deadlines do not
follow the conventional five-stage model, but another model with
a unique sequence of actions or inactions (see the figure below),
such as:
1. Initial meeting (A) where the group’s direction and the
date for completion (B) have been set up;
2. This first phase of group activity is one of inertia;
3. A transition takes place exactly when the group has used
up half of its allotted time (=A+B)/2);
4. This transition initiates major changes;
5. A second phase of inertia follows the transition;
6. In preparation for the last meeting, the group is
demonstrating markedly accelerated activity.
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Roles
Group Properties
Norms
Status
Group members are often characterized as role players,
where a role is defined as a set of expected behavior
patterns attributed to someone occupying a given
position in a social unit (group).
Because each individual can play more than one role,
the others are trying to read her/his behavior and to
understand the role the person is currently playing (at
work, at home, in the church, in the sport club, and so
on).
Defining characteristics here are:
Role perceptions – an individual’s view of how she/he is
supposed to act in a given situation
Role expectations – the way others believe a person
should act in a given situation
Role conflict – a situation in which an individual is
confronted by divergent role expectations
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Size
Cohesiveness
Diversity
All groups have established norms – acceptable standards of behavior within a
group that are shared by the group’s members. Norms can cover different
aspects of group behavior, such as:
• performance norms – how to get the job done, levels of output (per hour,
day, week), what level of delay/interruption is appropriate
• appearance norms – dress codes and other unspoken rules
• social arrangement norms – with whom to eat lunch, whether to form or
not form friendships (on and off the job)
• resource allocation norms – assignment of difficult jobs, distribution of
pay or equipment
The individual behavior of a group member can be demonstrated with three
additional categories:
1. Conformity: the adjustment of one’s behavior to align with the norms of
the others
2. Reference group: important groups to which individuals belong (or hope
to belong) and with whose norms individuals are likely to conform
3. Deviant workplace behavior (antisocial behavior; workplace incivility):
voluntary behavior that violates significant organizational norms and, in
so doing, threatens the well-being of the organization or its members
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Roles
Group Properties
Norms
Status
Size
Status is a socially defined position or rank given to
groups or group members by others.
Status tends to derive from one of three sources (status
characteristics theory):
• the power a person wields over others
• a person’s ability to contribute to the group’s goals
and success
• individual personal characteristics
High-status individuals are often given more freedom to
deviate from norms than are other group members. They
are also better able to resist conformity pressures than
their lower-status peers and speak out more often,
criticize more, state more commands, and interrupt
others often.
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Cohesiveness
Diversity
The size of a group affects the group’s overall behavior, but the effect depends
on the dependent variables: smaller groups are faster at completing tasks than
are larger ones; if the group is engaged in problem-solving, large groups
consistently do better.
The effects of the size of a group on the overall group behavior is often linked to
the tendency for individuals to expend less effort when working collectively
than when working individually (also called social loafing).
There are several ways to prevent social loafing:
• set group goals, so the group has a common purpose to strive toward;
• increase intergroup competition, which again focuses on the shared
outcome;
• engage in peer evaluation so each person evaluates each other person’s
contribution;
• select members who have high motivation and prefer to work in groups, and
• if possible, base group rewards in part on each member’s unique
contributions
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Roles
Group Properties
Norms
Status
Size
Cohesiveness
The degree to which group members are loyal to each other and are
motivated to stay in the group is called cohesiveness.
The relationship between group cohesiveness, performance norms, and
productivity is shown on the figure, below and can be explained as follows:
•
•
The relationship of
cohesiveness and productivity
depends on the performancerelated norms established by
the group.
If performance-related norms
are high, a cohesive group will
be more productive.
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Diversity
The final property of groups we consider is
diversity in the group’s membership, the
degree to which members of the group are
similar to, or different from, one another.
Culturally and demographically diverse groups
may perform better over time—if they can get
over their initial conflicts.
The impact of diversity on groups is mixed:
• It is difficult to be in a diverse group in the
short term;
• If members can weather their differences,
over time diversity may help them be more
open-minded and creative and to do
better;
• Even positive effects are unlikely to be
especially strong.
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Comparison of Group Versus
Individual Decision Making
Group Decision Making
Strengths of group decision making:
Effectiveness and Efficiency:
•
•
•
•
•
•
Groups generate more complete information
and knowledge.
They offer increased diversity of views.
This opens up the opportunity for more
approaches and alternatives to be considered.
The evidence indicates that a group will almost
always outperform even the best individual.
Groups lead to increased acceptance of a
solution.
•
•
•
•
Weaknesses of group decision making:
•
•
•
•
•
•
It is time consuming.
There is pressure towards conformity in groups.
A few members, or only one, can dominate
group discussion.
Group decisions suffer from ambiguous
responsibility.
Boston University MET AD715 © Dr. Zlatev, 2018
Whether groups are more effective than individuals depends on
the criteria you use.
In terms of accuracy, group decisions will tend to be more
accurate.
On the average, groups make better-quality decisions than
individuals.
If decision effectiveness is defined in terms of speed, individuals
are superior.
If creativity is important, groups tend to be more effective than
individuals.
If effectiveness means the degree of acceptance the final solution
achieves, groups are better.
In terms of efficiency, groups almost always stack up as a poor
second to the individual decision maker. The exceptions tend to be
those instances where, to achieve comparable quantities of diverse
input, the single decision maker must spend a great deal of time
reviewing files and talking to people.
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Group Decision Making
Managing Group Decisions: Ideal Group Process
Managing Group Decisions: Three Possible Models
Teams, groups, or committees are excellent decision makers in
many ways and are increasingly used at all organizational levels.
As anyone who has taken part in a group decision knows,
• teams make better decisions than individuals;
• but some of the absolute worst decisions are also made by
groups.
The quality of the outcomes of the group decision is directly linked
to the organizational knowledge of how to structure and follow up
the steps of the managerial decision-making process.
An ideal group process is illustrated in the Figure ‘Managing Group
Decision (b)
The lesson from this illustration will be confirmed by anyone who
has led a group:
‘good group processes do not emerge naturally, they must be
managed – and they must be managed well’ [Russo, J.E., &
Schoemaker, P. (2002)]
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Group Decision Making
Managing Group Decisions: ‘Debating Society’
In groups representing the ‘Debating Society’ model:
•
Discussions drone on and on without resolution or deep,
diverse conflicts occur that lead to a hostile impasse;
•
The decision-making process forever expands;
•
There is no closure and no action.
Managing Group Decisions: ‘Groupshift’
Another potential enemy of good group decision processes is
the so-called Groupshift (or Group Polarization).
Groupshift describes:
•
a change between the group’s decision and individual
decision that a member within the group would make;
•
a shift that can be toward either conservatism or greater
risk—but generally is toward a more extreme version of the
group’s original position.
Boston University MET AD715 © Dr. Zlatev, 2018
Managing Group Decisions: ‘Groupthink’
Groupthink is related to norms: the norm for consensus
overrides the realistic appraisal of alternative courses of
action.
As a result the group is convening too rapidly on the chosen
conclusion. The symptoms of groupthink include:
• Group members rationalize any resistance to the
assumptions they have made.
• Members apply direct pressures on those who
momentarily express doubts.
• Those members who hold differing points of view seek to
avoid deviating from group consensus by keeping silent.
• There appears to be an illusion of unanimity.
Minimizing groupthink is possible if managers:
• keep the group size less than 10 members;
• encourage group leaders to play an impartial role;
• appoint one group member to play the role of devil’s
advocate;
• use exercises that stimulate active discussion of diverse
alternatives without threatening the group or intensifying
identity protection.
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Group Decision Making
Interacting
Groups
Brainstorming
Groups
Members interact with
each other face to face.
An idea-generation process that
specifically encourages any and all
alternatives while withholding any
criticism of those alternatives.
• In a typical brainstorming
session, a half dozen to a dozen
people sit around a table;
• the group leader states the
problem in a clear manner, so
that all participants understand;
• The guidance, “Think the
unusual – nobody will criticize,”
encourages individuals to make
unconventional suggestions; all
ideas are recorded for later
discussion and analysis.
Group Decision-Making Techniques
Nominal
Groups
Electronic
Meeting
Individual members meet face to face to pool their
judgments in a systematic but independent fashion.
• Discussions or interpersonal communications
during the decision-making process are restricted.
• Group members are all physically present, but
members operate independently.
• A problem is presented to the group meeting by a
moderator (one of the group members).
• Before any discussion takes place, each member
independently writes down ideas related to the
problem.
• After this silent period, each member presents
one idea to the group. No discussion takes place
until all ideas have been presented and recorded.
• The group discusses the ideas for clarity and
evaluates them.
• Each group member silently and independently
puts the ideas in rank order. The idea with the
highest aggregate ranking determines the final
decision.
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This is a computer-assisted group meeting,
where members interact on computers, allowing
for anonymity of comments and aggregation of
votes.
• The group meeting is organized in two
possible formats – face to face or online
(video conferencing).
• Technical requirements include individual
participant access to networked computers
with a pre-installed software application (i.e.,
Adobe Connect, Go To Meeting, Echo 360,
Skype).
• Issues are presented to the group members,
and they type their responses into their
computers.
• These individual but anonymous comments,
as well as aggregate votes, are displayed to
all.
• The level of qualification of the moderator
and the initial level of preparation for the
meeting are instrumental for group
effectiveness.
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Group Decision Making
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Group Decision-Making Techniques
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Conflict
Conflict & Negotiation
The Conflict Process
a process that begins when one party perceives that another party has negatively
affected (or is about to negatively affect), something that the first party cares about.
To manage and control conflicts, decision-makers have to distinguish
between destructive conflict and productive conflict
Relationship conflict (i.e., conflict
between individuals in which
perceived differences in style,
background, or values are under
attack) will distract any group from
its productive work.
COMPETITIVE DECISIONS
POOR CHOICES/DECISIONS
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Moderate amounts of Task conflict (i.e., differences of opinion
about the task at hand and how it should completed) are
necessary and valuable if a group decision-making process is going
to accomplish more than simple groupthink.
• Higher conflict teams have more thorough and creative
discussion of decisions, gain a richer understanding of the
issues, and develop a more cognitively complex prospective.
• In contrast low-conflict teams tend to overlook key issues or
simply avoid analyzing the downside risk of the consensus
option; their understanding of issues is often superficial or
one-sided; and they often make poor choices.
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Conflict & Negotiation
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The Conflict Process
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Conflict & Negotiation
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The Conflict Process
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Negotiation
Conflict & Negotiation
Negotiation (or bargaining)
a process in which two or more parties exchange goods or
services and attempt to agree on the exchange rate for them.
There are two general approaches to negotiation – Distributive Bargaining and Integrative Bargaining
Distributive Bargaining is negotiation
that seeks to divide up a fixed amount
of resources; a win-lose situation.
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Integrative Bargaining is negotiation
that seeks one or more settlements that
can create a win-win solution
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Conflict & Negotiation
Negotiation
THE NEGOTIATION PROCESS:
1. Preparing and Planning
Negotiation Strategy = BATNA = Best Alternative To
a Negotiated Agreement
Develop (i) your BATNA; (ii) the other site BATNA
2. Definition of Ground Rules
3. Clarification and Justification
4. Bargaining and Problem Solving
5. Closure and Implementation
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Conflict & Negotiation
THE NEGOTIATION PROCESS:
Negotiation
•
•
•
1. Preparing and Planning
•
Negotiation Strategy = BATNA = Best Alternative To
a Negotiated Agreement
Develop (i) your BATNA; (ii) the other site BATNA
2. Definition of Ground Rules
3. Clarification and Justification
4. Bargaining and Problem Solving
5. Closure and Implementation
•
•
•
Formalizing the agreement.
Development of procedures necessary for
implementing and monitoring the agreement
Closure: a formal contract with specifics, or a
handshake.
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Defining goals and objectives
Assessing the other party’s goals and objectives
Developing a negotiation strategy, including
(i) your Best Alternative To a Negotiated Agreement (BATNA) and
(ii) the other site’s BATNA
Predicting the settlement range
•
•
•
•
•
•
Who will do the negotiating?
Where will it take place?
What time constrains, if any, will apply?
To what issues will negotiation be limited?
Will the negotiators follow a specific procedure if an impasse is reached?
Preparation and exchange (between the parties) of the initial proposals
and demands.
•
Based on the exchanged initial positions, both parties will explain,
amplify, bolster, and justify their original demands.
Both parties are informing and educating each other on the issues, why
they are important, and how each party arrived at its initial demands.
Exchange of any …
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