Lesson 4

Management Decision Making

TOPICS: LEARNING OUTCOMES:

1. Barriers to Individual Decision  Identify the barriers to individual
Making decision making.
2. Styles of Decision Making  Discuss the various style in making a
3. Rational vs Other Types of decision.
Decision Making  Describe the difference between
4. Evidenced-Based Decision Making rational and other types of decision
5. The Use of Decision Tree making.
6. Managing Group Decision Making  Describe the importance of evidenced-
based decision making.
 Identify the use of decision tree.
 Discuss the process in managing group

Topic 1: Barriers to Individual Decision Making

Decision-making is a process of selecting a decision, acquiring data, and weighing

potential solutions. The process of making decisions is constant and crucial to managing any
organization or business operations. Decisions are made to keep all business operations and
organizational operations going.

Obviously, not all decisions prove to be good ones. Sometimes that is due to unfortunate
situations that would have been impossible to foresee. Other times, however, the problem with
the decision could have been avoided. What are the potential barriers that we should be aware of
during the decision-making process?

Information-Related Barriers

Almost every decision is based at least in part on information that the decision maker
trusts. The reliability and use of that information can potentially lead to multiple problems.
 One of the most obvious information-related problems occurs when the information is
either incorrect or incomplete. Trusting information that is faulty leads to many wrong
deductions and conclusions. If information is incomplete, even if the decision maker is aware of
that fact, uncertainty is introduced, and any decision based on that partial information could
prove to be misguided.

Circumstance and Time-Related Barriers

A variety of difficulties can also arise from the circumstances during which a decision
maker must work. One of the most common issues is stress, which can arise from a great number
of sources. If the decision maker is experiencing abnormal levels of stress either in his personal
life or work environment, that can often lead him to poor decisions that are out of character. He
may be less objective or less disciplined in following the decision-making process he usually
trusts. Recognizing high stress levels can provide the opportunity to intentionally protect against
those tendencies.

Also, when time is a restricting factor, that often contributes to poor decisions.
Unsurprisingly, evidence suggests that when decision makers feel rushed for time, their
judgment often suffers. This is true even when there actually is sufficient time for the decision-
making process: just the feeling of a lack of time causes problems. It is important to commit to
taking sufficient time for decisions if possible (and it usually is).

Cognitive Biases

In this optical illusion all lines are parallel. Perceptual distortion makes them seem crooked.

Even when circumstances are conducive to good decisions and a sufficient supply of
accurate information is available, there are still several ways in which decision makers might be
at fault in their manner of judgment. For instance, their perception can be distorted.
Understanding how this happens is relevant for managers because they make many decisions
daily. They must also deal with many people making assessments and judgments.
Faulty ways of thinking during the analysis stage are often referred to as cognitive biases. A few
common ones follow:

Confirmation Bias

Confirmation bias is the tendency to seek out or prefer information and opinions that we
believe will confirm our own judgment. We want to be confirmed, so we pay more attention to
information that we think supports us, and we ignore or diminish the significance of information
to the contrary. We also tend to accept information at face value that confirms our preconceived
views while being critical and skeptical of information that challenges these views. For example,
if you believe your new diet of bananas and almonds is the healthiest foods to eat, you will
search for and accept any supporting information on the virtues of bananas and almonds and
ignore and discount any contradictory information.

Framing Bias

Framing bias is the tendency to be influenced by the way that a situation or problem is
presented. Framing a message with a positive outcome has been shown to be more influential
than framing a message with a negative outcome. For example, public health messages that
depict nonsmokers as happy and popular with sparkling white smiles has proven more effective
than displaying a smoker’s diseased lung. Numerous studies have demonstrated framing effects
in our everyday lives.

 We are more likely to enjoy meat labeled 75 percent lean meat as opposed to 25 percent
fat.
 93 percent of PhD students registered early when the framing was in terms of a penalty
fee for late registration, with only 67 percent registering early when the framing was in
terms of a discount for earlier registration.
 More people will support an economic policy if the employment rate is emphasized than
when the associated unemployment rate is highlighted.
It is important to be aware of this tendency because, depending on how a problem is presented,
we might choose an alternative that is disadvantageous simply because of how it is framed.

Hindsight Bias

Hindsight bias is the tendency to believe falsely that we would have accurately predicted
the outcome of an event after that outcome is known. When something happens and we have
accurate feedback on the outcome, we appear to be very good at concluding that this outcome
was relatively obvious. For example, a lot more people claim to have been sure about the
inevitability of who would win the Super Bowl the day after the game than they were the day
before.
 What explains hindsight bias? We are very poor at recalling the way an uncertain event
appeared before we realize the actual results of the event, but we can be exceptionally talented at
overestimating what we knew beforehand as we reconstruct the past. Just listen to a call-in sports
show after a big game, and hindsight bias will be on full display.

We seek out or prefer information and opinions that we believe will confirm our own
judgment. We want to be confirmed, so we pay more attention to information that we think
supports us, and we ignore or diminish the significance of information to the contrary.

Anchoring

Anchoring bias is a tendency to fixate on initial information and then fail to adjust for
subsequent information. When our opinion becomes anchored to that piece of information, we
cannot stray very far from it. For example, in a mock jury trial, one set of jurors was asked to
make an award in the range of $15 million to $50 million. Another set of jurors was asked for an
award in the range of $50 million and $150 million. The median awards were $15 million and
$50 million respectively with each set of jurors.

Halo Effect

Halo effect concerns the preferential attitude that we have toward certain individuals or
organizations. Because we are impressed with their knowledge or expertise in a certain area or
areas, we unconsciously begin to give their opinions special credence in other areas as well. This
would, for example, be exhibited when sports stars express their political opinions, and the
public gives strong weight to what they say. There is no logical reason to think that they have
sound political opinions just because they have great skill in the realm of sports.

Overconfidence Bias

Overconfident bias is particularly easy to understand. It basically amounts to the idea that
an individual decision maker trusts his own judgment (usually his intuition) and allows that
judgment to override evidence to the contrary. His opinion counts more strongly to him than that
of experts who are more knowledgeable and often more than factual data that contradicts his
views. From an organizational standpoint, as managers and employees become more
knowledgeable about an issue, the less likely they are to display overconfidence. And
overconfidence is most likely to arise when employees are considering issues outside of their
area of expertise.

Status-Quo Bias
 Some decision makers prefer to avoid change and maintain the status quo. This desire,
perhaps unrecognized, often leads them to favor ideas that do not lead to significant changes.
Evidence and ideas that support change are neglected as a result.

Pro-Innovation Bias

Pro-innovative bias is the opposite of the status-quo bias. Rather than prefer things to stay
the same, the innovation bias gives preference to any new and innovative idea simply because it
represents something new. The feeling is that new ideas must be better than old ones. Even if no
objective evidence supports the new idea as useful and helpful, it is still attractive just by virtue
of being new.

Topic 2: Styles of Decision Making

Managerial Styles in Decision Making

The task of the manager is making effective decisions to solve organizational problems.
Managers are mandated to mold, create, and modify systems that would deliver the most
effective ways of producing goods and services at the lesser cost. Due to the complexity of the
organizational environment and growing global competition, managers in today’s organization
could not sit back and wait for things to happen. They must make things happen.

Styles of Decision-Making

1. Analytical Style Decision-Making

People with an analytical style of decision-making are those who are at ease with
uncertainty but are determined to discover the best or most comprehensive solution. It
doesn't imply that you would take a risk or be inclined to make a choice without
considering the consequences. Although making responsible decisions is one of the
analytical style decision-makers' strengths, their flaws typically include making timely
decisions, communicating with others, and managing stress when making decisions.

2. Directive Style Decision-Making

People who appreciate structure and are driven by the outcomes of their decisions
are described as directive style decision makers. Directive style decision makers take
immediate action and have a "decide and move on” approach. You like to act rather than
think about possibilities. Decision-makers with a directive style find it difficult to seek
advice and formulate plans in new or uncertain circumstances.
3. Conceptual Style Decision-Making

The conceptual style decision maker is likely to daydream frequently and quickly
generate unique ideas when necessary. Your ease with uncertainty encourages greater
thinking and a greater sense of optimism about the possibility of your ideas. People who like
the ambiguity of open-ended possibilities and are driven to have an impact on the world are
said to use conceptual style decision making.

4. Behavioral Style Decision-Making

You probably put other people's needs, wants, and perspectives ahead of your own
while making decisions. Those with behavioral styles make decisions by assessing the
accuracy and observing how others respond. They apply the knowledge they acquire to create
solutions they believe other people would find appealing, and they regularly consult others
before deciding.

ANALYTICAL CONCEPTUAL
 Committed to finding the best  Achievement oriented.
answer.  Creative in nature.
 Enjoys problem solving.  Comfortable with “what if’s”
 Comfortable with large amounts of  Generally open-minded with a broad
information and data. outlook.
 Thrives on control.  Humanitarian/conscious of how
 Will take as long as needed to find decision will affect others.
the best option.  Thinks in the future.
 Enjoys variety and new challenges.  Enjoys coming up with new ideas.
DIRECTIVE BEHAVIORAL
 Driven by results.  Generally supportive; a team player.
 Relies primarily on rules and  Emphatic nature.
processes.  Looks to others for advice.
 Aggressive in nature.  Get buy in from stockholders before
 Prefers to make decisions alone. deciding.
 Intuitive in nature.  Persuasive in nature.
 Typically acts quickly and doesn’t  Good communicator.
like to dwell on decisions.  Relies on implied data.
 Strong verbal communicator.
 Informs people once a decision is
made.
The following managerial styles are presented for us to evaluate where manager stands
along the above category:

1. The problem Avoider-Smoother. He seeks to maintain the organizational status

quo and acts from making changes. He tries to maintain current conditions and
would avoid rocking the boat. He prefers to reconcile conflict and seeks to smooth
over any conflict. He tries to avoid as much as possible problems that may require
time and effort for him to study.

2. The Problem Solver. It is the most common of all managers. He solves managerial
problems in the normal course of doing things. He looks for innovations and
improvements. He is receptive to changes and make things happen.

3. The Problem Seeker. This type of manager seeks out problems and attempts to deal
with them before they emerge as a major difficulty for the business. It involves
creative planning through forecasting of future events in the environment he believes
for the organization to prosper, it must innovate and change. He is proactive rather
than reactive.

Decisions throughout each firm will differ significantly. The organizational hierarchy also
dictates the kind of decision-making process. There also exists a tremendous difference among
individuals in their ability to handle risks and make decisions.

ssss
Topic 3: Rational vs Other Types of Decision Making

STAGES IN RATIONAL DECISION MAKING

Managers can arrive at the best decisions using a process called rational decision
making, which involves logical processes. It is the process of identifying the right problem to
solve and for illuminating new and creative opportunities.
The method must be adhered to when the best management takes decisions. We'll take a
closer look at each step.
1. Identifying and Diagnosing the Problem
It is very important that the problem is properly identified and that the
manager recognizes that it exists. The organization must be provided with good
sensors to identify more problems to be able to uncover new opportunities. For
instance, the manager must be able to identify the present conditions and the
direction they project to be. He must also identify the resources available to solve
the problem.

2. Analyze the Decision Environment

The manager should be careful in making assumptions that he has
correctly identified the problem by just looking at the symptoms. He also must
evaluate the other factors in the external and internal environments that could
influence better analysis.
In addition, environmental analysis establishes constraints and
assumptions. The extensive the data gathered will give us a better view of the
problem. The more complete the laboratory findings for the patient the better for
the physician to prescribe the necessary medicine. The symptoms might be
masked by external influence, wherein the manager has little control.

3. Articulate and Develop Hypothesis

Upon identifying the problem and its symptoms and causes we must
identify further the opportunities that will be derived from the findings. Our
hypothesis must center on the opportunities and the data evaluation results. We
need to explore all avenues and clear the hi - way towards the solution of the
problem.

4. Develop Alternatives
Rational decision-making process focuses on developing viable options.
These are alternatives that are feasible, realistic, and sufficient. In developing
alternatives managerial judgement is still important. Experience manager will lead
valuable proposal in the analysis of the problem.

5. Evaluating Alternatives
This stage includes determining the value or the adequacy of the alternatives that
are were generate. The alternatives are selected and evaluated by tools that will
determine the relevance information as to sufficiency, feasibility, and realism.

Sufficiency of data Feasibility Realism

It must be able to exploit the It refers to the probability that It means the implementation
envisioned opportunity. the alternative is workable or could go through with less
When the alternative is not can be implemented with the constraints on the
sufficient, it should not be resources available. It must organizational resources both
considered, and the manager consider the internal and internal and external.
must go back to the analysis external resources and its
of other information. When impacts on the organizational
the alternative would be environment.
taken in the future, it should
be given serious study.

6. Make the Choice with Alternative is Feasible

Once you have considered the best possible alternative it must maximize the
company benefits that can be derived in the implementation. It must develop positive
consequences and operation shall be directed towards better performance. On the other
hand, optimizing the results of alternative solution is to generate the best possible benefits
that will be derived in the implementation of planned changed. The efforts and resources
spent in arriving at the solutions should generate the best possible gain for the company.

7. Implementing the Decision

The chosen decision alternative
must be implemented. The decision and
its justification must be understood by
those who will put it into practice.
People affected by the decision should
be involved in the early stage of the
decision process to get their support and
cooperation.

The manager should implement

the decision with extreme caution to get
things done according to plans. The
planning implementation should follow
the following steps.
 8. Evaluating the Decision
Since this is the last step in the decision-making process, the management must track the
implementation's progress, gather feedback, and assess any positive or negative impacts. The
positive feedbacks and data imply that the decision can also be implemented in other units.
Negative feedbacks must be analyzed in terms of the problem in resource allocation, time
constraints, and implementation strategy that are not followed accordingly.
Managers are unable to determine which choice is the best. Manager must be confident
that he follows a set of procedures that will yield the best possible decision. This means that
managers are vigilant to make things happen.
DECISION – MAKING ENVIRONMENT
Managers may find that decision – making may seem cumbersome in making decisions.
It is not always necessary to follow the procedures, but we have to understand the nature and the
environments that influence how decisions are made.

The following are the factors that influence the decision-making process.

1. Certainly It is the condition that the manager knows

that the chosen alternative will give the
expected outcome.

2. Risk When the outcome is not known or uncertain

there is the condition of risk. The manager
must objectively determine probabilities and
add intuitive dimensions in decision making.

3. Uncertainly This exists when the probabilities are

unknown or difficult to estimate. Manager
should not rely entirely on guesswork under
condition of uncertainly. The manager can use
several inferential decisions and inform
judgement.

MANAGERIAL DECISION – MAKING TECHNIQUES

Making decisions carries a significant and unpredictable risk. Managers should develop
viable solutions in the challenge of coming up a novel solution. Several techniques are developed
for gaining insights in the analysis of managerial problems.
The following are some of the most useful techniques employed by managers:
 Brainstorming
Human beings have been using the brain power in improving our quality of life. It
requires freedom of expression by individuals within the group with little structure as
possible. It must have the following features:

1. Criticism must be minimized.

2. Variety of ideas should be given due course and no limitations should be
imposed.
3. Synergism should be encouraged through collaborative contributions.

Brainstorming is effective on a group of not more than seven (7) individuals who
are willing to put their time and effort towards the solution of organization
problem. The group should work on a carefully designed objectives.

 Develop Nominal Groups

This technique follows many of the fundamental features of
brainstorming, but it is modified to allow members to develop ideas
independently through research and study. Their ideas and findings are presented
in group sessions for further analysis and brainstorming.

The following steps are features of Nominal Group Technique:

 Members work independently and develop list of ideas without consulting other
group members.
 The group member presents the idea to the group on a round robin process with
designated recorder.
 When all ideas had been presented, panel members discuss and elaborate points
and issues.
 They devise a rank order voting or predetermined rating scale as a means of
determining the most viable idea. Votes are tallied and those with the most
number are further refined until agreements are finally resolved.

 Independent Survey Method

This is used to develop new and futuristic ideas that shall guide management during its
direction to future operation. Although the respondents are recognized, they remain anonymous
to one another. Members of the panel are handed questionnaires about the problems and issues
that management is facing. The members are required to answer confidentially a set of questions
without identifying the respondents. To finalize the findings, management may form a small
study group using their brainstorming or nominal groupings’.

Topic 4: Evidenced-Based Decision Making

What is evidenced-based decision making?

Evidence Based Decision is a process for making decisions about a program, practice, or
policy that is grounded in the best available research evidence and informed by experiential
evidence from the field and relevant contextual evidence. It is a strategic and deliberate method
of applying empirical knowledge and research-supported principles to justice system decisions
made at the case, agency, and system level.

Why is it important?
An evidence-based approach ‘helps people make well informed decisions about policies,
programmers and projects by putting the best available evidence from research at the heart of
policy development and implementation’. Rather than being driven by intuition, feeling or
instinct, evidence-based decisions rely on the rigor of different types of data. While the quality of
evidence that is used is of extremely high importance when producing recommendations for
decision-makers, it is also vital that the evidence-base encompasses a variety of different sources
and that there is a triangulation of data.

What is the framework of thinking about evidence?

The framework includes contributions from researchers and practitioners to provide a
more comprehensive view of evidence that is appropriate and necessary for decision-making. To
inform public health decision-making, the framework is composed of three dimensions that
complement one another.

3 Dimensions of Decision-Making Framework

1. Contextual evidence - is a collection of measurable factors in the community that may
impact the success of a prevention strategy (e.g., community history, organizational
capacity, social norms, etc.). Contextual evidence refers to information about whether a
strategy “fits” with the context in which it is to be implemented.

2. Best available evidence - is one of the cornerstones of evidence-based decision making.

The implication is that evidence falls along a continuum from very strong evidence at one
end to very weak evidence at the other end. The best available evidence comes from an
objective and reproducible study of the quality of existing research results. It requires
 skills in systematically identifying, evaluating, and using research and other valid
information sources.

3. Experimental evidence -is the collective experience and expertise of those who have
practiced or lived in a particular setting. It also includes the knowledge of subject matter
experts. Experiential evidence is systematically gathered from multiple stakeholders who
are familiar with a variety of key aspects about specific settings, and who have
knowledge about the community in which a prevention strategy is to be implemented
(i.e., knowledge about what has/has not worked previously in a specific setting with
particular populations; insight into potential implementation challenges; insight regarding
the needs and challenges of the community and those who live in it).

Characteristics of Decision-Making Process

Transparency - is the quality of

being easily seen through, while
transparency in a business or
governance context refers to
being open and honest. It is
essential to hold governments to
account and maintain confidence
in public institutions. It improves
policy outcomes by minimizing
the risk of fraud, corruption, and
mismanagement of public funds,
and supports a level playing field
for business.

Inclusiveness/Participation - activates diversity to improve innovation, engagement, and results

across the enterprise. Ensuring inclusion and participation in decision-making; and consultation
in all institutions and processes related to peace and development.

Openness/Explicitness - involves actively seeking out experiences and being thoughtful or

reflective about what is encountered in everyday life. It's about embracing new experiences and
changes in life, or how ideas or experiences have a positive impact on how people feel and
function. Explicitness allows one to explain one's decisions to oneself and others and to state
clearly the reason for one's choices.
Skilled leadership and Facilitation - Making decisions, and supervising those who make
decisions beneath you, are two basic tasks of leadership. A well-crafted decision helps your
organization move in the right direction and systematizing how these decisions are made can
ensure that the choices made are the best ones for your group. One of the most important sets of
skills for leaders and members are facilitation skills. These are the "process" skills we use to
guide and direct key parts of our organizing work with groups of people such as meetings,
planning sessions, and training of our members and leaders.

Defined Process - a defined process consists of a well-defined set of steps that need to be
followed for the goal to be achieved. A defined process produces the same outcome every time
and has low volatility which could be predicted. This makes the process of planning easier as
there are no changes that get along the way of development.

It is crucial to remember that while achieving all these qualities is a goal for the best results, each
decision-making scenario will be different, and the extent to which these qualities can be attained
will change depending on the circumstances

Topic 5: The Use of Decision Tree

What is the Decision Tree?

A decision tree is a type of flowchart that, in its most basic form, depicts a clear path to a
choice. It is a kind of algorithm used in data analytics that classifies data using conditional
"control" expressions. A decision tree begins at a single node (or "node") and branches out in
two or more ways from there. Each branch presents g a range of choices and unforeseen
circumstances until a decisive result is reached. They resemble trees when displayed graphically,
hence the name.
Because they divide complex data into more digestible pieces, decision trees are very
helpful for data analytics and machine learning. For data classification, regression, and
prediction analysis, they are frequently employed in these domains.

What are the parts of a decision tree?

In part because they can handle complex data, decision trees are helpful. This does not
imply that they are hard to understand, though. All decision trees ultimately consist of just three
fundamental components, or "nodes":
Decision nodes: Symbolizing a choice (typically shown with a square)
Chance nodes: illustrating likelihood or ambiguity (typically denoted by a circle)
End nodes: illustrating a result (typically shown with a triangle)
'Branches' are the connections that exist between these various nodes. Trees of varying
complexity can be made by repeatedly combining nodes and branches in a variety of ways.
Before we add any data, let's have a look at these components.
Connecting these different nodes are what we call ‘branches’. Nodes and branches can be
used repeatedly in any number of combinations to create trees of various complexity. Let’s see
how these parts look before we add any data.

A lot of decision tree terminology follows the tree analogy, which makes it much easier to
remember! Some other terms you might come across will include:
Root Nodes
What we refer to as a "root node"—the blue decision node in the figure above—is always
the first node in the path. All other choice, chance, and end nodes ultimately branch from this
node.
Leaf Nodes
In the diagram above, the purple terminal nodes are what we call "leaf nodes". They mark
the end of the decision path (or result). Leaf nodes never branch or branch, so they are always
identifiable. Just like real leaves!
Internal Nodes
Between the root node and the leaf nodes can be any number of internal nodes. These can
include decision nodes and chance nodes (only chance nodes are used in this diagram for
simplicity). Internal nodes are easy to identify - each has its own branch and is connected to the
previous node at the same time.
Split
A branch or "split" is the division of a node into two or more of her sub-nodes. These
sub-nodes can be other internal nodes or lead to outcomes (leaf/leaf nodes).
Clipping
Decision trees can be very complex. In such cases, irrelevant data may be
overemphasized. To avoid this problem, you can remove specific nodes using a process called
"pruning". Pruning is exactly what it sounds like. When unwanted branches grow on the tree, cut
them off. simply.
An example of a simple decision tree
 Now that we’ve covered the basics, let’s see how a decision tree might look. We’ll keep
it simple. Let’s say that we’re trying to classify what options are available to us if we are hungry.
We might show this as follows.
This chart gives a clear overview of the various options. Decision nodes are dark blue,
chance nodes are light blue, and end nodes are purple. Everyone can easily understand and see
the possible results but remember:
Our goal was to sort out what to do on an empty stomach. Including options for what to
do when you're not hungry made the decision tree too complicated. Overloading trees in this way
is a common problem, especially when dealing with large amounts of data. This often allows
algorithms to extract meaning from irrelevant information. This is called over fitting. One way to
fix over fitting is to simply prune the tree.

As you can see, the decision tree now has a clearer focus. By removing irrelevant
information (like what to do when you're not hungry), you get results that focus on your goals.
Here's an example of a trap a decision tree can fall into and how to avoid it. However, decision
trees have some advantages and disadvantages. Let's talk about them next.
Advantages and disadvantages of decision trees
When used effectively, decision trees can be very powerful tools. Nevertheless, like any
algorithm, it is not suitable for all situations. Here are the main advantages and disadvantages of
decision trees:
Advantages of decision trees
 Good for interpreting data in a very visual way.
 Suitable for handling a combination of numeric and non-numeric data. Easy-to-define
rules, e.g., "yes, no, if, then, if not..."
 Minimal preparation and data sanitization before use.
 It's a great way to choose between best, worst, and most likely scenarios.
 It can be easily combined with other decision-making techniques.
Disadvantages of decision trees
 Over fitting (the model interpreting meaning from irrelevant data) can become a problem
if the design of the decision tree is too complex.
 It doesn't work well with continuous variables (that is, variables that can have multiple
values or ranges of values). Predictive analytics can quickly become computationally
tedious, especially when decision paths involve many random variables.
 When using imbalanced datasets (that is, when one data class dominates another), results
can easily be skewed in favor of the dominant class.
 In general, decision trees have lower prediction accuracy than other prediction
algorithms.

Topic 6: Managing Group Decision Making

A sort of participatory process called group decision-making involves several people

working together to examine issues or circumstances, discuss and assess various courses of
action, and choose one or more solutions from the available options. Although the number of
participants in group decision-making varies widely, it often falls between two and seven. A
group's members may share a lot of demographic traits or have quite different ones. Decision-
making groups may be formally established and given a defined mandate, or they may be more
informal in character. Decision-making procedures can be either unstructured or structured. The
size, demographic make-up, structure, and purpose of organizations, together with their nature
and composition, all have an impact on how well they work. The formation and effectiveness of
decision-making groups are also impacted by the external constraints that groups must deal with
(such as time constraints and competing goals).
The benefits of group decision-making include incorporating the knowledge and viewpoints
of a broader group of people. As a result, they could be more imaginative and make a better
choice. In fact, organizations occasionally produce outcomes that surpass what individuals could.
Groups also increase the participants' enjoyment of the task. Finally, when a group rather than a
single person makes the decision, implementation will be simpler because group members will
be invested in the decision. Because individual group members may have different opinions
based on their backgrounds and experiences, decisions may be made better if the group is
diverse. According to research, diverse groups that discuss issues reach judgments that are more
thorough and better for the organization's bottom line in terms of profitability and sales.

 The group has a definite leader, but the team has shared leadership roles.
 Members of a group have individual accountability; the team has both individual and
collective accountability.
 The group measures effectiveness indirectly, but the team measures performance directly
through their collective work product.
 The group discusses, decides, and delegates, but the team discusses, decides, and does
real work.

Figure 1.1: Advantages and Disadvantages of Different Levels of Decision Making

INDIVIDUAL GROUP
DECISION MAKING DECISION MAKING
 Pros Cons Pros Cons

Typically, faster than Fewer ideas Diversity of ideas and Takes longer
group decision can piggyback on
making others’ ideas
Best individual in a Identifying the best Greater commitment to Group dynamics such
group usually individual can be ideas as groupthink can
outperforms the challenging occur
group
Accountability is Possible to put off Interaction can be fun Social loafing-harder
easier to determine making decisions if and serves as a team to identify
left alone to do it building task responsibility for
decisions

Groupthink
Groupthink is a group pressure phenomenon that increases the risk of the group making flawed
decisions by leading to reduced mental efficiency, reality testing, and moral judgment.
Groupthink is characterized by eight symptoms that include:
1. Illusion of invulnerability shared by most or all the group members that creates excessive
optimism and encourages them to take extreme risks.
2. Collective rationalizations where members downplay negative information or warnings
that might cause them to reconsider their assumptions.
3. An unquestioned belief in the group’s inherent morality that may incline members to
ignore ethical or moral consequences of their actions.
4. Stereotyped views of out-groups are seen when groups discount rivals’ abilities to make
effective responses.
5. Direct pressure on any member who expresses strong arguments against any of the
group’s stereotypes, illusions, or commitments.
6. Self-censorship when members of the group minimize their own doubts and
counterarguments.
7. Illusions of unanimity based on self-censorship and direct pressure on the group; the lack
of dissent is viewed as unanimity.
8. The emergence of self-appointed mind guards where one or more members protect the
group from information that runs counter to the group’s assumptions and course of
action.
 ASSESSMENT

Grow your own decision tree!

Make a decision tree that can predict your future or goals in life. Answers shall be written on
whole sheet/s of yellow paper or printed on a short bond paper.

RUBRICS FOR WRITTEN OUTPUT

This criterion shall include the reliability and
ingenuity of the output. Its reliability shall be
Content evaluated based on the truthfulness, while ingenuity 50%
indicates the originality and creativity of the
incorporated ideas and concepts.
This criterion encompasses the ways how the ideas
and concepts are presented. Coherence and
Organization of Ideas 30%
structure of the content are the focus of the
criterion.
Grammar & This criterion shall include the grammatical
20%
Mechanics correctness, format and use of punctuations.
TOTAL 100%