MGT600 UNIT 4 INTELLIPATH

Experience in Decision Making

Introduction
In life, you may agree that some decisions are easier
to make based on the level of experience that you
have. When purchasing your first new car, the
decisions and process are all new to you.

However, once you have completed the process, you

are more prepared for the next time. You know how to
negotiate for a lower price or where negotiations can
occur. You may state experience as a benefit in the
decision-making process.

Is there a benefit in experience in business decision making? Will fewer biases occur when
making decisions in familiar tasks, or is it optimistic to assume that fewer biases occur in
decision making by the more experienced managers? Some people argue that experience and
expertise improve the decision-making process.

Learning Materials

Some researchers argue that the process of improving one’s judgment occurs naturally with
experience. As one receives feedback on past decisions, his or her judgment improves for the
next time he or she is confronted with the same or a similar decision. The idea relates to the
concept many have heard in their lives, people learn from past mistakes as well as from positive
encounters. Life experiences enable people to improve various skills and forsake bad habits.

As discussed in Judgment in Managerial Decision Making, Neal

and Northcraft define experience as “repeated feedback”
(Bazerman & Moore, 2009). They state that expertise is the result
of the development of a strategic conceptualization by an
individual. The individual must understand what constitutes a
rational decision-making process and then learn to recognize the
biases that limit rationally.

Their philosophy of a distinction between experience and

expertise is relevant to determine if decision makers can benefit
from a study of decision making. They completed a study of real
estate agents, which indicated that experienced decision makers
can be quite biased.

 
 The study also showed that although experience may be effective in a specific domain,
experience without expertise may not successfully transfer to another domain.

As discussed in Judgment in Managerial Decision Making, Larrick and Wu found that

experience in negotiating is not always beneficial (Bazerman & Moore, 2009). They studied
estimating the size of the bargaining zone. The results implied that experience may only correct
the error for overestimation of a bargaining zone’s size. If experience indicates that the
bargaining zone is larger than it is, the negotiating counterpart will identify and correct the error
with a refusal to agree to the deal.

However, if the size is underestimated, the negotiator may end up offering more than necessary,
which will most likely not be declined.

The video below illustrates experience and strategic planning with regard to the information on
hand.

https://youtu.be/DIdD9DiAyjo

Summary
Experience alone is not enough. Gaining a conceptual understanding of the process to make a
rational decision is more effective than depending on passive learning from past experiences.
Expertise requires constant monitoring and understanding of the decision-making process.
Strategic conceptualization allows decision-making success to be transferred instead of the use in
one specific domain.

References

Austin, J. (2008, July 23). Keynote speaker - strategic thinking and decision making. [Video file].
Retrieved from the You Tube Web site: https://www.youtube.com/watch?v=DIdD9DiAyjo

Bazerman, M. H. (1986). Judgment in managerial decision making. New York, NY: Wiley.

Questions
Judgment improves when a decision maker receives feedback on past EXPERIENCES.

How can a decision maker learn from a bad experience? (choose 2)

Thinks odds have improved for a better experience
Receives repeated feedback
Ignores feedback
Understands error in previous experience
Learns to recognize bias

Neal and Northcraft define experience as REPEATED FEEDBACK.

The idea that experience in negotiating is not always beneficial was found in a study by Larrick
and Wu.

What are reasons that experience is beneficial? (choose 2)

Deserves respect
Receives feedback
All responses should be accepted
Forsakes bad habits
Improves skills

Judgment improves with EXPERIENCE.

Experience is not beneficial if the learning from past experiences is PASSIVE.

Once a decision maker has expertise, what is still required in decision making?  (choose 2)
An expert requires nothing else
Trust intuition more
Keep biases
Understanding the decision-making process
Experience in the related area

Some argue the process of improving one’s judgment occurs naturally with EXPERIENCE.

Experience without expertise is beneficial in a specific domain but cannot be TRANSFERRED.

Experience alone does not imply EXPERTISE.

For the decision-making process to be transferred to another domain, the decision maker has to
understand strategic conceptualization.
Inference
Introduction

Decisions would be simple if the results were certain or guaranteed. Yet, little to nothing is
certain in the business world or life in general. An established policy for one company may not
work for another company.

In business, a decision is not usually made without a general conclusion in mind. Individuals
make decisions based on knowledge gathered or collected. However, even with a large amount
of knowledge, a decision is not made without uncertainty.

Learning Materials

The first step in decision making is to gather or collect any information that is necessary. Within
the information collected, the results of the decision should be contained.

https://youtu.be/E6Hbs3gOFXc

Consider a situation where contract negotiations with a union

representing employees of a company must take place. When
negotiating a new contract, the results of previous negotiations
would be reviewed.

Understanding the view of the employees or result of a past

vote is crucial in the negotiations.

Yet, the decision-making process is not solely based on past experience. Changes to the business
or economical standings of the company are cogitated. However, conclusions can be formulated
from the past experience.

Decision making with uncertainty is similar to the concept of inference. Inference draws

conclusions from certain knowledge. Inference uses prior knowledge to form a new decision.

A statistical inference uses conclusions from data with the understanding that the data are subject
to observational error and sampling variation. Basically, statistical inference may facilitate
decision making, but it does not provide complete certainty.

The use of inference in decision making begins with previous knowledge and utilizes evidence to
update the previous knowledge. When making a decision, the decision maker has to consider all
possible actions, uncertainty, and consequences.
Consider again the negotiations for a local union contract for
employees working in a manufacturing company. The
current contract is ending, and the company formed a
decision-making group to prepare for negotiations.

Using statistical inferences and experience from past

negotiations, the group decides the key points of the
contract. Past experience can indicate the main concerns of
the employees.

However, the evidence should be updated. The mean age of the employees or number of years of
service is crucial to understand. Younger employees may be concerned with salaries and health
care cost for families, while older employees worry about retirement benefits. Using the
knowledge of prior crucial points in the negotiation as well as utilizing new evidence may lead
the group to better possible negotiating points.

The video below takes a commercial from a mobile communications company in Thailand and
walks the viewer through making inferences and conclusions.

https://youtu.be/HDi66yKKxDM

Summary
Inference in decision making does not provide complete certainty, but it does facilitate the
decision-making process. Equipping a group or decision maker with previous knowledge and
data as evidence to update that knowledge assists in reducing the uncertainty in the decision.

References

Aston Business School. (2010, November 11). Making complex decisions [Video file]. Retrieved
from the You Tube Web site: https://www.youtube.com/watch?v=E6Hbs3gOFXc

MeDaRo ED (2013, September 20). Inferences and conclusions practice - True move

commercial. [Video file]. Retrieved from the You Tube Web site:
https://www.youtube.com/watch?v=HDi66yKKxDM
Questions
With inference, previous knowledge is used, but it is updated with evidence.

As a new manager to the IT department, you are asked for salary increase recommendations for
your department.  You have worked in the department and can make inferences regarding the
performance of the employees.  What additional information should you gather? (choose 2)
completion rate of recent projects
no additional information is required
your personal opinion of each
current salary levels
Past performance evaluations

In negotiations in a labor dispute, the manager representing the company is uncertain of a

starting point for salaries.  What knowledge would be beneficial to forming an
inference?  (choose 2)
Race of the employees
Current salaries
Last salary increase
Personal opinion of labor

In a statistical inference, it is understood the data are subject to observation errors

and SAMPLING VARIATION.

To reduce the uncertainty of a decision in a group, the group should be provided with previous
knowledge and DATA.

Inference uses previous knowledge to draw a(n) CONCLUSION.

A decision-making group has been organized to determine the price target for an upcoming
negotiation.  Knowing the first offer will be the benchmark for the negotiation, what inferences
can be made? (choose 2)
Having knowledge of previous deals will provide insight to a high offer that is not completely
unreasonable, but is negotiable.
Going in with a low offer will not benefit the company because the low offer would be accepted.
Having knowledge of previous deals, the negotiation requires no additional research.
The group will be 100% certain the first offer will be accepted and reasonable.

It is time to review the health care options for your company.  You have the results of studies
from 5 years ago.  Your company is small, and the majority of the employees are the same from
the previous study.  What inferences can be made? (choose 2)
The increase in age of the employees is not a concern.
The needs for the same basic coverage exist, but more or less family coverage may be needed.
The employees have no new concerns or needs.
The employee concerns will be about the same.

A new manager wants to complete a deal for a new property for the company’s expansion.  After
researching the last property the developer sold, the manager is 100% certain in the price to offer
and starts with the negotiations with the price.  What is incorrect regarding his decision? (choose
2)
Inference does not offer 100% certainty in any deal. In this situation, there is not enough
evidence to support his decision.
The manager researched the past transaction and made an inference with evidence. He should be
confident in the decision.
The manager used past knowledge and evidence to facilitation the decision. He has reduced the
uncertainty enough to feel confident.
The manager used past knowledge of one deal to make an inference. Previous knowledge of one
deal is not enough information to draw a conclusion. Also, a negotiation should not start with the
desired price.

Using inferences and additional evidence increases the probability of a(n) sound decision.

How can inference benefit a negotiation? (choose 2)

Assist in determining crucial points
Speed up the negotiation process
Eliminate the need for additional evidence
Remove all uncertainty from the negotiation

Statistical inference facilitates decision-making but does not provide complete certainty.

Prior to an interview, you learned that a current employee worked with the person you are to
interview.  You called the employee into your office to ask about the person.  The employee had
only positive comments regarding the person.  Should this knowledge be used to facilitate your
hiring decision?
An inference could be made that the person should be considered for the positive. However, the
manager should complete the interview and consider other opinions.
No inference can be made from the conversation since you do not know the relationship between the
two parties.
After the positive feedback and interview, the manager should be 100% certain in the decision. No
other evidence or research is required.
Fallacies
Introduction
Can it be assumed the person with the most experience will
make the best decisions? Or, it is illogical to assume this?

Experience is one of the keys in effective decision making,

but experience without expertise or all of the facts is
dangerous and can result in a fallacy. 

The conclusion of the argument may be true, but still fallacious. This can be dangerous because
a fallacy can reinforce negative behavior in decision making. Decision making without all of the
facts can have misleading results.

Learning Materials
Fallacies are arguments or decisions made based on poor logic or reasoning,
and include assumptions which are opinions based on a person’s experience,
reputation, level of education, association, or professional level. There are
numerous fallacies in the business world, ranging from the idea authority is
always correct, to personally constructed biases, and  mistaken associations.

This video, while rather basic, provides a great example of critical thinking skills you can use to
avoid logical fallacies.

https://youtu.be/iSZ3BUru59A

One example of a fallacy is the notion that an authority figure is always correct.

Yes, a person of authority, such as a manager or executive, has gained respect through
experience and positive decisions, but to assume the person is always correct is fallacious. Is it
realistic to assume that a manager has never made an incorrect decision? Additionally, is it
realistic to assume that a manager has the time to gather information on every possible decision
they make?

A balanced decision results from experience and knowledge gained through investigative study,
not from positional authority.

The video below illustrates how broken logic leads to fallacies.

https://youtu.be/VRZk62QNOsM
 A preconceived notation of a problem is another common fallacy in business.
A preconceived notion is only a starting point for collecting information for a
decision, an opinion formed before any facts are gathered. One cannot assume
the source of the problem without reviewing all of the facts at hand.

Consider a drop in sales for a certain month in the summer. A manager with the preconceived
notion that the cause for the drop in sales is poor performance is making a dangerous
assumption. If the manager takes action on the preconceived notion that the sales staff is
performing poorly, morale may suffer. Perhaps the sales slowdown is because it is summer and
people are on vacation. Until the manager collects data to support the hypothesis, this argument
is just a fallacy. 

Bias and judgment also lead to fallacies. In a logical argument, if a decision

maker has a bias toward a person, that bias cannot be used against the person’s
position. A decision maker has to focus on the position within the argument,
and not the person making the opposing point of view.

The video below explores personal biases and avoiding them in logical arguments.

https://youtu.be/W_veZ24nC3g

The attached document, How to Identify Illogical Arguments, can help you identify fallacies and
avoid them in decision making.

Summary
Fallacies exist in the business world because of assumptions or biases. To avoid fallacies, a
decision maker must investigate all claims and gather all facts to form a decision with as little
biases as possible. Decisions cannot be constructed based on association, preconceptions, or
authority.

References

techNyouvids. (2011). Critical thinking part 1: A valuable argument. [Video]. Retrieved from You Tube
Web site: https://www.youtube.com/watch?v=iSZ3BUru59A

techNyouvids. (2011). Critical thinking part 2: Broken logic. [Video]. Retrieved from You Tube Web
site: https://www.youtube.com/watch?v=VRZk62QNOsM

techNyouvids. (2011). Critical thinking part 4: Getting personal. [Video]. Retrieved from You Tube
Web site: https://www.youtube.com/watch?v=W_veZ24nC3g
Questions
Fallacies are based on poor logic or reasoning.

Fallacies can be a result of bias and judgment.

A decision-making group has been formed to discuss salary increases.  One of the managers is
well-respected and has many years of experience.  Which situation would be a fallacy? (choose
2)

The group should allow the experienced manager to start the discussion out of respect for his
experience. However, everyone in the group should be heard.
The group should accept the decision of the experienced manager because he has the authority
and must be correct.
The group should consider the options of the experienced manager, but need to discuss others.
The group should not discuss options provided by other members of the group since they are not
as experienced.

One fallacy in business is a person of authority is always CORRECT.

Obvious facts may lead one to jump to CONCLUSIONS.

During the negotiations with the union representing the employees of the company, the manager
representing the company has a personality conflict with the union leader.  How should the
situation be handled?  (choose 2)
The manager should start every negotiation low and not budge on any offers due to his dislike of the
union.
The manager should focus on his role in the negotiations and not allow the conflict in the
negotiations.
The manager should focus on the union leader and allow his personal feelings to control the
negotiations.
The manager should focus on the negotiations at hand and disregard his personal feelings.

To avoid fallacies, a decision-maker must investigate all claims.

Rob and Ted have a conflict regarding the handling of a situation in the workplace.  Ted has
more experience that Rob.  Which decision by their manager would be a fallacy?  (choose 2)
Determine Rob is correct after reviewing the situation.
Interview other employees involved to gather more evidence.
Determine Rob is correct based on his friendship with the manager.
Assume Ted is correct based on seniority.
Greg and Tim have lunch together on a regular basis.  Greg is known for his crude sense of
humor.  What fallacies can be made?  (choose 2)
Greg will probably have a sexual harassment claim against him soon.
Greg and Tim enjoy having lunch together.
Greg cannot be trusted to meet with customers.
Greg may only joke around with close friends.

When reviewing resumes for a position, the manager has to make a decision of who to interview
based on the information on the resume.  Which situations are not fallacies?(choose 2)
The candidate has a degree in an unrelated field, but has worked many years within the field.
She may be considered based on experience.
The candidate has experience and a degree suitable for the position. However, you heard he associates
with someone you dislike. He should not be considered based on his association.
The candidate has a degree in an unrelated field, but has worked many years within the field. She
should not be considered because of her level of education.
The candidate has experience and a degree suitable for the position. He may be considered based
on his experience and level of education.

You have been working with another manager in preparing for the negotiation of a new property
for your company’s expansion.  The other manager has more experience than you, but you have
completed more research on the property.  Should you simply follow his lead? (choose 2)
Showing respect for the manager with the experience is professional. However, assuming he
knows more about this project based solely on his experience is not productive for the company.
If your research contradicts his option, you should tell him.
Assuming you are not correct based on experience is a fallacy. Experience is beneficial, but
evidence to support an option is crucial. Experience alone is not always enough.
Out of respect, you will follow his lead. He has more experience. Your opinion based on facts is not as
important. You do not want him to hold a grudge against you.
Let him take the lead. If the negotiations fall apart, the downfall will also be on him. There are no
expectations for you since you have less experience.
Methods for Debiasing
Introduction

Biases in decision making must be limited. The goal of a decision maker

should be to make an objective and balanced decision. Debiasing is a
procedure to remove or at least reduce the biases from cognitive strategies in
the decision-making process. Simply stressing the importance of avoiding
biases in a decision is a start, but it does not completely remove the biases.
Many believe that training is required to remove or reduce biases.

 Learning Materials

As discussed in Judgment in Managerial Decision Making, Fischhoff introduced a four-step

process as a training method for debiasing (Bazerman & Moore, 2009):

1. Warn decision makers of the possibility of bias

2. Describe the direction of the bias
3. Provide feedback
4. Offer an extended program of training to include feedback
and coaching

The process is difficult and should be closely monitored and guided. The bias continues to
remain even after it is explained to decision makers and they are directed to avoid it.

As discussed in Judgment in Managerial Decision Making, Larrick contradicts Fischhoff with a

theory of the ability to overcome bias through training (Bazerman & Moore, 2009). The training
must have the following characteristics:

 It must be context- and bias-specific

 Training and testing must be closely linked
 Training and testing must occur in close time proximity

The training is more effective for groups over individuals, training in statistical reasoning, and
holding people accountable for their decisions.

Another factor to consider in debiasing is the behaviors of the individuals or groups that are
ingrained. For example, behaviors include satisfaction with the status quo, risk aversion, and
preferences for the known outcomes versus unknown outcomes. To improve the decision-making
process over time, the process of “unfreezing” the ingrained thinking and behaviors has to occur.

Unfreezing the behavior is crucial for the following reasons:

 Changing one’s ways requires admission of flawed thinking in the past.

  The basics of reinforcement theory imply that a person who has reached professional
success has received positive reinforcement for past decisions and will continue rewarded
behavior.
 Balance theory is difficult for most people. One would prefer to think that notation of
success equates to excellent decision making. The awareness of one’s success clashes
with the concept of wrong decision making.

Once the behaviors are unfrozen, a decision maker is more willing to consider alternatives. The
next stage is to make a change. It is important in this stage to clarify that almost everyone is
subject to judgmental biases. Being subject to the biases does not imply that the individual makes
poor decisions. It does imply that they are human. The individual should also be reassured that
the deficiencies are not a threat to their self-esteem.

One method for change is for the decision maker to play devil’s advocate. The decision maker
should think of reasons he or she may be wrong. In assessing a situation, the decision maker
should assume that his or her hypothesis is false and think of an alternative hypothesis. He or she
should then test the hypothesis to make a more sound decision.

Summary
The temptation to revert back to old habits still exists in spite of completing the debiasing
training. It is important to practice the new strategies over time. The new practices will slowly
become second nature and replace the old habits.

References

Bazerman, M., & Moore, D. (2009). Judgment in Managerial Decision Making. Danvers, MA: John
Wiley & Sons.
Questions
The notion that success equates to excellent decision-making is the opposite of the theory
of BALANCE.

Playing devil’s advocate forces a person to consider they may be WRONG.

Changing one’s ways required admission of past FLAWED THINKING.

What are some behaviors that may be considered ingrained? (choose 2)

always seeking to improve oneself
preferences to known outcomes
not afraid to take a risk
risk aversion
satisfaction with status quo

Changing ingrained thinking and behaviors is the process of UNFREEZING.

Why is balance theory difficult for many?   (choose 2)

Prefer to think success equates to excellent decision-making.
Awareness of success clashes with wrong decision-making.
Understands even successful people have made poor decisions.
Prefer to think through all consequences of a decision.

Which are reasons “unfreezing” is crucial?  (choose 2)

Most people have never made a poor decision.
People who have received past positive reinforcement will continue that behavior.
Rewarded behavior is not typically continued.
Accepting that one has made poor decisions is difficult.
With practice after training, new practices will become SECOND NATURE.

The first step in debiasing training is to WARN decision makers of the possibility of bias.

After completion of debiasing training, reverting back to old habits is a possibility.

Intuition as a Decision-Making Tool
Introduction

When forced to make a quick decision, one utilizes intuition. Intuition is based on emotions and
patterns of past experiences. Decisions based on intuition abet when there is not time for
rational decision analysis.

Intuitive tools generally are hasty and effortless, and while intuitive tools are used in many
decisions in life, intuitive tools are not always advantageous for a business setting. A key goal
for a manager should be to trade intuitive thinking with more logical thinking.

Learning Materials
Decisions can be generated intuitively or rationally. An
intuitive decision encompasses emotions and patterns from
past experiences.

Rational decisions conclude from analyzing all options and

anticipating all outcomes.

Should decisions in business only use rational decision

making?

In certain situations, intuitive decisions are appropriate. Consider new concepts where no
precedent has been set to analyze. When using intuition, the decision maker should consider if
emotions could distort his or her perception in any way. Also, the decision maker should
examine his or her personal beliefs to ensure that decisions are based on reliable facts and
evidence instead of biases and judgments.

The video lecture below explores the concept of intuitive decision making.

https://youtu.be/B40ICphuivU

Why are intuitive decisions not always appropriate? Rational decision making reviews
knowledge and reliable facts. Intuitive decision making allows unrelated emotions to influence
decisions. Options are limited to past experiences. New and unique options may be not
presented. Prejudices from flawed experiences can override thorough facts and evidence.

In group decision making, intuition of one member of the group is difficult

to explain to other group members. Or, it may even conflict with another
member’s intuition. When working with groups or seeking a total buy-in
for a decision, intuition is too difficult to defend.
Decision makers who have experienced positive rewards for intuitive decisions may become
overconfident in the success. The decision maker may continue to experience success in a
specific field, but he or she should not assume success in unrelated areas.

Summary
Intuitive decisions are used in many aspects of life and should not be completely discouraged in
business. However, a more rational decision-making approach is more acceptable in business.
When requiring buy-in, a rational decision is easier to explain and defend to others. When a
precedent has not been set, intuition may apply.

References

TEDx Talks (2011). TEDxVALLETTA - Jo Simpson - Intuitive decision making. [Video].

Retrieved from You Tube Web site: https://www.youtube.com/watch?v=B40ICphuivU
Questions
Which are positive traits of rational decision-making? (choose 2)
Is quick and inexpensive.
Uses reliable facts and evidence.
Easier to defend than intuitive.
Contains prejudice.

Rational decisions conclude from analyzing all options and anticipating all outcomes
/ consequences.

In decision-making groups, what are some problems with intuition? (choose 2)

Too difficult to defend
Total “buy-in” is difficult
Conflict of intuition from different group members
Past experience from group members provides some insight
Provides a starting point for discussion

Melissa is a manager of real estate office.  From negative past experiences, Melissa has made an
intuitive decision to not hold morning meetings.  Which could be a basis for her
decision? (choose 2)
Melissa was late for too many meetings.
Everyone was present and ready for the meetings.
Melissa is always the first in the office.
Too many agents missed the meetings.

When a decision maker has had positive experience, which of the following may occur? (choose
2)
The decision maker may assume success in unrelated areas.
The decision maker may continue to have success in related areas.
The decision maker may become overconfident in his success.
The decision maker can guarantee he has no biases.
Others should assume the decision maker is always correct.

Intuition is based on emotions and patterns from past experience / experiences.

When using intuitive decision-making, how can a decision maker improve the decision? (choose
2)
Consider if emotions distort perception in any way.
Mislead others when defend the decision by claiming evidence was gathered.
Examine one’s personal beliefs to remove any bias and judgments.
Use bias and judgment to one’s benefit in the decision.
Consider if the past experience was positive or negative.

A key goal for a manager would be to trade intuitive thinking for more LOGICAL THINKING.

John represented the company at a recent meeting with new clients.  The company did not get the
contract.  What distorted perceptions could his manager have? (choose 2)
John represented the company well, but it was not the right partnership for the company.
John is the reason the company lost the client.
John should not meet with any new customers.
John presented the company’s pitch, but another company had a better idea.
Choosing Between Options
Introduction
A single clear option is not always easy to see in decision making.
When several feasible options are provided, the best has to be
chosen.

When choosing between options in decision making, several tools are

available.
 Learning Materials

Several decision-making tools are available to assist in formulating a decision. However, not all
tools are ideal for every given situation. To choose the correct tool, it is important to understand
the situation.

Decision Matrix Analysis

Decision matrix analysis is an effective tool when the decision involves numerous good
alternatives and many factors to consider. In the decision matrix analysis, the decision maker
creates a table with the options labeling the rows and the factors labeling the columns. Each
option is scored with a numerical value of its quality. Each factor is scored as to the importance
to the final decision. These numerical values are scores, not rankings, so they can score evenly.
The scores for the row and column are multiplied for a weighted score, and the highest score
indicates the best decision.

This Scottish government Web site is a great example of the process of creating and using a
decision matrix for procurement:

http://www.scotland.gov.uk/Topics/Government/Procurement/buyer-information/spdlowlevel/
decisionmatrix

(Decision Matrix - SPD low value toolkit., n.d.)

When priorities are not clearly defined and objective data are not available, a paired comparison
analysis can be beneficial. The importance of the options relative to one another is a factor. As
mentioned, the options are not objective; they are subjective. Subjective options in business
would include qualifications, skills, and ability to work in a team. The analysis uses the options
as the row and column headings to compare against each other. The more important option is
listed in the cell and scored as to the level of difference. The most frequent option and highest
score would be defined as the best option.

Pareto Analysis

A simple technique for prioritizing problems is Pareto analysis. Pareto analysis identifies the root
cause by listing the problems and their causes. The concept is to find the solution to the cause of
the most problems and resolve it. Thus, several problems are resolved with a single solution. The
 decision maker can prioritize the changes to improve the situation as much as possible. An
example for Pareto analysis would be low customer satisfaction. Review all issues involved and
pinpoint the resolution to eliminate the most issues.

The video below explores Pareto Analysis.

https://youtu.be/dENYL2mk4OE

Decision tree and Monte Carlo analysis are extremely effective in deciding between several
resolutions. The outcomes are investigated. A decision tree draws a full picture of the positive
and negative impacts associated with each resolution. The tree analyzes each outcome and the
consequences of the outcome.

Summary
Once options are realized by a decision maker or group, the next step in the decision-making
process is to choose the best option. To realize the best option, several tools are available based
on the options. The tools weigh the options for importance or number of issues they may resolve.

References

Decision Matrix - SPD low value toolkit. (n.d.). Retrieved from

http://www.scotland.gov.uk/Topics/Government/Procurement/buyer-information/spdlowlevel/
decisionmatrix

 O'Loughlin, E. (2009, November 23). Problem solving techniques #1: Pareto analysis. [Video file].
Retrieved from the You Tube Web site: https://www.youtube.com/watch?v=dENYL2mk4OE
Questions
A subjective competency in business would be ability to work in a team.

In decision matrix analysis, each option is scored with a numerical value of its QUALITY.

In a recent survey, the company has a low level of customer satisfaction.  The best analysis tool
is Pareto Analysis.

A paired comparison analysis is the best tool when the data are not objective. Which data would
require paired comparison analysis? (choose 2)
cost
number of staff required
ability to work as a team
skills of an employee
Best charity for company

Match the decisions below with the appropriate implementation strategy. 

A single solution can resolve several problems by using the Pareto Analysis.

In decision matrix analysis, each factor is scored based on its importance to the FINAL
DECISION.

A paired comparison analysis is beneficial when the priorities are not clearly defined and the
data are SUBJECTIVE.

A decision matrix analysis is reliable option when the decision involves numerous good
alternatives and considers many FACTORS.
Group Decision-Making
Introduction
When the consequences of the right or wrong decision are
profound to a department or organization, should a manager
make the decision alone?

No. Certain decisions require more time, information, and

perspectives than one person can manage.

In many situations, leaders should be decisive, think the issues through on their own, and take
action. However, in other situations, the best approach is to form a group for the decision. A
better decision will result in processing all of the information and considering different
perspectives.

Learning Materials

One person can process only a limited amount of information and see a limited number of
perspectives. Larger, more complex decisions require a group to explore the situation and to
provide input for a proper decision. Groups, in many cases, make better decisions than
individuals.

In addition to the quantity of information to review, a large decision requires buy-in from people
within the company for successful implementation. A decision-making process from a group
involves more people who are willing to buy in.

Challenges exist in groups. Each

member of the group has opinions,
personal values, and experiences. To
avoid conflict and increase
participation and consensus, team
decision-making strategies should be
used. With certain strategies, each
member provides input and opinions.
The team discusses all options until an
agreement occurs.
Typically in a group, more assertive
members dominate discussion while
less assertive members listen. To
ensure every group member the
chance to participate, apply the
stepladder technique. In this
 technique, every member thinks
about the problem individually.

Then, one at a time, the members introduce their idea to the group. The process starts with two
members. Each member introduces an idea, and the two members discuss each idea. Then, a
third member joins the group to present an idea. The three discuss the ideas presented. The group
repeats the cycle until all ideas are heard. The benefit of the stepladder technique is that everyone
is acknowledged while the options are narrowed until a decision is made.

Another popular method for group decision making is voting. Voting improves
decision making when groups are divided. However, the method is less useful
when there are many options.

Consider 10 options up for vote, the majority could be a percentage such as 12%, and a larger
percentage of the group is left unsatisfied. The method of multivoting reduces the number of
ideas in a vote with the use of voting rounds. Instead of a single vote, rounds of voting occur
with a certain number of votes in each ballot.

The group member may allocate votes in any manner for each round. A member may “weight”
choices. The highest vote in each round moves to the next round. The winning vote is the
group’s decision. This method works best with time constraints when full buy-in is not essential.

Sometimes, not all members of a group work well together. The group members may possess the
experience required for the group, but dislike one another to the point of difficulty working
together or agreeing with each other.

To avoid a poor decision because of conflict, apply the Delphi method. In the
Delphi method, a facilitator leads the group by brainstorming with each
individual member. Each member submits ideas solely to the facilitator in an
anonymous manner. The facilitator collects and organizes the input. The
facilitator presents the input to the others in the group for critique. This
process continues until a final decision is made.

This link has a series of quick lessons on group decision making you can peruse:

https://education-portal.com/academy/topic/group-decision-making.html

(Group Decision Making, n.d.)

Summary
Group decision making offers more perspectives to a decision but does not avoid conflict or
biases. To improve team decision making, use team strategies to ensure participation of all group
members, join divided groups, and avoid conflicting personalities in the group.

References

Group decision making. (n.d.). Retrieved from Education Portal Web site: https://education-
portal.com/academy/topic/group-decision-making.html
Questions
Group decision-making results in gathering more information and considering
different perspectives.

In the voting technique, the method is best used when it is not essential for a full BUY-IN.

In a group with assertive members, less assertive members will have the opportunity to be heard
when using the stepladder technique.

A group was formed to determine the insurance provider for the company.  After discussing the
options, the group narrowed the options to eight providers.  In which situations, should multi-
voting have been considered? (choose 2)
81% of the members were not satisfied with the decision.
The winning vote had 15% of the votes.
The winning vote had 75% of the votes.
70% of the group was satisfied with the decision.

Challenges arise in group decision-making since every member has different opinions, personal
values, and EXPERIENCES.

When members of a group clearly disagree and cannot work together, use the Delphi-method.

Multi-voting reduces the number of ideas in a vote with the use of voting rounds.

In multi-voting, the highest vote in each round moves on to the next ROUND.

The Delphi-method allows members to submit ideas anonymously.

Voting is beneficial if the group is DIVIDED in its ability to reach consensus.
The Impact of Ethics and Values on Decision-
Making
Introduction
Often, a decision in business is clearly right or wrong, but what happens when the choice falls
into the gray area between right and wrong? In complicated situations, considering ethics
during the decision making process can give a manager or group guidance on making an
objective and balanced decision.

Learning Materials

To make an objective and ethical decision, one should gather and review relevant and significant
data. The Foursquare Protocol is a four-step process that gathers the data needed to make the best
choice. The four steps are as follows:

Step One: Dig into the facts. One should

take time to gather all of the facts required
for a fair and consistent decision.
Step Two: Examine individual reactions to past
solutions. An appropriate response will be fair and
consistent based on past responses from the
company.

Step Three: Gauge similarities to past

situations. Review the similarities and
differences of the current situation to past
situations. Legal ramifications may result if
similar situations have different outcomes. A
company cannot imply special treatment for
race, age, gender, education level, or seniority.
Step Four: Analyze the decision-making
situation. The decision maker should not have
any self-interest in the action. The decision
maker should consider the situation as involved
personally. Then, he or she should examine his
or her personal morals and instincts. One way to
do this is through Spiral Dynamics.

Spiral Dynamics is a theory of motivation that looks at the value

systems that drive an individual’s beliefs and actions, and in the
workplace, Spiral Dynamics addresses how and why people do what
they do.

The basis of the theory is that people continue to spiral through a helix of developmental stages
depending on the biological, social, environmental, and psychological forces at work, and that
one resolution does not work for everyone. Spiral Dynamics attempts to represent a more
individual approach to motivation.

In different stages of life, people have different priorities or values. Understanding one’s stage
and the stage of others strengthens the decision-making process. What is important at the time in
one’s life can range from desiring respect, pursuing materialism, responding to guilt, or thriving
on competition.

Summary
Ethics and values are significant in making a good decision. One should gather facts and
compare situations to past situations. However, gathering information is only the first step. An
effective decision maker understands his or her personal values as well as the values and
behavior of his or her employees. As people mature, their values and behavior expand from a
purely individual basis to a more group or societal basis.
A decision maker with increased awareness of understanding has a better ability to manage
people and motivate people. In the workplace, the higher the level of development of the
decision maker, the more understanding the person will be.
Questions
Does one resolution does not work for everyone.  When preparing for a negotiation of benefits,
should the perspectives of younger and older employees both be considered?  What are some
possible perspectives? (choose 2)
Healthcare benefits will be the same for all employees.
All employees have the same concerns regardless of age.
Older employees may be more concerned with healthcare and long-term coverage.
Younger employees may be more concerned with salary.
Younger employees may have a family to cover in the healthcare plan and are concerned with
family premiums.
Older employees may be more concerned with vacation days.

Retaining good employees is an issue in several businesses.  Considering options by age alone
may not provide the best option.  Will one option for every employee motivate the employee to
stay? (choose 2)
Everyone requires more vacation time to relax from work. Extra week of vacation would motivate
everyone.
No one enjoys commuting to work. Everyone would be productive from home. Working from home a
day a week should be an option.
Another company may provide lower health insurance premiums for families, which may
motivate a person with a family, but not a single person.
Some employees prefer to work from home a couple days a week to save time and money from
commuting. Others may find working from home as a distraction.
Some employees may be seeking higher salaries regardless of age. Many people measure their
worth by salary. Thus, it is important to understand what motivates each employee.

A decision-maker or group should be in a position to make a decision that is objective

and BALANCED.

A four-step process to gather data to improve the decision-making process is the  Four step
Protocol.

It is important for a decision-maker to understand his own values and ETHICS.

A department manager has a conflict between two of his employees.  He called both employees
into his office at the same time to resolve the issue.  Was this the best decision? (choose 2)
The manager does not have time to investigate the situation. A quick resolution was to meet with both
at one time and tell them to act professionally.
The manager should not be bothered with their problems. Talking to both at the same time is fine since
they work in the same department. They must have similar personalities.
Meeting with each individually would have provided the manager with more information to
generate a resolution to suit both employees.
Considering one resolution was not the best option. What motivates one employee may not
motivate the other. May increase the tension level between the employees.

Taking the time to gather all the facts is required to make a decision that is fair
and BALANCED.

It is important to review similar situations to avoid potential LEGAL ISSUES.

Click on the quadrant where reviewing and eliminating self-interest and personal biases takes
place. ANALYZE DECISION-MAKING SITUATION

Click on the quadrant where reviewing past solutions lead to a fair, consistent, and appropriate
response. EXAMINE PAST SOLUTIONS
Click on the quadrant where reviewing similarities and differences between past solutions and
the current situation occur. GAUGE PAST SITUATIONS

Why is reviewing past similar experiences important for resolution involving different
employees in a company? (choose 2)
Special treatment cannot be provided to any employee based on race, age, gender, professional
level, or level of education. It is important to avoid legal issues by having a standard or
consistent response.
Every situation is different, and therefore, should be treated differently. What happened in past
situations is not relevant again.
With certain professional levels, the experienced professional deserves more respect than a younger
professional. There should be “special” treatment in only this case.
For a response to be fair, it has to be consistent in all similar situations. Examining past
reactions to solutions prepares the decision maker.

A theory of motivation is spiral dynamics.