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(5) The willingness to give and accept ongoing feedback in a nondefensive
manner is another critical component of a culture dedicated to creativity.
BACK TO THE CHAPTER-OPENING CASE
1. How does Google’s Execute meetings attempt to integrate rational and
nonrational models of decision making?
a. The rational model of decision making assumes that decision makers are
completely objective and possess complete information to make a
2. How will Google’s approach to decision making increase the use of intuition in
making decisions?
a. Table 12-1 presents guidelines for developing intuitive awareness. The
3. To what extent is Google’s approach to decision making consistent with research
and recommendations about group decision making?
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a. The Execute meetings highlight some of the advantages of group decision
making. First, groups benefit from a greater pool of knowledge. Despite
the fact these managers are working on separate projects, they can still
benefit from the collective knowledge of their fellow executives. A second
1. Which model of decision making is represented in this case?
a. Two broad approaches can be used to make decisions: the rational model
or nonrational methods. It does not appear that rational decision making
was used. No clear attempt was made to identify the problem (i.e., the
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2. To what extent did decision-making biases impact the decisions made in this
case? Identify the specific biases that were present. Is BP’s and Transocean’s
approach more characteristic of the rational, normative, or garbage can models
of decision making? Discuss your rationale.
a. Eight decision-making biases are discussed in this chapter: availability
heuristic, representativeness heuristic, confirmation bias, anchoring bias,
overconfidence bias, hindsight bias, framing bias, and escalation of
commitment bias. Several of these biases likely played a role in the
Deepwater Horizon explosion. One was the overconfidence bias as the
b. According to the rational model, people use a logical, four-step sequence
when making decisions: identifying the problem, generating alternative
solution, selecting a solution, and implementing and evaluating the
solution. Although the rational model is a good instructional tool, it does
Chapter 12 – Individual and Group Decision Making
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3. How could evidence-based decision making been used to help avoid this
disaster?
a. Evidence-based decision making (EBDM) represents a process of
conscientiously using the best available data and evidence when making
managerial decisions. Step 1 is to identify the problem or opportunity.
4. What do you think are the key causes of this disaster?
a. In addition to the decision-making biases and the lack of evidence-based
decision making (EBDM) previously addressed, it is likely that intuition
5. What are the key takeaways from this case? Explain.
a. Student responses will vary but it should be clear to the students that bad
decision making by managers can have profound consequences for firms
and other stakeholders.
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LEGAL/ETHICAL CHALLENGE: How Would You Handle the Early Reporting of
Sales?
What would you do if you were Jonathan?
1. Nothing. I need to get along with my new team, and this has been standard
practice in the past. Further, this really isn’t that much of a big deal.
2. Let it go for now, but I will speak to the group’s manager about this practice. My
goal would be to understand why this practice has been going on, and then I
might attempt to put an end to it.
3. Confront the issue right now and put an end to this practice. If I get any
resistance, I would immediately reach out to my contacts at corporate
headquarters.
4. Invent other options.
Discussion:
The ethical decision tree presented in Figure 12.5 is a useful tool for analyzing ethical
issues such as the scenario faced by Jonathan. The first branch in the ethical decision
tree is to consider if a proposed action is legal. If the answer to that question is no,
Jonathan cannot ignore the situation and must take action. Jonathan’s professional
career could be potentially ruined if he knowingly violated accounting practices by
artificially inflating this quarter’s earnings. If the practice is legal or does comply with
accepted accounting standards, the second branch in the ethical decision tree is to
determine if the proposed action would maximize shareholder value. If inflating this
quarter’s sales by recording early transactions would increase the firm’s stock price, the
practice may maximize shareholder value, at least in the short run.
If the practice would maximize shareholder value, Jonathan would then have to
consider the next branch in the decision tree of if the proposed action is ethical. In this
step, Jonathan must consider the potential effect on customers, employees, the
community, the environment, and suppliers. According to the decision tree, Jonathan
should make the decision to engage in an action if the benefits to the shareholders
exceed the benefits to the other key constituents. He should not engage in the action if
the other key constituents would benefit more from the action than shareholders.
If the practice would not maximize shareholder value, Jonathan must consider if it would
be ethical not to take the action. If the costs to shareholders from a managerial decision
exceed the costs or benefits to other constituents, Jonathan should not engage in the
action. Conversely, Jonathan should take action when the perceived costs or benefits
to the other constituents are greater than the costs to shareholders.
Chapter 12 – Individual and Group Decision Making
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When applying this ethical tree, it is important to remember that ethical decision making
is not always clear cut. For instance, in the current scenario it may very well maximize
shareholder value in the short run if quarterly earnings are inflated, but it will likely
reduce shareholder value in the long-run if later quarterly earnings are lower and/or if
the firm becomes subject to investigation because of accounting fraud. Jonathan would
be wise to focus more on the long-term implications of his actions rather than only the
short-term consequences.
INTERNET EXERCISE
http://open2.net/healtheducation/body_mind/brainstretcher_launcher.html
This chapter discussed several decision-making biases and heuristics, some of which
are impacted by memory and how information is stored in our brains. Open University,
an online university based in the United Kingdom, provides a “mind gym” exercise that
will give your brain a workout and will give you insight into your memory skills. This
“Brainstretcher” exercise is located on the university’s open2.net page and has three
sections. Access the exercise at:
http://open2.net/healtheducation/body_mind/brainstretcher_launcher.html.
First, complete the four sections of the “Test” section: Words, Observation, Objects, and
Visual and Auditory Memory. Then read the “Memory and Study” information in the
“Learn” section. In the “Improve” section, read the “Visualisation,” “Classification” and
“Mind–Mapping” sections. After completing these assessments, reflect on the questions
below.
Questions:
1. Based on your scores on the memory tests, what did you learn about your
memory skills and classification approaches?
2. Discuss the decision-making biases you displayed in the memory tests.
3. How could your ability to be creative in decision making be enhanced through
better memory skills?
4. Would mind mapping help you to take better lecture notes for this class?
Chapter 12 – Individual and Group Decision Making
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INSTRUCTIONAL RESOURCES
1. See “Topic 10: Decision–Making” in “An Instructor’s Guide to an Active
Classroom” by A. Johnson and A. Kinicki (McGraw-Hill/Irwin, 2006).
2. An updated and extraordinary version of escalation of commitment is presented
in “A Very Extreme Case of the Dollar Auction” by J. Murnighan in Journal of
Management Education, 2002, Vol. 26(1), pp. 56-69.
3. An exercise analyzing multiple sides of an ethical dilemma is presented in
“Dilemma at 29,000 Feet: An Exercise in Ethical Decision Making Based on the
1996 Mt. Everest Climbing Disaster” by D. Kayes in Journal of Management
Education, Vol. 26(3), pp. 307-321.
TOPICAL RESOURCES
1. A truly fascinating account of how environmental factors affect group decision
making can be found in “Informational Intragroup Influence: The Effects of Time
Pressure and Group Size” by B. Bonner and M. Baumann in European Journal of
Social Psychology, 2007, Vol. 38(1), pp. 46-66.
2. The relationship between participative decision making, performance, and
societal culture is examined in “Participative Decision Making and Employee
Performance in Different Cultures: The Moderating Effects of
Allocentrism/Indiocentrism and Efficacy” by S. Lam, X. Chen, and J. Shaubroeck
in Academy of Management Journal, 2002, Vol. 45, pp. 905-914.
3. The relationship between time constraints and decision making is examined in
“The Speed Trap: Exploring the Relationship Between Decision Making and
Temporal Context” by L. Perlow, G. Okhuysen, and N. Repenning in Academy of
Management Journal, 2002, Vol. 45(5), pp. 931-955.
VIDEO RESOURCES
1. Creative problem-solving techniques are provided in the film “Creative Problem
Solving: How to Get Better Ideas” (CRM Films).
2. The beginning stages in the creative thinking process are explored in the film
“Blue Movie: Generating Great Ideas” (CRM Films).
3. Barriers to creative thinking and ways to overcome them are found in the film
“Ideas into Action” (CRM Films).
4. Insight Media produces two films on the topic of creativity: “How to Think
Creatively” and “Creative Thinking: Breaking New Ground for Creating Innovative
Business Solutions.”
Chapter 12 – Individual and Group Decision Making
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DISCUSSION QUESTIONS
1. Think of a time when you made a major life decision, such as buying a home,
buying a new car, deciding where to go for your undergraduate studies, etc.
Thinking back to this decision, was your decision-making process influenced by
any of the decision-making biases described in the chapter? How can you seek
to avoid these decision-making biases in the future?
2. Assume you are about to make a major life decision. Describe how you could
use evidence-based decision making. What will be the challenges in using
evidence-based decision making?
3. What is your dominant decision-making style? What are the advantages and
disadvantages of this style?
4. Contrast the decision making potential of individuals versus groups. What are
the advantages and disadvantages of each?
5. What are some things you could do to foster your creativity?
SUPPLEMENTAL EXERCISE 1: NOMINAL GROUP TECHNIQUE1
APPLICATION
This exercise is designed to give students hands-on experience using the nominal
group technique (NGT). The scenarios provided all involve an educational setting. If
the class size is relatively small, the entire class may serve as one group, or break the
class into smaller groups if necessary. As an alternative, you may choose to split the
class into groups, having one group use NGT while the other uses a brainstorming
approach. Then compare the results of the two groups.
* * *
Recall from the text that there are five steps to the NGT. (1) Individually and silently
generate ideas. (2) Each person systematically offers one idea from his/her list. (3)
One person records all ideas. (4) After all ideas are elicited, discuss them as a group.
(5) Anonymously vote for the top choices using a weighted voting procedure (e.g., 1st
1 Adapted from J. Justice and R. Jang, “Tapping Employee Insights with the Nominal Group Technique,” American
Pharmacy, October 1990, pp. 43-45.
Chapter 12 – Individual and Group Decision Making
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place = 3 points, 2nd place = 2 points, 3rd place = 1 point). Have students apply this
procedure to the brief cases listed below.
CASE 1: UNIVERSITY BUDGET. Your university has just had a 10% across-the-board
budget cut. You are part of a student task force designed to help university
administrators determine what student services to cut. Based on your experience as a
student, what services are the most critical, and what can be eliminated with the least
damage to the student population?
CASE 2: UNIVERSITY DIVERSITY. Your university is concerned about the lack of
women and minorities in its business program. You are on a special task force that has
been asked to determine what the university can do to recruit and retain more
minorities. There is a $200,000 annual budget to accomplish this task. How should the
university approach this issue and how should the money be spent?
CASE 3: CLASSROOM CHEATING. Cheating has become a critical problem in your
business college’s large lecture classes. Faculty recognize this, but there are simply
not enough graduate students to proctor the exams properly. As a member of the
college ethics committee, generate some possible solutions to this problem.
SUPPLEMENTAL EXERCISE 2: ESCALATION AND BIDDING WARS2
APPLICATION
This exercise demonstrates escalation of commitment in a classroom setting and
involves auctioning dollar bills to students under atypical bidding conditions. It requires
that students come to class with some spare pocket change. The instructor takes a
chance of losing $5, but it’s well worth the learning experience for the students!
* * *
The instructor, playing the part of auctioneer, will auction off five $1 bills. All class
members may participate in the chance to “purchase” the bills. The bidding rules are a
bit atypical. Both the highest bidder and the next highest bidder pay their last bids to
the auctioneer, and the dollar is awarded to the highest bidder. For example, if Bidder A
bids 15 cents for the dollar and Bidder B bids 10 cents, and there is no further bidding,
then A pays 15 cents for the dollar and receives the dollar, while B pays 10 cents and
receives nothing. The auctioneer would lose 75 cents on this transaction. Too keep
2 Adapted from R. Lewicki, D. Bowen, D. Hall, & F. Hall, “Competitive Escalation: The Dollar Auction,” in Experiences
in Management and Organizational Behavior (3rd ed.) 1988, pp. 91-94.
Chapter 12 – Individual and Group Decision Making
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things simple, bids should be in multiples of 5 cents. The dollar is sold when there are
no more bids offered. The auctioneer repeats this process five times, one for each
dollar bill. Discussion during the bidding process should be kept to a minimum. Ask a
student volunteer to keep track of the bidding process on the record sheet provided.
Students who lose money in the bidding process will sometimes ask for the return of
their “investment” once the demonstration is over (the auctioneer usually ends up with
lots of extra change). However, consider the fact that perhaps losing the money for
good helps cement the learning experience in memory! (To smooth over any hurt
feelings, I usually come to the next class period with a large bag of candy to share with
the class, purchased from the proceeds of the auction.)
DISCUSSION QUESTIONS:
1. Who made the most money in this exercise – one of the bidders or the
auctioneer? Why?
2. As the auction proceeded, did bidders become more competitive or cooperative?
Why?
3. Did two bidders ever pay more for the money being auctioned than the value of
the money itself? Explain how and why this happened.
4. Did you become involved in the bidding? If you did, what were your motivations?
Did you accomplish your objectives? If you didn’t become involved, why not?
5. Did people say things to one another during the bidding to influence their
actions? What was said, and how was it influential?
The text lists a number of ways to reduce escalation of commitment, including setting
minimum targets, involve others in the project decisions, beware of ego-involvement
and the need to impress others, and be aware of the costs of persistence.
SUPPLEMENTAL LECTURETTE 1: WHEN TO HAVE GROUPS PARTICIPATE IN
DECISION MAKING: THE VROOM/YETTON/JAGO MODEL
APPLICATION
This lecturette may be used to supplement the chapter’s coverage of group decision
making.
* * *
Chapter 12 – Individual and Group Decision Making
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Victor Vroom and Philip Yetton developed a model in 1973 to help managers determine
the appropriate degree of group involvement in the decision-making process. The
model was later expanded by Vroom and Arthur Jago. The model is prescriptive in
nature and specifies decision-making styles that should be effective in different
situations. The model is represented as a decision tree. The manager’s task is to move
from left to right along the various branches of the tree. A specific decision-making style
is prescribed at the end point of each branch.
Vroom and Yetton identified five distinct decision-making styles (AI, AII, CI, CII, and
GII). Each style is represented by a letter indicating the basic thrust of the style. “A”
stands for autocratic, “C” for consultive, and “G” for group. When moving from an AI
style to a GII style, (1) the problem or decision is discussed with more people, (2) group
involvement moves from merely providing data to recommending solutions, (3) group
“ownership” and commitment to the solution increases, and (4) as group commitment
increases, so does the time needed to arrive at a decision. The appropriate style choice
depends on the type of problem situation.
Vroom and Jago developed eight problem attributes that managers can use to diagnose
a situation (expressed as questions). Answers to these questions lead managers along
different branches, pointing the way to potentially effective decision-making styles.
1. How important is the technical quality of this decision?
2. How important is subordinate commitment to the decision?
3. Does the leader have sufficient information to make a high-quality decision?
4. Is the problem well structured?
5. If the leader makes the decision by himself or herself, is it reasonably certain that
subordinates would be committed to the decision?
6. Do subordinates share the organizational goals to be attained in solving this
problem?
7. Is conflict among subordinates over preferred solutions likely?
8. Do subordinates have sufficient information to make a high-quality decision?
Vroom and Jago developed four decision trees, thus the first step is to choose one of
the trees. Each tree represents a generic type of problem that managers frequently
encounter. They are (1) an individual-level problem with time constraints, (2) an
individual-level problem in which the manager wants to develop an employee’s
Chapter 12 – Individual and Group Decision Making
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decision-making abilities, (3) a group-level problem in which the manager wants to
develop employees’ decision-making abilities, and (4) a time-driven group problem.
Available research supported the Vroom-Jago decision-making model. Decisions were
more effective when managers used decision-making styles consistent with the model.
Managers are advised to use different decision-making styles to suit situational
demands. The model also helps managers determine when, and to what extent, they
should involve employees in decision making. By simply being aware of the eight
diagnostic questions, managers can enhance their ability to structure ambiguous
problems. This should ultimately enhance the quality of managerial decisions.
SUPPLEMENTAL LECTURETTE 2: THE SIX HAT THINKING SYSTEM3
APPLICATION
This lecturette may be used to supplement the chapter’s coverage of organizational
creativity and innovation. It provides a brief description of de Bono’s six hat thinking
system.
* * *
Edward de Bono developed what he called the “six hat thinking system” to make
“creative thinking part of ordinary thinking.” There are six metaphorical hats that the
thinker can utilize to indicate the type of thinking that is being employed. They are the
white, red, black, yellow, green, and blue hats.
The white hat is used for discussing facts, figures, and information. The person wears
this hat when he or she is actively in the process of gathering data pertinent to the issue
or problem.
The red hat covers intuition, feelings, and emotions. The discussion of the emotional
impact of the proposal is sometimes disparaged. Using the red hat gives the person
“permission” to freely discuss his or her feelings about the idea in question.
The black hat is the logical negative hat. That is, it represents judgment and caution. It
is used to point out “why a suggestion does not fit the facts, the available experience,
the system in use or the policy that is being followed.”
The yellow hat represents the logical positive. In other words, why the idea will work
and the benefits offered by the idea.
The green hat covers creativity and provocative proposals.
3 Based on E. de Bono, “Serious Creativity” Journal for Quality and Participation, September 1995, Vol. 18 No. 5, pp.
12–18.
Chapter 12 – Individual and Group Decision Making
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The blue hat represents the process control hat. The purpose of wearing this hat is to
control the thinking process itself. It is not concerned with the subject of the discussion,
but with the discussion itself.
According to de Bono, “the ritual and artificiality of the hat system is its greatest
advantage.” The hats provide an opportunity to switch thinking and thus cover every
potential aspect of the issue under consideration. The appropriate sequencing the hats
in use depends on situation. For example, with a new issue, the sequence might be:
white (gather data), green (generate ideas and proposals), yellow followed by black for
each alternative (to evaluate the pros and cons of each alternative), red (to assess
feelings thus far) and finally blue (to decide in which direction the thinking process
should progress).
The six hat system is a way to learn, practice, and deliberately foster creativity.