Organizational Behavior Notes

Organizational Behavior Notes - Organizational Behavior...

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Organizational Behavior Class 2 – Decision-Making Decision Making: the conscious and logical process of making choices among all alternatives with the intention of moving towards some desired state of affairs and choosing an alternative with the highest value Rational Choice Paradigm of Decision Making Rational Choice Paradigm : an extreme calculative view of decision making where companies identify, select, and apply the best possible alternative o Use pure logical and all available information to choose alternative with highest value (highest expected profitability, customer satisfaction, employee well-being, or a combination of such) Subjective expected utility : the probability (expectation) of satisfaction (utility) for each alternative o the ultimate principal of rational choice paradigm o Calculate: 1. The probability each alternative will cause any of the possible outcomes to occur 2. The value of the possible outcome Rational choice assumes decision makers should select the alternative that offers greatest level of happiness o Ex: highest return s for stockholders Decision Process 1. Identify problem or opportunity a. Problem : deviation between current and desired situations a.i. Deviation – symptom of ore fundamental root causes that need to be corrected b. Opportunity : deviation between current expectations and potentially better situation that was not previously expected b.i. Can produce beyond expected goals 2. Choose best decision process a. Issue1: making sure decision maker has all information or needs to involve others in process b. Issue 2: programmed or not programmed decisions b.i. Programmed: follow standard operating procedure, have been resolved in the past so optimal solution has already been identified and documented b.ii. Nonprogrammed: require all steps in decision model because problems are new, complex, or ill-defined 3. Develop alternative solutions a. Begins by searching for ready-made solutions (ex: practices that have worked well on similar problems); if not found, create custom made solution or modify existing one 4. Choose best alternative
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a. Calls for all possible information about alternatives and their outcomes (note: assumes easy to find) 5. Implement selected alternative a. Assume implementation occurs without problems 6. Evaluate decision outcomes a. Ideally, information should come from systematic benchmarks so feedback is objective and easy to observe Problems: impossible to apply to reality; assumes people are efficient and logical information processing machines o Difficulty recognizing problems, simultaneously process the huge volume of information to identify best solution, recognizing when choices have failed o Ignores emotion Identifying Problems and Opportunities Problems with Problem Identification o Shareholder farming : employees, clients, and other stakeholders vested interests
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Organizational Behavior Notes - Organizational Behavior...

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