LDRS
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Making
Decisions
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Making
Decisions
Acknowledgements
This
text
is
a
reprint
of
Chapter
11
“Making
Decisions”
from
Bauer
&
Erdogen’s
(2009)
Organizational
Behavior.
It
is
copied
and
adapted
under
the
terms
of
the
Creative
Commons
Attribution-‐NonCommercial-‐ShareAlike
3.0
License.
Bauer,
T.,
&
Erdogan,
B.
(2009).
Organizational
behavior
(1st
ed.).
New
York:
Flat
World
Knowledge.
Learning
Objectives
After
reading
this
chapter,
you
should
be
able
to
do
the
following:
1. Understand
what
is
involved
in
decision
making.
2. Compare
and
contrast
different
decision-‐making
models.
3. Compare
and
contrast
individual
and
group
decision
making.
4. Understand
potential
decision-‐making
traps
and
how
to
avoid
them.
5. Understand
the
pros
and
cons
of
different
decision-‐making
aids.
6. Engage
in
ethical
decision
making.
7. Understand
cross-‐cultural
differences
in
decision
making.
11.1
Decision-‐Making
Culture:
The
Case
of
Google
Source:
http://en.wikipedia.org/wiki/File:Googleplex_Welcome_Sign.jpg
by
Ardo191.
LDRS
320
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27
Google
(NASDAQ:
GOOG)
is
one
of
the
best-‐known
and
most
admired
companies
around
the
world,
so
much
so
that
“googling”
is
the
term
many
use
to
refer
to
searching
information
on
the
Web.
What
started
out
as
a
student
project
by
two
Stanford
University
graduates—Larry
Page
and
Sergey
Brin—
in
1996,
Google
became
the
most
frequently
used
Web
search
engine
on
the
Internet
with
1
billion
searches
per
day
in
2009,
as
well
as
other
innovative
applications
such
as
Gmail,
Google
Earth,
Google
Maps,
and
Picasa.
Google
grew
from
10
employees
working
in
a
garage
in
Palo
Alto
to
10,000
employees
operating
around
the
world
by
2009.
What
is
the
formula
behind
this
success?
Google
strives
to
operate
based
on
solid
principles
that
may
be
traced
back
to
its
founders.
In
a
world
crowded
with
search
engines,
they
were
probably
the
first
company
that
put
users
first.
Their
mission
statement
summarizes
their
commitment
to
end-‐user
needs:
“To
organize
the
world’s
information
and
to
make
it
universally
accessible
and
useful.”
While
other
companies
were
focused
on
marketing
their
sites
and
increasing
advertising
revenues,
Google
stripped
the
search
page
of
all
distractions
and
presented
users
with
a
blank
page
consisting
only
of
a
company
logo
and
a
search
box.
Google
resisted
pop-‐up
advertising,
because
the
company
felt
that
it
was
annoying
to
end-‐users.
They
insisted
that
all
their
advertisements
would
be
clearly
marked
as
“sponsored
links.”
This
emphasis
on
improving
user
experience
and
always
putting
it
before
making
more
money
in
the
short
term
seems
to
have
been
critical
to
their
success.
Keeping
their
employees
happy
is
also
a
value
they
take
to
heart.
Google
created
a
unique
work
environment
that
attracts,
motivates,
and
retains
the
best
players
in
the
field.
Google
was
ranked
as
the
number
1
“Best
Place
to
Work
For”
by
Fortune
magazine
in
2007
and
number
4
in
2010.
This
is
not
surprising
if
one
looks
closer
to
how
Google
treats
employees.
On
their
Mountain
View,
California,
campus
called
the
“Googleplex,”
employees
are
treated
to
free
gourmet
food
options
including
sushi
bars
and
espresso
stations.
In
fact,
many
employees
complain
that
once
they
started
working
for
Google,
they
tend
to
gain
10
to
15
pounds!
Employees
have
access
to
gyms,
shower
facilities,
video
games,
on-‐site
child
care,
and
doctors.
Google
provides
4
months
of
paternal
leave
with
75%
of
full
pay
and
offers
$500
for
take-‐out
meals
for
families
with
a
newborn.
These
perks
create
a
place
where
employees
feel
that
they
are
treated
well
and
their
needs
are
taken
care
of.
Moreover,
they
contribute
to
the
feeling
that
they
are
working
at
a
unique
and
cool
place
that
is
different
from
everywhere
else
they
may
have
worked.
In
addition,
Google
encourages
employee
risk
taking
and
innovation.
How
is
this
done?
When
a
vice
president
in
charge
of
the
company’s
advertising
system
made
a
mistake
costing
the
company
millions
of
dollars
and
apologized
for
the
mistake,
she
was
commended
by
Larry
Page,
who
congratulated
her
for
making
the
mistake
and
noting
that
he
would
rather
run
a
company
where
they
are
moving
quickly
and
doing
too
much,
as
opposed
to
being
too
cautious
and
doing
too
little.
This
attitude
toward
acting
fast
and
accepting
the
cost
of
resulting
mistakes
as
a
natural
consequence
of
working
on
the
cutting
edge
may
explain
why
the
company
is
performing
much
ahead
of
competitors
such
as
Microsoft
and
Yahoo!
One
of
the
current
challenges
for
Google
is
to
expand
to
new
fields
outside
of
their
Web
search
engine
business.
To
promote
new
ideas,
Google
encourages
all
engineers
to
spend
20%
of
their
time
working
on
their
own
ideas.
Google’s
culture
is
reflected
in
their
decision
making
as
well.
Decisions
at
Google
are
made
in
teams.
Even
the
company
management
is
in
the
hands
of
a
triad:
Larry
Page
and
Sergey
Brin
hired
Eric
Schmidt
to
act
as
the
CEO
of
the
company,
and
they
are
reportedly
leading
the
company
by
consensus.
In
other
words,
this
is
not
a
company
where
decisions
are
made
by
the
senior
person
in
charge
and
then
implemented
top
down.
It
is
common
for
several
small
teams
to
attack
each
problem
and
for
employees
to
try
to
influence
each
other
using
rational
persuasion
and
data.
Gut
feeling
has
little
impact
on
how
decisions
are
made.
In
some
meetings,
people
reportedly
are
not
allowed
to
say
“I
think…”
but
instead
must
say
“the
data
suggest….”
To
facilitate
teamwork,
employees
work
in
open
office
environments
where
private
offices
are
assigned
only
to
a
select
few.
Even
Kai-‐Fu
Lee,
the
famous
employee
whose
defection
from
Microsoft
was
the
target
of
a
lawsuit,
did
not
get
his
own
office
and
shared
a
cubicle
with
two
other
employees.
LDRS
320
–
Making
Decisions
Page
3
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27
How
do
they
maintain
these
unique
values?
In
a
company
emphasizing
hiring
the
smartest
people,
it
is
very
likely
that
they
will
attract
big
egos
that
may
be
difficult
to
work
with.
Google
realizes
that
its
strength
comes
from
its
“small
company”
values
that
emphasize
risk
taking,
agility,
and
cooperation.
Therefore,
they
take
their
hiring
process
very
seriously.
Hiring
is
extremely
competitive
and
getting
to
work
at
Google
is
not
unlike
applying
to
a
college.
Candidates
may
be
asked
to
write
essays
about
how
they
will
perform
their
future
jobs.
Recently,
they
targeted
potential
new
employees
using
billboards
featuring
brain
teasers
directing
potential
candidates
to
a
Web
site
where
they
were
subjected
to
more
brain
teasers.
Each
candidate
may
be
interviewed
by
as
many
as
eight
people
on
several
occasions.
Through
this
scrutiny,
they
are
trying
to
select
“Googley”
employees
who
will
share
the
company’s
values,
perform
at
high
levels,
and
be
liked
by
others
within
the
company.
Will
this
culture
survive
in
the
long
run?
It
may
be
too
early
to
tell,
given
that
the
company
was
only
founded
in
1998.
The
founders
emphasized
that
their
initial
public
offering
(IPO)
would
not
change
their
culture
and
they
would
not
introduce
more
rules
or
change
the
way
things
are
done
in
Google
to
please
Wall
Street.
But
can
a
public
corporation
really
act
like
a
start-‐up?
Can
a
global
giant
facing
scrutiny
on
issues
including
privacy,
copyright,
and
censorship
maintain
its
culture
rooted
in
its
days
in
a
Palo
Alto
garage?
Larry
Page
is
quoted
as
saying,
“We
have
a
mantra:
don’t
be
evil,
which
is
to
do
the
best
things
we
know
how
for
our
users,
for
our
customers,
for
everyone.
So
I
think
if
we
were
known
for
that,
it
would
be
a
wonderful
thing.”
Case
written
by
Berrin
Erdogan
and
Talya
Bauer
to
accompany
Bauer,
T.,
&
Erdogan,
B.
(2009).
Organizational
behavior
(1st
ed.).
New
York:
Flat
World
Knowledge.
Based
on
information
from
Elgin,
B.,
Hof,
R.
D.,
&
Greene,
J.
(2005,
August
8).
Revenge
of
the
nerds—again.
BusinessWeek.
Retrieved
April
30,
2010,
from
http://www.businessweek.com/technology/content/jul2005/tc20050728
_5127_tc024.htm;
Hardy,
Q.
(2005,
November
14).
Google
thinks
small.
Forbes,
176(10);
Lashinky,
A.
(2006,
October
2).
Chaos
by
design.
Fortune,
154(7);
Mangalindan,
M.
(2004,
March
29).
The
grownup
at
Google:
How
Eric
Schmidt
imposed
better
management
tactics
but
didn’t
stifle
search
giant.
Wall
Street
Journal,
p.
B1;
Lohr,
S.
(2005,
December
5).
At
Google,
cube
culture
has
new
rules.
New
York
Times.
Retrieved
April
30,
2010,
from
http://www.nytimes.com/2005/12/05/technology/05google.html;
Schoeneman,
D.
(2006,
December
31).
Can
Google
come
out
to
play?
New
York
Times.
Retrieved
April
30,
2010,
from
http://www.nytimes.com/2006/12/31/fashion/31google.html;
Warner,
M.
(2004,
June).
What
your
company
can
learn
from
Google.
Business
2.0,
5(5).
Discussion
Questions
1. Do
you
think
Google’s
decision-‐making
culture
will
help
or
hurt
Google
in
the
long
run?
2. What
are
the
factors
responsible
for
the
specific
culture
that
exists
in
Google?
3. What
type
of
decision-‐making
approach
has
Google
taken?
Do
you
think
this
will
remain
the
same
over
time?
Why
or
why
not?
4. Do
you
see
any
challenges
Google
may
face
in
the
future
because
of
its
emphasis
on
risk
taking?
11.2
Understanding
Decision
Making
Learning
Objectives
1. Define
decision
making.
2. Understand
different
types
of
decisions.
Decision
making
refers
to
making
choices
among
alternative
courses
of
action—which
may
also
include
inaction.
While
it
can
be
argued
that
management
is
decision
making,
half
of
the
decisions
made
by
managers
within
organizations
ultimately
fail.
[1]
Therefore,
increasing
effectiveness
in
decision
making
is
an
important
part
of
maximizing
your
effectiveness
at
work.
This
chapter
will
help
LDRS
320
–
Making
Decisions
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4
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27
you
understand
how
to
make
decisions
alone
or
in
a
group
while
avoiding
common
decision-‐making
pitfalls.
Individuals
throughout
organizations
use
the
information
they
gather
to
make
a
wide
range
of
decisions.
These
decisions
may
affect
the
lives
of
others
and
change
the
course
of
an
organization.
For
example,
the
decisions
made
by
executives
and
consulting
firms
for
Enron
ultimately
resulted
in
a
$60
billion
loss
for
investors,
thousands
of
employees
without
jobs,
and
the
loss
of
all
employee
retirement
funds.
But
Sherron
Watkins,
a
former
Enron
employee
and
now-‐famous
whistleblower,
uncovered
the
accounting
problems
and
tried
to
enact
change.
Similarly,
the
decision
made
by
firms
to
trade
in
mortgage-‐backed
securities
is
having
negative
consequences
for
the
entire
economy
in
the
United
States.
All
parties
involved
in
such
outcomes
made
a
decision,
and
Types
of
Decisions
Most
discussions
of
decision
making
assume
that
only
senior
executives
make
decisions
or
that
only
senior
executives’
decisions
matter.
This
is
a
dangerous
mistake.
~
Peter
Drucker
Despite
the
far-‐reaching
nature
of
the
decisions
in
the
previous
example,
not
all
decisions
have
major
consequences
or
even
require
a
lot
of
thought.
For
example,
before
you
come
to
class,
you
make
simple
and
habitual
decisions
such
as
what
to
wear,
what
to
eat,
and
which
route
to
take
as
you
go
to
and
from
home
and
school.
You
probably
do
not
spend
much
time
on
these
mundane
decisions.
These
types
of
straightforward
decisions
are
termed
programmed
decisions,
or
decisions
that
occur
frequently
enough
that
we
develop
an
automated
response
to
them.
The
automated
response
we
use
to
make
these
decisions
is
called
the
decision
rule.
For
example,
many
restaurants
face
customer
complaints
as
a
routine
part
of
doing
business.
Because
complaints
are
a
recurring
problem,
responding
to
them
may
become
a
programmed
decision.
The
restaurant
might
enact
a
policy
stating
that
every
time
they
receive
a
valid
customer
complaint,
the
customer
should
receive
a
free
dessert,
which
represents
a
decision
rule.
In
to
ensure
consistency
around
the
globe
such
as
at
this
St.
Petersburg,
Russia,
location,
McDonald’s
Corporation
trains
all
restaurant
managers
at
Hamburger
University
where
they
take
the
equivalent
to
2
years
of
college
courses
and
learn
how
to
make
decisions
on
the
job.
The
curriculum
is
taught
in
28
languages.
Source:
http://upload.wikimedia.org/wikipedia/commons/a/a2/McDonalds_in_St_Petersburg_2004.JPG.
LDRS
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Making
Decisions
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On
the
other
hand,
unique
and
important
decisions
require
conscious
thinking,
information
gathering,
and
careful
consideration
of
alternatives.
These
are
called
nonprogrammed
decisions.
For
example,
in
2005
McDonald’s
Corporation
became
aware
of
the
need
to
respond
to
growing
customer
concerns
regarding
the
unhealthy
aspects
(high
in
fat
and
calories)
of
the
food
they
sell.
This
is
a
nonprogrammed
decision,
because
for
several
decades,
customers
of
fast-‐food
restaurants
were
more
concerned
with
the
taste
and
price
of
the
food,
rather
than
its
healthiness.
In
response
to
this
problem,
McDonald’s
decided
to
offer
healthier
alternatives
such
as
the
choice
to
substitute
French
fries
in
Happy
Meals
with
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