ETHICAL DECISION MAKING IN ORGANIZATIONS

Two types of decisions…

Programmed Decision:  Routine matter for which a manager has an established decision rule.

Non programmed Decision: A new, complex decision that requires a creative solution

Simple decision making process…

MODELS OF DECISION MAKING

Rational Model…

Describes how individuals should behave in order to optimize some outcome:

1.Problem clarity	2.Known options
3.Clear preferences	4.Constant preferences
5.No time or cost constraints	6.Maximum payoff

Bounded Rationality Model…

Suggests that there are limits upon how rational a decision maker can actually be:

1.Select the first alternative that is satisfactory

2.Develop shortcuts, called heuristics, to save mental activity

Garbage Can Model…

Says  that decisions in organizations are random and unsystematic.

Managing risk-taking behavior…

•Model effective decision making under uncertainty, allow employees to fail without fear of punishment

Ø  Fear of taking risks stifles creativity and innovation

Escalation of Commitment… The tendency to continue to commit resources to a failing course of action:

Why it occurs?	How to deal with it?
Personal pride	Split responsibility for decisions
Optimism	Provide individuals with a graceful exit
Humans dislike inconsistency	Have groups make the initial decision

Creativity in the organization!!

Creativity is highest when there is a match between individual &organizational influences on creativity.

Ø  Some individuals are more creative than others

Ø  Some organizations require more creativity than others

Mental Blocks that Diminish Creativity…

• Ø  Searching for the “right” answer.
• Ø  Trying to be logical.
• Ø  Following the rules.
• Ø  Avoiding ambiguity.
• Ø  Striving for practicality.
• Ø  Being afraid to look foolish.
• Ø  Avoiding problems outside our own expertise.
• Ø  Fearing failure.
• Ø  Believing we are not really creative.
• Ø  Not making play a part of work.

Participative Decision Making…

Decision making in which individuals who are affected by decisions influence the making of those decisions.

Groupthink (Irving Janis)

A deterioration of mental efficiency, reality testing, and moral judgment resulting from pressures within the group.

Consequences:

•Incomplete survey of alternatives

•Failure to evaluate the risks of the preferred course of action

•Biased information processing

•A failure to work out contingency plans

•The overall result of groupthink is defective decision making.

Techniques of group decision making…

Brainstorming	Nominal Group Technique (NGT)	Delphi Technique	Devil’s Advocacy	Dialectical Inquiry
A technique for generating as many ideas as possible on a given subject, while suspending evaluation until all the ideas have been suggested.	A structured approach to group decision making that focuses on generating alternatives and choosing one.	Gathering the judgments of experts for use in decision making.	A technique for preventing groupthink in which a group or an individual is given the role of critic during decision making	A debate between two opposing sets of recommendations.

Ethics…

Ø  Social responsibility: obligation of an organization to behave in ethical way in the social environment in which it operates

• Morals: the values and principles that distinguish right from wrong
• Ethics: behavioral norms and rules. Do the right thing.

Ethical theories…

Locus of Control…

Personality variable that affects individual behavior:

Internal-belief in personal control and personal responsibility
External-belief in control by outside forces (fate, chance, other people)

REFERENCES

• Mintzberg, H. & Westley, F. (2001, Spring). Decision making: It’s not what you think. MIT Sloan Management Review, 42(3), 89 –93.
•  Wong, K. F. E., & Kwong, J. Y. Y. (2007). The role of anticipated regret in escalation of commitment. Journal of Applied Psychology, 92, 545–55.
•  Google images

QUESTION

How can organizations effectively manage both risk taking and escalation of commitment in the decision-making behavior of employees?

Both risk taking and escalation of commitment should be good manage, otherwise the benefits that could come from that tend to be lost. To give it an effectively manage the organization should have a responsible group over the people that is suppose to taking these risk decision or escalating in commitment, these group of prepare people should advice the employees when the limit line is being cross, in this way the company avoid possible big losses and mistakes.

THE CORPORATION

Documentary  Trailer "The corporation":

Related terms:

• Capitalism: Economic system based (to a varying degree) on private ownership of the factors of production (capital, land, and labor) employed in generation of profits. It is the oldest and most common of all economic systems and, in general, is synonymous with free market system
• Psychopath: a way of acting.
• Legal institution: Association, corporation, partnership, proprietorship, etc., that has legal standing in the eyes of law. A legal entity has legal capacity to enter into agreements or contracts,assume obligations, incur and pay debts, sue and be sued in its own right, and to be held responsible for its actions.

• Externalities: factors that affect from outside.
• Limited liability: Legal protection available to the shareholders(stockholders) of privately and publicly owned corporation sunder which the financial liability of each shareholder of the firm for the firm's debts and obligations is limited to the par value of his or her fully paid-up shares. The firm itself, as a legal entity, is liable for the rest. Also called limited personal liability

References

·         www.businessdictionary.com

QUESTION

As a legal organizational model, how does the rise of corporations influence the aspects of culture in pursuing profit?

In a society where all the social and political structure works around the big corporations it seems to be every time more difficult to maintain some aspects of traditional culture. The new generations are being risen in the context of business, money and pursuing profits, dreaming to belong to one these amazing corporations that make our lives “better”, but in many cases leaving the human sense, and the most important values away. This represents a big and fast phenomenon that is very difficult to stop, taking into account that we are talking about legal entities and also that we are part of it with all the things we do every day. This context changes our minds and takes us to a new globalized and industrialized culture, where our thinking is just exactly the same of all that pursue this corporation love tendency.

MOTIVATION

MOTIVATION

A GOOD DEFINITION….

Internal and external factors that stimulate desire and energy in people to be continually interested in and committed to a job, role, or subject, and to exert persistent effort in attaining a goal. Motivation is the energizer of behavior and mother of all action. It results from the interactions among conscious and unconscious factors such as the:

(1)    Intensity of desire or need

(2)    Incentive or reward value of the goal

(3)    Expectations of the individual and of his or her significant others

Motivation Theories

INTERNAL THEORIOES: give primary consideration to variables within the individual that give rise to motivation and behavior (e.g., hierarchy of needs).

PROCESS THEORIES: of motivation emphasize the nature of the interaction between the individual and the environment (e.g., expectancy theory).

EXTERNAL THEORIES:  focus on the elements in the environment (e.g., two-factor theory).

What is a need? ...

 Is a state or condition within an individual that generates movement toward some outcome or reward.

·         Intrinsic motivation: internal needs

·         Extrinsic motivation: external incentives

Maslow’s Hierarchy of needs

An interpretation of Maslow's hierarchy of needs, represented as a pyramid with the more basic needs at the bottom.

Theory X and Theory Y (Douglas McGregor)

Theory x (Lower order needs)	Theory y (Higher order needs)
Dislike work	View work as natural
Must be threatened with punishment	Self-directed
Avoid responsibilities	Exercise self-control
Seek formal direction	Accept responsibility
Require security	Seek responsibility
Little ambition	Make innovative decisions
Workers are costs	Workers are assets

ERG theory (Clayton Alderfer)

Workers pursue multiple needs simultaneously.

McClelland’s Theory of needs

An individual’s specific needs are acquired over time and are shape by one´s life experiences. Most of these needs can be classed as achievement, affiliation, or power.

Two-factor theory (Frederick Herzberg)

Motivation factors: psychological growth - Hygiene factors: avoidance of pain

Social exchange and equity theory (AmitaiEtzioni)

•Individual –environment interaction

•Three categories of exchange between individuals and organizations:

*        Committed: moral relations of high positive intensity (religious group)

*        Calculated: each party in the relationship demands certain things of the other and contribute accordingly to the other.

*        Alienated: high negative intensity (prison)

Stacy Adam’s theory of inequity

*        People are motivated when they see themselves in risk, or in a position they believe is unfair.

*        Tension motivates a person to act.

*        Individuals consider their inputs and their outcomes; they calculate them and compare it with others.

 Video....

Expectancy theory or VIE (Valence, Expectancy, Instrumentality

Developed by Porter and Lawler (1968) Connection between the employees’ motivation and the certitude of their expectancies. Results of performance are means to satisfy a need

Effort	Performance	Reward
“¿what are my chances of getting the job done if I put the necessary effort?”	“¿What are my chances of getting the rewards I value if I satisfactorily complete the job?”	“¿What rewards do I value?”

3 Causes of Motivational Problems…

•Belief that effort will not result in performance

•Belief that performance will not result in rewards

•The value a person places on, or the preference a person has for, certain rewards

REFERENCES:

·         www.businessdictionary.com

·         A.H. Maslow, A Theory of Human Motivation, Psychological Review 50(4) (1943):370-96.

·         Business Knowledge center:  www.netmba.com

QUESTION

In multicultural organizational contexts what could be a good strategy to keep people motivated towards a common task?

In a multicultural organizational context is necessary to take into account the Maslow´s need hierarchy which tells the managers the most important needs for each employee depending on his way working. Although most of the people could have the same kind of psychological needs, as the culture varies the needs could do, so in this sense the manager could recognize how the employee see the work, in the terms of theory x or theory y and construct the better way to motive the different types of employees the company has.