decision making in organisation, Study Guides, Projects, Research of International Management

Download decision making in organisation and more Study Guides, Projects, Research International Management in PDF only on Docsity! INTERNATIONAL JOURNAL OF MANAGEMENT, BUSINESS, AND ADMINISTRATION VOLUME 15, NUMBER 1, 2011 1 Decision Making in Organizations Fred C. Lunenburg Sam Houston State University ABSTRACT Today, many decisions in organizations are made by groups, teams, or committees. The benefits of group decision making include: More knowledge and expertise is available to solve the problem; a greater number of alternatives are examined; the final decision is better understood and accepted by all group members; and there is more commitment among all group members to make the final decision work. There are some common dysfunctions of effective group decision making. There are several ways in which the organization can counter these dysfunctions and improve group decision making. They include brainstorming, nominal group technique, Delphi technique, devil’s advocacy, and dialectical inquiry. Think about the difficulties involved in making individual decisions in your own personal life. Thus, you can appreciate how complicated—and important—the process of decision making can be in organizations, where the stakes are considerable and the impact is widespread (Greenberg, 2011). In both cases, the essential nature of decision making is identical. Decision making may be defined as the process of making choices from among alternatives (March, 2010). Management theorists agree that decision making is one of the most important—if not the most important—of all management activities (Drucker, 2010; Mintzberg, 2008; Simon, 1997). It is important to note, however, that not only managers make decisions in organizations, but also employees at every level in an organization participate in decision making as well. The late management consultant put it this way, “Most discussions of decision making assume that only senior executives make decisions . . . This is a dangerous mistake . . . Making sound decisions is a crucial skill at every level in the organization.” (Drucker, 2009, p. 27). Today, many decisions in organizations are made by groups, teams, or committees (Bonito, 2012). The term group decision making refers to being involved in making decisions. Group decision making takes place in different degrees. At one extreme is consultative decision making, in which the leader consults with group members before making a decision. At the other extreme is democratic decision making, in which the problem is given to the group, and group members are empowered to make the decision. In between the two is consensus decision making, in which the leader shares the problem with group members. Together the group leader and members generate and evaluate alternatives and attempt to reach agreement on a solution to the problem (DuBrin, 2012). Consensus has been reached when the group can agree on a decision and INTERNATIONAL JOURNAL OF MANAGEMENT, BUSINESS, AND ADMINISTRATION 2_____________________________________________________________________________________ each member can say: I believe you understand my point of view; I believe I understand your point of view; I will support this decision when we leave this meeting because it was reached fairly and openly; and I believe this decision is in the overall best interest of the organization and its members (Hartnett, 2011). Individual versus Group Decision Making Considerable debate has occurred concerning the relative effectiveness of individual versus group decision making. The benefits of group decision making include (1) more knowledge and expertise is available to solve the problem; (2) a greater number of alternatives are examined; (3) the final decision is better understood and accepted by all group members; and (4) there is more commitment among all group members to make the final decision work (Schermerhorn, Hunt, & Osborn, 2011). In fact, a considerable amount of research has indicated that consensus decisions with five or more participants are superior to individual, majority vote, and leader decisions (Bonner, Sillito, & Bauman, 2007; Dirks, Cummings, & Pierce, 1996; Foote, Matson, Weiss, & Wenger, 2002; Gigone & Hastie, 2007; Hill, 1982; Johnson & Hollenbeck, 2007; Kleingeld, Van Tuijl, & Algera, 2004; Maier, 1967; Martell & Borg, 1993; Robinson & Schroeder, 2004; Scott-Ladd & Marshall, 2004; Shaw, 1981; Walsh & Tseng, 1998; Wanous & Youtz, 1986; Watson, Michaelson, & Sharp, 1991; Yetton & Bottger, 1983). Unfortunately, open discussion can be negatively influenced by behavioral factors, such as (1) social pressure to conform, i.e., individuals may feel compelled to go along with the wishes of the group; (2) minority domination, i.e., the group’s decision may be forced, or ramrodded through, by one individual or a dominant clique; and (3) time delays, i.e., with more people involved in the dialogue and discussion, group decisions usually take longer to make than individual decisions (Schermerhorn, et al, 2011). Group Decision-Making Techniques For groups to be more effective, they must overcome some of the problems and dysfunctions that groups generally encounter: groupthink (Janis, 1982), risky shift (Stoner, 1968), group polarization (Bordley, 1983), and escalation of commitment Whyte, 1993). Traditional models of group effectiveness include creating the right climate where support, commitment, goals, rewards, communication systems, and physical space are all synchronized to allow the group to work in a productive atmosphere (Lunenburg, 1983). Group size should be kept ideally between five to 12 participants depending on the task (Hare, 1976; Seijts & Latham, 2000; Shaw, 1981; Thomas & Fink, 1963) and members should be selected based on their motivation and ability (Hersey & Blanchard, 2008). Furthermore, group cohesion should be built by either establishing homogeneous groups or overcoming potential problems associated with diversity; by encouraging interaction and contact; and by making the group seem somewhat “exclusive,” so that members are honored to be included (Luthans, 2011). FRED C. LUNENBURG _____________________________________________________________________________________5 problems. For example, suppose the president of a large manufacturing firm wishes to evaluate a new technology for manufacturing a new product line. Selected members of the organization, plant managers, executives, consumers, and nationally renowned experts could participate in the various phases of the Delphi process. The Delphi technique has many variations, but generally it works as follows. 1. The organization identifies a panel of experts, both inside and outside the organization, and solicits their cooperation. 2. Each member of the panel receives the basic problem. 3. Each individual expert independently and anonymously writes comments, suggestions, and solutions to the problem. 4. A central location compiles, transcribes, and reproduces the experts’ comments. 5. Each panelist receives a copy of all the other experts’ comments and solutions. 6. Each expert provides feedback on the others’ comments, writes new ideas stimulated by their comments, and forwards these to the central location. 7. The organization repeats Steps 5 and 6 as often as necessary until consensus is reached or until some kind of voting procedure is imposed to reach a decision. Success of the Delphi technique depends on the expertise, communication skills, and motivation of the participants and the amount of time the organization has available to make a decision. There are several benefits of the Delphi approach. First, it eliminates many of the interpersonal problems associated with other group decision-making approaches. Second, it enlists the assistance of experts and provides for the efficient use of their time. Third, it allows adequate time for reflection and analysis of a problem. Fourth, it provides for a wide diversity and quantity of ideas. And, finally, it facilitates the accurate prediction and forecasting of future events. The major objectives of the Delphi technique include the following:  To determine or develop a range of possible program alternatives.  To explore or expose underlying assumptions or information leading to different judgments.  To seek out information that may generate a consensus among the group members.  To correlate informed judgments on a subject that spans a wide range of disciplines.  To educate group members concerning the diverse and interrelated aspects of the subject. Today, numerous organizations in business, government, the military, health-care agencies, and schools are using the Delphi technique. Research shows that the technique is superior to ordinary group decision making in terms of the number and quality of ideas generated and group members overall satisfaction (Corey, 2011). The major disadvantage of the Delphi technique is the amount of time involved in going through the questionnaire phases of the process. Variations of the Delphi technique have been used to overcome this problem. INTERNATIONAL JOURNAL OF MANAGEMENT, BUSINESS, AND ADMINISTRATION 6_____________________________________________________________________________________ One special type of Delphi approach is a procedure called ringi used by the Japanese. This version of the Delphi technique involves the circulation of a written document from member to member, in nominal group fashion, for sequential editing until no more changes are required and each participant has signed off the final document. Another Japanese variation of the Delphi technique is assigning parts of the problem to each of several subgroups who prepare responses for their assignments. This version differs from the pure Delphi approach in that the written mini-reports are then circulated among the group members before face-to-face discussion starts. In essence, the latter Japanese version of the Delphi technique combines with simple group decision making (Eto, 2003). Devil’s Advocacy Devil’s advocacy, another technique for improving the quality of group decisions, introduces conflict into the decision-making process (Schwenk, 1984). Janis (1982) suggests that this concept is an antidote for groupthink. Groupthink, one of the dysfunctions of group decision making, results in inhibitions and premature conformity to group norms. Devil’s advocacy can nullify these and other group phenomena to which group members are subjected (Schwenk, 1990). After a planning group has developed alternative solutions to a problem, the plan is given to one or more staff members, with instructions to find fault with it. If the plan withstands the scrutiny of the devil’s advocates, it can be presumed to be free of the effects of groupthink and thus viable. Although devil’s advocacy can be used as a critiquing technique after alternative solutions to a problem have been developed, it can also be used during the early stages of the decision-making process. For example, during a decision-making session one member could be assigned the role of devil’s advocate, expressing as many objections to each alternative solution to a problem as possible (Schweiger & Finger, 1984). Dialectical Inquiry Like devil’s advocacy, dialectical inquiry is an alternative approach for controlling group phenomena such as groupthink in decision making (Schweiger, Sandberg, & Ragan, 1986). The process can be described as follows: 1. The process begins with the formation of two or more divergent groups to represent the full range of views on a specific problem. Each group is made as internally homogeneous as possible; the groups, however, are as different from one another as possible. Collectively they cover all positions that might have an impact on the ultimate solution to a problem. 2. Each group meets separately, identifies the assumptions behind its position, and rates them on their importance and feasibility. Each group then presents a “for” and an “against” position to the other groups. 3. Each group debates the other groups’ position and defends its own. The goal is not to convince others but to confirm that what each group expresses as its position is not necessarily accepted by others. FRED C. LUNENBURG _____________________________________________________________________________________7 4. Information, provided by all groups, is analyzed. This results in the identification of information gaps and establishes guidelines for further research on the problem. 5. An attempt to achieve consensus among the positions occurs. Strategies are sought that will best meet the requirements of all positions that remain viable. This final step permits further refinement of information needed to solve the problem Although agreement on a management plan is a goal of this approach, a full consensus does not always follow. Nevertheless, the procedure can produce useful indicators of the organization’s planning needs. Conclusion Today, many decisions in organizations are made by groups, teams, or committees. The benefits of group decision making include: more knowledge and expertise is available to solve the problem; a greater number of alternatives are examined; the final decision is better understood and accepted by all group members; and there is more commitment among all group members to make the final decision work. There are some common dysfunctions of effective group decision making. There are several ways in which the organization can counter these dysfunctions and improve group decision making. They include brainstorming, nominal group technique, Delphi technique, devil’s advocacy, and dialectical inquiry. References Bonito, J. (2012). Interaction and influence in small group decision making. New York, NY: Routledge. Bonner, B. L., Sillito, S. D., & Baumann, M. R. (2007). Collective estimation: Accuracy, expertise, and extroversion as sources of intra-group influence. Organizational Behavior and Human Decision Processes, 103, 121-133. Bordley, R. F. (1983). A Bayesian model of group polarization. Organizational Behavior and Human Performance, 32, 262-274. Corey, G. (2011). Group techniques. Belmont, CA: Brooks/Cole. Dalkey, N. (1969). The Delphi method: An experimental study of group opinion. Santa Monica, CA: Rand Corporation. Delbecq, A. L., Van de Ven, A. H., & Gustafsen, D. H. (1986). Group techniques for program planning: A guide to nominal group and Delphi processes. Middleton, WI: Green Briar Press. Dirks, K. T., Cummings, L. L., & Pierce, J. L. (1996). Psychological ownership in organizations: Conditions under which individuals promote and resist change. Research in Organizational Change and Development, 9, 1-23. Drucker, P. F. (2009). The effective executive. New York, NY: HarperCollins. Drucker, P. F. (2010). The practice of management. New York, NY: HarperCollins.