Organizational Decision-Making and Its Forms

Decisions in the workplace

Strategic and operational decisions observed in the workplace

According to Buhler (2001), strategic decisions are uncertain and involve high risks because they are concerned with the business’s future. Moreover, they entail harmonizing a firm’s resources and capabilities with external threats and opportunities (Buhler, 2001). An example of a strategic decision that I have observed in my workplace is determining new products our company could add to its portfolio and the potential target customers. The decision was arrived at after identifying a gap in the market that the existing products were yet to satisfy. The decision was classified as strategic based on its characteristics. Such a decision is complicated, deals with organizational growth, and is made at the topmost level of an organization. The decision to introduce new products and identify potential customers is strategic since it is concerned with the company’s future growth and involves high risks.

On the other hand, an example of operational decisions that I have observed entailed the determination of resources that were to be allocated to various departments. The decision was operational because it met certain features attributed to operations. It was intended to boost organizational production and enhance growth. It facilitated the implementation of strategic business plans. The decision was short-term based and made at middle-level management (Buhler, 2001).

Programmed and non-programmed decisions

According to Moshal (2009), programmed decisions are related to structured situations and routine resolutions. They rely on rules, policies, or procedures that are established in advance. An example of a programmed decision that I have observed entailed an inventory manager deciding to make new orders for goods after the stock level had been reduced to three-quarter. The resolution fell under programmed decision because the manager had made various similar judgments in the past and had come up with rules and guidelines to follow when inventory reaches a certain level. According to Moshal (2009), non-programmed decisions are unique, mostly unstructured, and require gathering information that can help evaluate alternatives. An example of a non-programmed decision that I witnessed entailed a resolution to respond to changing market needs. The restaurant that I was working in resolved to offer healthy food in response to increasing concerns amid consumers regarding their health. The resolution fell under non-programmed decisions because it aimed to handle unanticipated events that arose in the course of operations.

Decision-making style of a supervisor

Rational decision-making is applicable in uncertain situations that are characterized by limited information. It enables individuals to work with ambiguities, consider all potential alternatives, and have a detailed understanding of the case before making a decision. Buhler (2001) posits that rational decision-making enables an individual to reason before making decisions. One compares different alternatives and relies on all the available information. In rational decision-making, people use facts, analysis, and systematic process (Buhler, 2001). In my previous workplace, our supervisor would use a rational decision-making approach to resolving employee performance challenges. Every time that the revenues went down, he would encourage workers to evaluate their activities and determine what they were doing differently. He would also request us to brainstorm and come up with ways to address the situation.

Reasons of the bad decisions made by supervisors

Two years ago, I worked in a restaurant where I witnessed my supervisor make the wrong decision. It involved recommending continued restocking of a beverage drink. Previously, the drink contributed to increasing the sales volume of the restaurant. However, market research conducted two years back indicated that consumers no longer preferred the drink. The decision was wrong because the supervisor did not consider changing consumer preferences. His decision resulted in a decline in revenues as customers moved to other restaurants to get their preferred drinks.

Confirmation bias contributed to the supervisor’s poor decisions. The bias resulted in the director’s wrong choice because he interpreted data in a manner that prevented him from thinking critically. He also selectively retained information that supported his perceptions.

Hammond, Keeney, and Raiffa (1998) claim that the confirmation evidence trap makes people look for “information that supports their existing instincts or points of view while avoiding information that contradicts it” (p. 52). Hammond et al. (1998) provide some solutions on how to prevent the confirmation evidence trap. Individuals should always ensure that all available evidence has been examined with the same strictness. The inclination to accept confirming evidence without questioning it should be avoided. Adequate information should be gathered to help select the best choice, but should not be used as evidence for confirming one’s desired choice.

Another wrong decision made in the same restaurant entailed management failure to fire non-performing employees after annual performance reviews. They opted to retain them because they had spent a considerable amount of money on their training and development. The decision was wrong because the hired employees could not help meet the organization’s productivity goals.

Sunk-cost bias was the cause of this bad decision. The decision falls in this bias because the management relied on old investments (sunk costs) to make a decision. Bolland and Fletcher (2012) provide that individuals find it hard to abandon investments that have already consumed many resources. Poor decisions are then arrived at due to the invested capital. Sunk cost bias can be avoided by stopping to allocate resources to unproductive investments. The policymakers should also disengage from past decisions and give priority to long-term objectives.

The third bad decision that I observed from my supervisor entailed ordering the doubling of food served to customers based on a projection that it would drive more clients to the restaurants. The decision was wrong because the supervisor did not have enough reasons to believe that the action would attract many customers. Overconfidence bias contributed to the bad decision. The director did not use any facts in reaching the decision. He relied on his self-belief that the clients could not miss the benefits that the promotion offered.

According to Bolland and Fletcher (2012), this bias happens when decision-makers have a positive attitude towards themselves and their products or performance that is unrealistic. The bias can be avoided by consulting a third party to act as the voice of reason. All relevant facts and data should be collected to ensure that unbiased opinion is obtained.

I would advise my supervisor to use the reading by Hammond et al. (1998) as his reference material. The reading is the most useful as it provides detailed information about various biases that hinder effective decision-making. Moreover, it explains how each kind of trap can be avoided.

Group decision making during the meetings

Are participants in the meeting afraid to contradict senior management?

One of the disadvantages of group decision-making is that the separated responsibilities adversely affect the quality of decisions. According to Moshal (2009), members are likely to avoid taking a serious interest in getting solutions, and they might not demonstrate a sense of responsibility. Another disadvantage is attributed to some employees’ failure to speak up during meetings since they are not interested in taking an active role in solving problems. In many meetings that I have attended, employees are reluctant to speak because they fear to contradict their managers, and hence they fail to give their honest contributions. Moreover, some employees tend to make decisions that they think will please their boss.

Is time spent at the meetings productive, or is a lot of time wasted?

Meetings can be unproductive and result in time wastage for an organization. Moshal (2009) explains, “delays due to lengthy discussions, application of procedures and technicalities, as well as the diverse opinions provided by members characterize group decision-making” (p. 158). These issues reduce the group decision-making process’s productivity since considerable time is wasted as members try to evaluate all views and reach a consensus.

Are the decisions that are made solid ones?

Meetings may fail to produce concrete decisions due to issues such as groupthink. According to Sims (2002), groupthink is a serious obstacle in decisions involving crowds. It occurs in highly cohesive groups, where members enjoy a high level of interpersonal attraction. The problem results in participants having indistinct perceptions about the problems that they require solving. Therefore, they are pushed to seek a consensus and avoid searching for alternative courses of action. The group decision-making process may also have discussion sessions that do not encourage disagreements and critical analysis, leading to selecting a course of action that fails to consider potential dangers and pitfalls (Sims, 2002).

Are ideas expressed at meetings creative and original, or are original ideas discouraged?

The ideas expressed in meetings may lack creativity and originality. Such a scenario may occur due to compromise and indecisiveness. It happens when the least able member hampers the most qualified participants’ efforts, hindering their ability to think creatively. The decisions also lack originality, as some members are forced to adopt their colleagues’ resolutions (Sims, 2002).

What kind of group decision-making process is recommended to be used in meetings?

The group decision-making process I would recommend to be used in meetings that I have attended comprises eight stages, as discussed by Moshal (2009).

1. Identification of the problem – the need to make a decision is identified by locating the problem for which a decision is to be made.
2. Definition of the problem- this stage performs a thorough analysis of the problem enabling it to be defined as clearly as possible.
3. Specification of objectives – this step identifies the goals that will be achieved by solving the problem.
4. Data collection – relevant and reliable information is gathered to help define the problem and develop factual solutions.
5. Developing alternative courses of action – managers come up with various options that are evaluated to make the final decision.
6. Evaluation of alternative courses of action – The generated alternatives are thoroughly assessed to determine their efficiency, associated risks, the time consumed, and the availability of resources required to implement the options.
7. Selection of appropriate alternative – screening and critical evaluation is used to eliminate various options and remain with only a few. The final solution is selected if it is feasible, acceptable, practical, and simple.
8. Implementation of decisions – The chosen option is implemented with the help of necessary arrangements such as delegation authority, resource allocation, task assignment, and the establishment of control mechanisms.

Application of the Vroom-Yetton model to the supervisor’s decision

Managerial decision and decision-making style

Last year, at my workplace, the management had to decide whether to dismiss employees who had acted against the company’s policies. The workers were expected to be honest in charging customers for services rendered. However, they opted to defraud clients by overcharging them, thinking that the management would not realize. The organization’s leadership had not authorized increment of service fees; hence, the move was against the company policies. Some customers lodged complaints on the organization’s website to find out why the prices had been increased. The employees’ actions had the potential of costing the company regarding profit as customers could seek services from other firms. The management resolved to dismiss all the perpetrators. The decision was autocratic because the administration did not ask for input from other members of the organization. They did not give the dismissed employees a chance to explain their actions or ask for opinions from other members about the kind of punishment that the workers deserved.

Vroom-Yetton’s seven questions applied to the made decision

Answering the seven questions in Vroom-Yetton’s model and applying them to the decision tree diagram that it provides will help to identify its appropriate decision-making style.

1. 1. Did the issue have a quality requirement?

The issue had quality requirements because the nature of the required solution was critical.

2. 2. Did the managers have sufficient information to develop a high-quality decision?

The managers had adequate information to make a quality decision because of payment records, and the queries on the website offered sufficient data.

3. 3. Was the problem structured?

The problem was structured since the consequences of failing to adhere to company policies resulted in strict disciplinary actions.

4. 4. Could the acceptance of the decision by subordinates affect its implementation?

The approval would not affect its application as subordinates did not participate in hiring and firing employees.

5. 5. If the management was to decide by itself, was it reasonably confident that the subordinates would accept it?

All assistants were aware of the consequences that they would face if they failed to adhere to company policies. Thus, they were confident that their decision would be acceptable.

6. Did the subordinates share the organizational goals to be achieved by solving this problem?

All the subordinates’ personal goals of improving their performance were aligned with the corporate objective of achieving growth through increased revenues. The actions of the fired employees could hinder the achievement of this goal.

7. 7. Was conflict among subordinates likely to occur due to the selection of the solution?

Subordinates could not support actions that would jeopardize the performance of the company.

The answers indicate that the management could select any of the five different decision-making approaches. The results provided by the decision tree are A1 (Autocratic type 1), A11 (autocratic type 2), C1 (consultative type 1), C11 (consultative type 2), and G11 (group-based type 2) (Vroom, 1976). Therefore, the management was not wrong to use the autocratic style.

Recommendation given by this model regarding decision-making style

I would recommend the model to my supervisor as it would help to adopt a decision-making process that considers all the factors that affect an organization. The seven questions in the design ensure that important factors such as the level of team participation required and information availability are reviewed during the process. The model enables decision-makers to maintain a balance between achieving the benefits of participative decisions and the need to make effective decisions (Vroom, 1976). I am not surprised by the recommendations that the model has provided regarding the style used for this ruling. The management was justified to use it to demonstrate that they had the authority to prevent such a serious problem from occurring again.

References

Bolland, E., & Fletcher, F. (2012). Solutions: Business problem solving. New York, NY: Gower Publishing Ltd.

Buhler, P. (2001). Decision-making: A key to successful management. Supervision, 62(2), 13-15.

Hammond, J., Keeney, R., & Raiffa, H. (1998). The hidden traps in decision-making. Harvard Business Review, 76(5), 47-58.

Moshal, B. (2009). Decision making in an organization: Principles of management (Chapter 7). New Delhi, India: Global Professional Publishing Ltd.

Sims, R. R. (2002). Decision making: Managing organizational behavior (Chapter 8). Westport, CT: Greenwood Press.

Vroom, V. H. (1976). Can leaders learn to lead? Organizational Dynamics, 4(3), 17-28.