Management and Organisations Decision-Making Essay Introduction As a manager of a company, it is inevitable that one will have to make a variety of decisions throughout their career. Managers face decision-making every day, however, a lot of the time, these decisions may seem straightforward and the use of a formal decision-making process may seem unwarranted. The situation faced by the operations manager in this case study is very different. Here, the operations manager must make a decision about whether or not to implement new software to improve the workflow of staff at the expense of an employee who is the sole income earner in her family. The decision in question is rather complex and requires a systematic approach to decision-making before a decision can be reached. The situation at hand isn’t as simple as deciding whether or not the firm should invest in pricey new information technology software. The manager also faces an ethical dilemma, as this software will replace the job of a highly valued employee. This essay will highlight each step of the decision-making process and potential approaches the manager might take. Decision-Making Decision-making is defined by Schermerhorn et al. (2014) as the action of making choices between different strategies. Decision-making occurs in a process that can be broken down into five steps: finding and defining the problem, generating alternative solutions, evaluating the alternatives, implementing a solution and evaluating the results. The process is important as the success of organisations relies on good decision-making (Charlesworth 2013 p. 2). Rational Choice Paradigm McShane et al. (2014) introduces the notion of the rational choice paradigm, which has been prevalent in Western society for over 2500 years. The rational choice paradigm is the idea that in decision-making, individuals should and often do use logic and all the information accessible to choose the strategy with the highest value. This paradigm assumes that decision-makers follow the aforementioned process above. Whilst it is easy to assume that the rational choice paradigm is coherent, in reality it is difficult to implement. This difficulty comes from a number of causes, however, one is more predominant; firstly, decision-makers have difficulty within each of the steps outlined in the process of decisionmaking. For example, it may be difficult for the decision-maker to find a problem or identify an opportunity (pp. 204-205). Although it is evident that the rational choice paradigm is hard to put into effect, the idea behind it is very significant when faced with a decision as difficult to make as this. The operations manager in this instance needs to utilise all the data available to him to make a decision that is of the highest worth. Making decision-makers aware of the flaws in this paradigm can assist them in being more proactive when searching for problems and more careful about making a decision. Ethical Dilemmas in Decision-Making As previously mentioned, the operations manager of the small firm will potentially face an ethical dilemma. An ethical dilemma exists when a decision-maker is confronted by a decision between alternatives that, amongst other things, have noteworthy repercussions for stakeholders in the situations and create difficulties in the “balance between both economic and social performance of an organisation” (Wallace, cited in Paliwal 2006 p. 54). Ethical decision-making is a very complex process. This is partly due to the fact that there is no one distinct method or practice that can be adopted for all ethical decisions (Weiss 2014 p. 48). There is also a lot more that decision-makers need to consider and plan for. Ethical decisions can take a lot longer to make which can be scary, however it is imperative that all the time necessary is taken to ensure that all the details of the issue are looked over and accounted for. Finding and Defining the Problem Finding and defining the problem is the first step in the decision-making process. This is the stage where the decision-maker assesses the situation and collects and organises as much information as possible. The information accumulated must be relevant to the problem at hand; otherwise the decision-maker may begin to focus on details that aren’t of great importance in the scheme of things. This idea of focusing on the wrong details describes one of a number of common mistakes that decision-makers make when defining the problem; the cause of the problem should be the priority, not the indicators. Decision-makers also need to be cautious about the extent to which they define the problem. On one hand, if they define it too loosely it will be difficult to come to a solution that really targets the problem specifically. On the other hand, if the situation is defined to narrowly the decision-maker may overlook key details that are crucial to the problem remaining solved in the long-term (Schermerhorn et al. 2014 p. 163). Before making a decision on whether or not to employ the new software in the firm, the operations manager must research the software in question extensively. The manager needs to consider whether or not the software is going to be suitable to the type of work the organisation performs, whether the software is reliable and efficient and of course, whether it is worth the price. Whilst it may be something the manager chooses to do later on in other steps of the decision-making process, the manager should not focus on exploring his options in regards to the employee who may lose her job, in this stage of the process - this is a separate issue. Generating Alternative Solutions Once the manager has sought out all of the relevant information, he can move on to the second step of the decision-making process - generating alternative solutions. During this stage the manager needs to come up with a list of different choices he could make in regards to the dilemma he faces. In this phase, the manager must also make another decision; does he involve other employees in his decision? Group decision-making does have a number of advantages including the access to more information and opinions, access to a wider range of alternatives and an increase in the acceptability of the decision as more people feel they have had the opportunity to voice their opinions on the matter (Encyclopaedia of the Mind). Despite the obvious benefits of working in a team to come to decisions, there are also major drawbacks. There can be added pressure to agree with and follow the opinions of majority groups and typically the overall time needed to come to a decision increases significantly (Schermerhorn et al. 2014 p.166). All things considered, in this situation it may be of greater benefit for the operations manager to make this decision on his own due to the ethical problem involved. At the very least he should limit the number of people involved to only those necessary. If there were people involved unnecessarily and the information was to spread office tension could potentially surface, creating a toxic environment. During this phase, the operations manager needs to think about the different solutions he could implement. It is during this stage that the manager may begin to explore his options regarding the employee who may lose her job. Of course there is the option of installing the software and eventually laying off the employee whose position would be made redundant, however, this option presents the aforementioned ethical dilemma that the manager will then need to consider. In the event of this situation, the operations manager needs to also consider ways in which he could dissolve, even slightly, the ethical issues. His options here include offering the employee a redundancy package or retraining the employee and offering her opportunities in a new field of work within the organisation. There is also an alternative option; choosing to forego the new software. Instead, the operations manager may choose to leave the situation as it is or he may decide to look into further training for the employee in this position so that she is able to perform her job more efficiently and effectively. Potentially, he could achieve the same or similar results with this method as he could by installing the software, but he must assess whether or not it is worth taking this risk as the firm could struggle given the implementation of an ill suited solution. Evaluating the Alternatives and Choosing One to Pursue Once all the possible solutions are thought out, it is necessary to evaluate each one to come to a decision about which alternative to pursue. Often, decision-makers may partake in cost-benefit analysis, however, this should not be the only thing considered when deciding on a solution to pursue. There are a number of evaluation criteria to take into consideration when assessing each solution, as well as a number of strategies to consider and some to be weary of. Important criteria to think about when evaluating each alternative include benefits, costs, timeliness, acceptability and ethical soundness (Schermerhorn 2014 p. 163). To put these analysis criteria into context, consider one of the options mentioned previously; the operations manager chooses to install the software and lay off the employee whose job has been made redundant. The benefits in this situation would be that the company would hopefully experience increased effectiveness and efficiency in the workflow of staff. This increase could translate to improvements in the growth of the firm further on down the track. Alternatively, there are the costs to consider. Implementing the software will not only cost the organisation economically, but it could impact on the image and reputation of the firm, depending on how exactly the manager handles laying off the employee. Timeliness refers to how soon the firm can expect to see the benefits. With the introduction of new software, the manager could easily assume that it would certainly take less time to see the benefits than if he were to retrain the employee who is in this position currently. The final two criteria are acceptability and ethical soundness. The manager needs to consider how others might perceive the situation when they hear about it and how he may handle these reactions. It is also crucial that the manager contemplates whether he would be happy with his decision being talked about by the public, as if he believes that it could make him and the organisation look bad, it could have a detrimental impact on the organisation. It is exceptionally important that when making a decision as important and as serious as this, managers are aware of a number of different issues and traps. It is also critical that decision-makers take time to make their decision as making a decision quickly and haphazardly is sure to have serious implications. There are possible biases that may impact on the overall effectiveness of the decision chosen. The rational choice paradigm also assumes that decision-makers take into account all the information they are presented with when making a decision. One issue is that more often than not, only a few alternatives are properly evaluated, which effectively limits the options available to the decision-maker and, in turn the effectiveness of the decision chosen (McShane et al. 2014 p. 208). Another issue that the text highlights is that decision-makers often analyse their options sequentially instead of all at once. When a manager unknowingly does this, they begin to compare each alternative to an alternative that they already prefer subconsciously. Considering the number of alternatives that the manager has available to him in this particular instance is small, these issues may not be very harmful to the decision-making process he follows however, awareness is absolutely crucial. Another issue that is worth noting is that of satisficing. McShane et al. (2014) defines satisficing as when a decision-maker chooses an alternative that is merely satisfactory rather than the option that is the best. Avoiding satisficing can be difficult, especially when making a decision like this can be so time consuming. It is incredibly important, however, to implement the alternative that is best for the organisation and not just the easiest as choosing the wrong alternative can be costly in more ways than one. It is also important to be aware of the use of heuristics. Heuristics are rules-of-thumb or short cuts that can help make the decision-making process faster (Schermerhorn 2014 p.165). Heuristics can be used to make the decision-making process easier, however, they can also result in decisionmakers straying from ideal options as they aren’t always dependable (Frankl 2015 p. 1; Astebro & Elhedli 2006 p. 396). One particular heuristic that can be applied to this case is the availability heuristic. The availability heuristic involves decision-makers using information and data that are already accessible to them (typically from memory) as a way of forming judgements on a particular situation (Schermerhorn et al. 2014 p.165). Using information that is available from memory can create a possible bias as this information is not necessarily true about the current situation. For example, in this instance the operations manager must assess whether or not the new and expensive information technology software is worth implementing. If the manager had, in previous years, looked at similar softwares that he then deemed to be unsuitable, he may make similar assumptions about the new software if he decided to take a shortcut and not thoroughly research the new software. The lack of information available in the case study makes it difficult to comment on a final decision for the firm. However, all in all the decision chosen needs to be the best alternative for the company overall. Despite the obvious ethical issues that the operations manager faces, there are a number of options available to him that can help make the idea of laying off an employee somewhat less ‘unethical’ as previously mentioned. Implementing the Chosen Solution and Evaluating the Results Depending on how the manager decides to handle the situation he is presented with, implementing the chosen solution could be somewhat difficult to do. Considering the alternatives highlighted previously, the manager may choose to install software to improve the organisation. If this was the case, he would need to contact the providers of this software about having it installed. He would also need to have come to a decision about how we would manage the situation involving the employee being laid off; this would involve intensive discussion with her. Of course, if the decision was to abandon the idea of the software the manager may need to organise training and courses with the employee instead. Once the alternative has been implemented into the organisation, it is essential that the manger continues to monitor its success (or failure) over time (McShane 2014 p. 210). This phase of the decision-making process can be difficult if the decision-maker looks at the situation broadly. For this reason, putting comprehensible objectives in place can facilitate the evaluation stage. If the decision’s expected results aren’t attained intervention may be necessary to avoid greater costs further on in the firm’s lifetime. Evaluating the results of a decision over time helps organisations to avoid an error referred to as an escalation of commitment. Escalating commitment is easy to do; it has to do with not seeing the predicament fast enough “Escalation of commitment is considered a decision-making bias and if often seen as an economically irrational act,” (Encyclopaedia of Group Processes and Intergroup Relations). It involves keeping up with a decision that is known to not be achieving the desired result. Escalation of commitment can be pernicious to the firm as it is costly, not only in an economical sense; there will be no improvement to the workflow of staff which could potentially damage other areas of the organisation, such as the firms reputation. Conclusion The decision-making process can be a very time consuming and touch process, especially when the situation at hand presents an ethical dilemma such as choosing between an expensive piece of technology and a valued employee. Whilst in this instance it was difficult to come to a final conclusion due to lack of information, it is important that when faced with such a decision, to ensure take your time, list and consider as many relevant alternatives as possible before making a final choice. It is also crucial that the time and effort is put into evaluating the choice and ensuring that it was indeed a suitable fit. Word Count: 2713 Bibliography Astebro, T & Elhedhli, S 2006, ‘The Effectiveness of Simple Decision Heuristics: Forecasting Commercial Sucess for Early-Stage Ventures’, Management Science, vol. 52, no. 3, pp. 395-405. Charlesworth, D 2013, Decision Analysis for Managers: A Guide for Making Better Personal and Business Decisions, Business Expert Press. Available from: OneSearch [15 August 2015] Frankl, M 2015, Business Decision-Making: Streamlining the Process for More Effective Results, Business Expert Press. Available from: OneSearch [24 August 2015] McShane, S, Olekalns, M, Travaglione, T 2014, Organisational Behaviour : Emerging Knowledge : Global Insights., 4th edn. New South Wales, Australia. Paliwal, M 2006, Business Ethics, New Age International Pvt. Ltd., Publishers. Available from: OneSearch. [15 August 2015] Schermerhorn, JR, Davidson, P, Poole, D, Woods, P, Simon, A, McBarron, E 2014, Management Foundations And Applications, 2nd edn. Milton, Queensland. Weiss, JW 2014, Business Ethics: A Stakeholder and Issues Management Approach, 6th edn. Berrett-Koehler Publishers, California. Available from: OneSearch. [17 August 2015]
Decision Making Tools And Techniques Essay
One of the key roles of being a manager or potential manager is solving problems and making decisions. Do you do it alone? Do you involve others? Do you let others make the decisions? "Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker. Making a decision implies that there are alternative choices to be considered, and in such a case we want not only to identify as many of these alternatives as possible but to choose the one that best fits with our goals, objectives, desires, values, and so on." (Harris, 1998).
There are many different methods and techniques that are used by managers to help them make decisions. One of the most common methods is the Pros and Cons analysis. A Pros and cons analysis is a qualitative comparison method in which good things (pros) and bad things (cons) are identified about each alternative. Lists of the pros and cons are compared one to another for each alternative. The alternative with the strongest pros and weakest cons is preferred. It requires no mathematical skill and is easy to implement. (Baker, 2002).
A closely related method to the pros and cons analysis is the PMI method. PMI stands for "Plus/Minus/Interesting" and is a variation of the pros and cons technique adding a third possibility called "interesting." It is a valuable development (by Edward de Bono) of the pros and cons technique that has been used for centuries. PMI is a basic decision making tool that can be used when facing a difficult decision. It is used by simply drawing up a table with three separate sections titled "Plus", "Minus", and "Interesting." In the column underneath the "Plus" heading, the decision maker should write down all the positive points of taking the action. Underneath the "Minus" heading the decision maker should write down all the negative effects. In the "Interesting" column the decision maker should write down the extended implications of taking the action, whether positive or negative.
The individual may be able to make a decision just from the table they have drawn up. Alternatively, they should consider each of the points they have written down and assign a positive or negative score to each appropriately. The scores they assign can be entirely subjective. Once they have done...
Loading: Checking Spelling0%