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In this document the learners in Team C compare and contrast the problem identification and formulation styles in their respective organizations. They discuss the strengths and weaknesses found in each decision style and consider the most favorable aspects of each style discussed in describing a process that facilitates a process in which problems can be identified and described to stakeholders with sensitivity to their perspectives.
Every day people take decisions of varying importance. Studies have shown that most people have poorer decision-making skills than they think. Understanding what the decision-making process involves will help them make logical decisions. The first step needed in order to achieve this goal is gaining an understanding the decision-making process. Decision-making allows the identification of as many alternatives as possible for choosing the one that has the highest probability of success based on the values and preferences of the decision maker. Very few decisions are taken with absolute certainty because complete knowledge regarding all possible alternatives is unrealistic; therefore, the decision-making process helps people to reduce the uncertainty about alternatives and select the most logical and reasonable one (Harris, 2008).
The most common decision-making styles are democratic, autocratic, collective-participative, and consensus. In the democratic style a decision maker gives up his or her control of a decision to a group. Autocratic style occurs when a decision maker maintains the ownership and control of a decision. Collective-participative style occurs when a decision maker encourages ideas and thoughts from others to make the best decision possible. Consensus style occurs when a decision maker gives up the ownership and control and allows the group to make the decision (Development Center Inc., 1997).
XYZ Protection Services Ltd. is a security company with a flat organizational structure. The company provides services to clients such as political figures, religious leaders, and celebrities; it also provides security at public events like the Super Bowl. The company’s Board of Directors comprises eight individuals who represent the interest of groups of associates in different departments. The Board meets weekly to discuss new and existing business and to make decisions that affect the operations. Decisions are taken by consensus among the members of the Board, with one member making a motion and another supporting it. The benefits of this method are that the interests of all functional areas are represented and the employees perceive it as being fair.
The Information Technology Department of a biotechnology company (ITD) was also observed. That department supports the company’s overall operations by using the “age of empowerment” decision making process as defined in the learning from the course material (Langdon, 2001). The various teams within the IT department propose business cases with lists of projects and budgets to their senior management, annually. Projects are selected based on feedback from other departments in the organization, obsolescence of existing technology or from the need to gain technological advantages that would improve productivity. Projects that are supported by senior management of the IT department but outside of their discretion require the approval of the Chief Financial Officer.
Stakeholders are involved at various stages of the decision-making process, ahead of the project start date and the organizational culture of transparency and collaboration allows the IT department control in making IT policies; however, in emergencies, some policy decisions are made using the “Attila the Hun” approach (Langdon, 2001). In the manufacturing company that was observed (MC), the organizational structure is flat. The Managing Director and majority shareholder has extensive knowledge of the business and directs the day-to-day activities within the organization from a remote location. That method of management is problematic and ideas are only requested from others after the Managing Director’s shove processes would have failed.
(DM) is a well-known leader in global foodservice retail with more than 30,000 locations which serve approximately 52 million people in more than 100 countries each day (McDonald’s USA, 2008). The decision-making process has been successfully used at McDonald’s. Oftentimes, distorted perceptions such as the ones caused by the act of stereotyping may lead individuals to take wrong decisions. An entity that is considered by its employees to be the fifth biggest fast-food company (JB) in the world has a Board of Directors that makes all the decisions regarding the direction of the company. Because the Board views employees as an essential asset, consideration is given to the impact of decisions on staff as well as customers.
In an ideal world everyone should follow the six-step rational decision-making model listed below:
1. Define the problem
2. Identify the decision criteria
3. Allocate weight to the criteria
4. Develop the alternatives
5. Evaluate the alternatives
6. Select the optimal alternative
Defining the problem represents the core of the decision-making process.
Recently, MC was reporting frequent shortages of raw material and alternative sources were found. The Managing Director decided to introduce the new method of procurement with minimum consultation with his Management Team. A meeting was not convened with the employees who would be impacted by the change and upon whom the company would be relying for the change to succeed. The process was chaotic and could have realized greater efficiencies if there was involvement of that stakeholder group before implementation.
DM identifies problems by avoiding the natural tendency to focus on one particular area. Because of it global reaches, and decentralized organizational design, the company can be flexible in responding to problems. Lower-level managers are empowered to take certain decisions for which they take ownership.
The main strength of the consensus approach used at XYZ company is that the decision makers will be in a position to encourage successful implementation the decisions. One drawback is the possibility for individuals to adopt “group think” or the framing bias, whereby they adopt a frame and limit their outlook. In the case of ITD, there is a tendency to shift the mode of decision making to suit the situation. Whilst that approach seems practical and effective in dealing with emergencies; there may be a sense of complacency in addressing issues before they escalate into crises.
In MC, the autocratic decision-making style does not always gain full team support and the organization is deprived of a vast pool of ideas. However, the team gets down to business as soon as the missives are issued. At DM, a decentralized organization, the decision-making is done at the employee level and there is a tendency for greater involvement of those who are best informed and more directly impacted. Further, a decentralized organization allows DM to be flexible and responsive (Robbins, 2005).
One of the drawbacks to DM’s process is that executives do not strictly follow set models. Sometimes, the phenomenon of bounded rationality impacts decision making Bounded rationality takes into account only specific features selected by decision makers without considering the complexity of the issue (Robbins, 2005). At JB, the Marketing Department pilots new products before roll out ; however there is a need for the Board to involve store managers in decision making and for efforts to be made to remove the perception that profit is the main priority. The bi-annual store managers meetings do not seem adequate to change that perception.
The collective or participative decision-making style is a very popular style; it allows issues to be resolved by using the brain power of several individuals. The collective or participative style also has the advantage that issues may be examined from different perspectives and therefore, the group can likely reach the best possible decision. However, the collective or participative style requires more time and, in some circumstances, it is possible that the group may not come up with a reasonable solution.
Because it is unrealistic to assume that decisions can be made with absolute certainty, a thorough decision-making process helps reduce uncertainty to ensure the most logical and reasonable decision is made (Harris, 2008). People and organizations constantly make decisions despite the fact that they often possess overrated decision-making skills. Regardless of the decision-making style, it is vital that the problem is defined, the decision criteria identified, weighted or prioritized, and alternatives developed and evaluated, before selecting the optimal alternative. It is important for the problem to be defined objectively to eliminate any blame games and for the recommended actions to include measures that would prevent or reduce the possibility of a reoccurrence. Combining this method of problem identification and formulation with the appropriate decision-making style for the organization and situation lends to a more effective and logical decision.
Development Center Inc. (1997). Decision making styles. Retrieved from http://www.leadershipmanagement.com/html-files/decision.htm
Harris, R. (2008, October). Introduction to decision making. Retrieved from http://www.virtualsalt.com/crebook5.htm
Langdon, K. (2001). Smart Things to Know About Decision Making. (p. 57) John Wiley & Sons, Ltd.
McDonald’s USA (2008). About McDonald’s. Retrieved on from http://www.McDonald’s.com/corp/about.html
Robbins, S.P. (2005). Organizational behavior (11th ed.). Upper Saddle River, NJ: Pearson Education
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