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MB 02
ORGANIZATIONAL BEHAVIOUR
BLOCK 1 ORGANIZATIONAL STRUCTURE AND PROCESSES
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Unit 1 Organisational Structure and Design 2 Unit 2 Motivation 21 Unit 3 Organisational Change 38 Unit 4 Decision Making Process 60
1.1 Introduction
Every organisation made up of more than one person will need some form of organisational structure. An organisational chart shows the way in which the chain of command works within the organisation. The right organizational structure can play an important role in an organization's evolution. This chapter introduces the elements of organizational structure. Objectives At the end of this unit, you will be able to: Define Organisation Structure Explain the Organisational Process List the types of structure Describe Organisational Design
Review plans and objectives. Objectives are the specific activities that must be completed to achieve goals. Plans shape the activities needed to reach those goals. Managers must examine plans initially and continue to do so as plans change and new goals are developed.
Determine the work activities necessary to accomplish objectives. Although this task may seem overwhelming to some managers, it doesn't need to be. Managers simply list and analyze all the tasks that need to be accomplished in order to reach organizational goals. Classify and group the necessary work activities into manageable units. A manager can group activities based on four models of departmentalization: functional, geographical, product, and customer. Assign activities and delegate authority. Managers assign the defined work activities to specific individuals. Also, they give each individual the authority (right) to carry out the assigned tasks. Design a hierarchy of relationships. A manager should determine the vertical (decision-making) and horizontal (coordinating) relationships of the organization as a whole. Next, using the organizational chart, a manager should diagram the relationships.
Above: A Traditional Hierarchical Organizational Structure Managers must make choices about how to group people together to perform their work. Five common approaches functional, divisional, matrix, team, and networkinghelp managers determine departmental groupings (grouping of positions into departments). The five structures are basic organizational structures, which are then adapted to an organization's needs. All five approaches combine varying elements of mechanistic and organic structures. For example, the organizational design trend today incorporates a minimum of bureaucratic features and displays more features of the organic design with a decentralized authority structure, fewer rules and procedures, and so on. Functional structure The functional structure groups positions into work units based on similar activities, skills, expertise, and resources (see Figure 1 for a functional organizational chart). Production, marketing, finance, and human resources are common groupings within a functional structure.
As the simplest approach, a functional structure features well-defined channels of communication and authority/responsibility relationships. Not only can this structure improve productivity by minimizing duplication of personnel and equipment, but it also makes employees comfortable and simplifies training as well. But the functional structure has many downsides that may make it inappropriate for some organizations. Here are a few examples: The functional structure can result in narrowed perspectives because of the separateness of different department work groups. Managers may have a hard time relating to marketing, for example, which is often in an entirely different grouping. As a result, anticipating or reacting to changing consumer needs may be difficult. In addition, reduced cooperation and communication may occur. Decisions and communication are slow to take place because of the many layers of hierarchy. Authority is more centralized. The functional structure gives managers experience in only one fieldtheir own. Managers do not have the opportunity to see how all the firm's departments work together and understand their interrelationships and interdependence. In the long run, this specialization results in executives with narrow backgrounds and little training handling top management duties. Divisional structure
Because managers in large companies may have difficulty keeping track of all their company's products and activities, specialized departments may develop. These departments are divided according to their organizational outputs. Examples include departments created to distinguish among production, customer service, and geographical categories. This grouping of departments is called divisional structure (see Figure 2 ). These departments allow managers to better focus their resources and results. Divisional structure also makes performance easier to monitor. As a result, this structure is flexible and responsive to change.
However, divisional structure does have its drawbacks. Because managers are so specialized, they may waste time duplicating each other's activities and resources. In addition, competition among divisions may develop due to limited resources.
Matrix structure The matrix structure combines functional specialization with the focus of divisional structure (see Figure 3 ). This structure uses permanent cross-functional teams to integrate functional expertise with a divisional focus.
Employees in a matrix structure belong to at least two formal groups at the same timea functional group and a product, program, or project team. They also report to two bossesone within the functional group and the other within the team. This structure not only increases employee motivation, but it also allows technical and general management training across functional areas as well. Potential advantages include Better cooperation and problem solving. Increased flexibility. Better customer service. Better performance accountability. Improved strategic management. Predictably, the matrix structure also has potential disadvantages. Here are a few of this structure's drawbacks: The two-boss system is susceptible to power struggles, as functional supervisors and team leaders vie with one another to exercise authority. Members of the matrix may suffer task confusion when taking orders from more than one boss. Teams may develop strong team loyalties that cause a loss of focus on larger organization goals. Adding the team leaders, a crucial component, to a matrix structure can result in increased costs. Team structure Team structure organizes separate functions into a group based on one overall objective (see Figure 4 ). These cross-functional teams are composed of members from different departments who work together as needed to solve problems and explore opportunities. The intent is to break down functional barriers among departments and create a more effective relationship for solving ongoing problems.
The team structure has many potential advantages, including the following: Intradepartmental barriers break down. Decision-making and response times speed up. Employees are motivated. Levels of managers are eliminated. Administrative costs are lowered. The disadvantages include: Conflicting loyalties among team members.
Time-management issues. Increased time spent in meetings. Managers must be aware that how well team members work together often depends on the quality of interpersonal relations, group dynamics, and their team management abilities. Network structure The network structure relies on other organizations to perform critical functions on a contractual basis (See Figure 5). In other words, managers can contract out specific work to specialists.
This approach provides flexibility and reduces overhead because the size of staff and operations can be reduced. On the other hand, the network structure may result in unpredictability of supply and lack of control because managers are relying on contractual workers to perform important work.
Check your progress 3. What are the various types of organizational structure _____________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________________________________________
industry functioning in a dynamic environment is electronics. Technology changes create competitive pressures for all electronics industries, because as technology changes, so do the desires of consumers. e) Technology Advances in technology are the most frequent cause of change in organizations since they generally result in greater efficiency and lower costs for the firm. Technology is the way tasks are accomplished using tools, equipment, techniques, and human know-how. Small-batch production is used to manufacture a variety of custom, made-to-order goods. Each item is made somewhat differently to meet a customer's specifications. A print shop is an example of a business that uses small-batch production. Mass production is used to create a large number of uniform goods in an assembly-line system. Workers are highly dependent on one another, as the product passes from stage to stage until completion. Equipment may be sophisticated, and workers often follow detailed instructions while performing simplified jobs. A company that bottles soda pop is an example of an organization that utilizes mass production. Organizations using continuous-process production create goods by continuously feeding raw materials, such as liquid, solids, and gases, through a highly automated system. Such systems are equipment intensive, but can often be operated by a relatively small labor force. Classic examples are automated chemical plants and oil refineries. f) Employee skills: Matrix structures are particularly suited to organisations where the employee skill level is high. g) Leadership style: If the owners of a business wish to keep as much control over their business as possible there will be a narrow span of control whereas those who wish to motivate their teams may delegate decision-making to others and therefore have a wider span of control. h) Business objectives: If a company decides to expand quickly, through a merger or acquisition, the span of control will become much wider. i) External factors: A recession may cause the need to cut back and make many roles redundant. This can result in layers of management being taken out of the business reducing the chain if command and making the organisation much flatter.
Check your progress 4. State the factors affecting organizational structure _____________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________________________________________
The process of corporate restructuring often occurs after buy-outs, corporate acquisitions, takeovers or bankruptcy. It can involve a significant movement of an organizations liabilities or assets. d) Centralisation versus Decentralisation. Centralisation is the process by which the activities of an organization, particularly those regarding decision-making, become concentrated within a particular location and/or group. Decentralisation is where the decision making responsibility is given to more operational managers, lower down the organisation. Advantages of Centralised Structure Advantages of Decentralised Structure For Organisations For Organisations Senior managers enjoy greater control Senior managers have time to over the organisation. concentrate on the most important decisions (as the other decisions can be undertaken by other people down the organisation structure. The use of standardised procedures can Decision making is a form of results in cost savings. empowerment. Empowerment can increase motivation and therefore mean that staff output increases. Decisions can be made to benefit the organisations as a whole. Whereas a decision made by a department manager may benefit their department, but disadvantage other departments. People lower down the chain have a greater understanding of the environment they work in and the people (customers and colleagues) that they interact with. This knowledge skills and experience may enable them to make more effective decisions than senior managers.
The organisation can benefit from the Empowerment will enable departments decision making of experienced senior and their employees to respond faster to managers. changes and new challenges. Whereas it may take senior managers longer to appreciate that business needs have changed. In uncertain times the organisation will Empowerment makes it easier for people need strong leadership and pull in the to accept and make a success of more same direction. It is believed that strong responsibility leadership is often best given from above.
Check your progress 5. What is organizational Design? Explain its key concepts _____________________________________________________________________________________________________________________________________________________ _____________________________________________________________________________________________________________________________________________________
Self assessment Questions 1. Describe Centralisation versus Decentralisation. _____________________________________________________________________________________________________________________________________________________ 2. What is Departmentalization? _____________________________________________________________________________________________________________________________________________________ 3. Explain Traditional Hierarchical Organizational Structure. _____________________________________________________________________________________________________________________________________________________ 4. Explain Organization Life Cycle. _____________________________________________________________________________________________________________________________________________________
1.8 Summary
The working relationships vertical and horizontal associations between individuals and groups that exist within an organization affect how its activities are accomplished and coordinated. Effective organizing depends on the mastery of several important concepts: work specialization, chain of command, authority, delegation, span of control, and centralization versus decentralization.
Reference: www.ebsglobal.net/programmes/organisational-behaviour www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.
Unit 2 - Motivation
Structure 2.1 Introduction 2.2 Objectives of Directing - Motivation 2.3 Meaning of Motivation 2.4 Nature of Motivation 2.5 Process of Motivation 2.6 Importance of Motivation 2.7 Maslows Needs Hierarchy 2.8 McGregers Theory X and Theory Y 2.9 Herzbergs Motivation Hygiene Theory 2.10 Summary 2.11 Answer to Questions
2.1 Introduction In this unit we will understand the use of motivation in management context. Motivation is an integral part of direction. No organization can perform its optimum without self motivated employees. Since motivation influences productivity, supervisors need to understand what motivates employees to reach peak performance. It is not an easy task to increase employee motivation because employees respond in different ways to their jobs and their organization's practices. Every organization is derived through this element. This important step can profoundly affect an organisation's success.
The most effective motivation for employees comes from within each employee, i.e., self-motivation. Possible indicators of self-motivation include: past accomplishments in school, sports, organizations and work; stated career goals and other kinds of goals; expertise in one or more areas that shows evidence of craftsmanship, pride in knowledge and abilities, and self-confidence; an evident desire to continue to learn; and a general enthusiasm for life. Threats, bribery, manipulation and coercion have only limited usefulness beyond the very short-run in changing behaviour in the farm environment. More effective employer action responds to employee needs, making their work useful to satisfying their needs, helping employees understand the relationship between their contribution to success of the farm and rewards received, and creating an atmosphere of equity and fairness.
Maslow's Hierarchy of Needs identifies five levels of needs, which are best seen as a hierarchy with the most basic need emerging first and the most sophisticated need last. People move up the hierarchy one level at a time. Gratified needs lose their strength and the next level of needs is activated. As basic or lower-level needs are satisfied, higher-level needs become operative. A satisfied need is not a motivator. The most powerful employee need is the one that has not been satisfied. Abraham Maslow first presented the five-tier hierarchy. Level I - Physiological needs are the most basic human needs. They include food, water, and comfort. The organization helps to satisfy employees' physiological needs by a pay cheque. Level II - Safety needs are the desires for security and stability, to feel safe from harm. The organization helps to satisfy employees' safety needs by benefits. Level III - Social needs are the desires for affiliation. They include friendship and belonging. The organization helps to satisfy employees' social needs through sports teams, parties, and celebrations. The supervisor can help fulfil social needs by showing direct care and concern for employees. Level IV - Esteem needs are the desires for self-respect and respect or recognition from others. The organization helps to satisfy employees' esteem needs by matching the skills and abilities of the employee to the job. The supervisor can help fulfil esteem needs by showing workers that their work is appreciated. Level V - Self-actualization needs are the desires for self-fulfilment and the realization of the individual's full potential. The supervisor can help fulfil self-actualization needs by assigning tasks that challenge employees' minds while drawing on their aptitude and training.
Comments on Theory X and Theory Y Assumptions These assumptions are based on social science research which has been carried out, and demonstrate the potential which is present in man and which organizations should recognize in order to become more effective. McGregor sees these two theories as two quite separate attitudes. Theory Y is difficult to put into practice on the shop floor in large mass production operations, but it can be used initially in the managing of managers and professionals. In "The Human Side of Enterprise" McGregor shows how Theory Y affects the management of promotions and salaries and the development of effective managers. McGregor also sees Theory Y as conducive to participative problem solving. It is part of the manager's job to exercise authority, and there are cases in which this is the only method of achieving the desired results because subordinates do not agree that the ends are desirable. The situation in which employees can be consulted is one where the individuals are emotionally mature, and positively motivated towards their work; where the work is sufficiently responsible to allow for flexibility and where the employee can see her or his own position in the management hierarchy. If these conditions are present, managers will find that the participative approach to problem solving leads to much improved results compared with the alternative approach of handing out authoritarian orders. Once management becomes persuaded that it is under estimating the potential of its human resources, and accepts the knowledge given by social science researchers and displayed in Theory Y assumptions, then it can invest time, money and effort in developing improved applications of the theory. McGregor realizes that some of the theories he has put forward are unrealizable in practice, but wants managers to put into operation the basic assumption that: Staff will contribute more to the organization if they are treated as responsible and valued employees. Check your progress 4. What is Maslows hierarchy of needs?
Frederick Herzberg, contributed to human relations and motivation two theories of motivation as follows: Hygiene Theory Motivation Herzbergs' first component in his approach to motivation theory involves what are known as the hygiene factors and includes the work and organizational environment. These hygiene factors include: The organization Its policies and its administration The kind of supervision (leadership and management, including perceptions) which people receive while on the job Working conditions (including ergonomics) Interpersonal relations Salary Status Job security These factors do not lead to higher levels of motivation but without them there is dissatisfaction. The second component in Herzbergs' motivation theory involves what people actually do on the job and should be engineered into the jobs employees do in order to develop intrinsic motivation with the workforce. The motivators are Achievement Recognition Growth / advancement Interest in the job These factors result from internal instincts in employees, yielding motivation rather than movement. Both these approaches (hygiene and motivation) must be done simultaneously. Treat people as best you can so they have a minimum of dissatisfaction. Use people so they get achievement, recognition for achievement, interest, and responsibility and they can grow and advance in their work. Therefore, the hygiene and motivation factors can be listed as follows: Hygiene factors Company policies and administration Supervision Working conditions and interpersonal relations Salary, status and security Motivators Achievement Recognition for achievement Interest in the task Responsibility for enlarged task Growth and advancement to higher level tasks Effects on Individuals of Working Environment The working environment has an effect on individuals as follows: It will provide at least sufficient for his basic needs and often much more. For example, 50 years ago in the United Kingdom, food and shelter were a person's basic needs. Today, most families will consider that the basic needs also include a car, television, overseas holiday, etc. It may or may not provide adequate security. Again, most individuals seek a secure job, there are others including some men on oil rigs, who seek high pay for a limited period but with limited security.
It provides an individual with an identity. As a member of an organization, he carries out a specific function. It also gives the worker comradeship, freedom from boredom, and an interest during his working life. It also provides self-fulfilment for individual where consideration has been given to ensure that the job is creative and gives job satisfaction. It provides the individual with status. There is a status in all jobs. Providing the job content is investigated to make the work more interesting. Effects on Work Groups of Working Environment Rensis Likert has already described how the various management styles in an organization can affect the groups in an organization. Whilst the working environment will affect individuals, it will undoubtedly have a greater effect on working groups, since whilst an individual may have certain needs, he will not obtain those needs if the working environment does not provide the needs of the working group. The working group is the instrument of society through which in large measure the individual acquires his attitudes, opinions, goals and ideals; it is also one of the fundamental sources of discipline and social controls. Therefore, the working environment has an effect on groups as follows: It will affect the morale of the group. It will determine whether the group achieves the objectives set by the organization. It It It It will will will will determine whether the degree of cooperation provided by the group motivate the group to give of their best. determine whether the human relations within an organization are good or bad. also affect the relations between management and trade unions.
Check your progress 6. Explain Herzbergs Motivation Hygiene Theory ______________________________________________________________ _____________________________________________________________________________________________________________________________________________________
Self assessment Questions 1. How working environment affects the work groups in the organization? _____________________________________________________________________________________________________________________________________________________ 2. Explain objectives of motivation. _____________________________________________________________________________________________________________________________________________________
2.10 Summary
This unit emphasized on motivation and it different shades. The only way you can find out what truly motivates your staff is: Asking your employees what motivates them Monitoring the changes in work levels as a result of your motivational philosophy Once you know what makes your employees tick you can formulate a management style which will assist to motivate your staff. For many employers or managers this task is simple, but for many it has been continuous learning process.
Reference: www.ebsglobal.net/programmes/organisational-behaviour www.nwlink.com/~donclark/leader/leadob.html www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.
3.1 Introduction
In a knowledge-powered environment it is an organisations ability to successfully cope with change that gives it a competitive edge. Objectives At the end of this unit, you will be able to: Define Change management List the elements of change State the types of resistance Define Restructuring organisations
3.2 Motivation
Critical to success is the ability to motivate employees with people-friendly HR policies and bring synergies in individual and organisational goals. Motivation means different things to different employees. Money is often the biggest motivator, more so at lower levels in an organisations hierarchy. For some, chances of moving ahead in a chosen career, and reaching positions of power and influence are major motivators. Motivation helps to achieve goals, gain a positive perspective and build self-esteem and capability. Demotivators Employees feel demotivated because of inadequate infrastructure, outdated equipment and entrenched attitudes amongst others. Motivators An improved rewards and recognition system More interesting work More efficient bosses Greater participation and challenges More opportunities for development They can be ascertained through performance appraisals, informal conversations, and attitude surveys. It is however crucial to cultivate a climate of honesty, openness and trust. On the job Convey concern: Convey to employees the organisations concerns and intention. Extend support: Make the staff understand the levels of support they can expect from the organisation. Earn respect: Earn respect by setting an example. Cash, low on the list: Studies reveal that cash incentives and fringe benefits motivate new employees more than existing employees. Focus on individual growth: Consider policies and incentives that positively affect work, promotion, reward and recognition, effective participation, and employee involvement.
Check your progress 1. What is Change Management? _____________________________________________________________________________________________________________________________________________________ 2. State various levels of resistance for change _____________________________________________________________________________________________________________________________________________________
Another kind of response that is also observed in matters of change is the group response. People belonging to a group show their attachment by joining in a uniformed response to change. This response may sometimes result in walkouts, strikes and demands. Basically, they respond in a we are all in this together attitude. The group also tries to maintain equilibrium in an attempt to return to its normal life. This results in a counter pressure within the group, which is a self-correcting measure. Such self-correcting measures to restore balance whenever change comes in are called homeostasis. Footnote Changes come in with some costs, which are not just economic, but also are psychological and social. Economic: Costs associated with change need to be analysed. The cost-benefit should be considerable and the benefits should always be greater than the costs. Psychological: These costs are also referred to as psychic costs as change affects the inner self or psyche of the employee. Costs of this nature can be debilitating as they may also affect the physical health of the employee.
Who is responsible? Change agents are primarily responsible for any change within the organisation. Can be managers or non-managers, employees or outside consultants. The most favoured are outsiders who can challenge the organisation's conventional wisdom. Doubtless to say, outsiders offer objective perspective than the insiders, but are handicapped with inadequate understanding of the organisation, its history, culture, operating procedures and personnel. Thus it is advisable also to have an internal champion for the change program to succeed. Traits of the change agent Promote change actively and enthusiastically. Build support for change within the organisation. Overcome resistance. Innovative. Self-confident. Persistent. Energetic. Willing to take a risk.
Effective Execution Implementation requires time and concerted effort across the organisation. Deadlines must be met while restructuring, and managers must be made accountable. Effective execution communicates a sense of decisiveness and commitment. The restructuring is sustainable only if it enables changes in compensation, new skill requirements, career path and expectations. Organisations can effectively implement change by using New wave restructuring to retain their competitive edge.
Getting started: As doctors do, an organisation first recognises the problem or symptoms that led to the decline in productivity, quality or market share, drop or disappearance of projects and increased absenteeism or turnover. Once such serious problems are observed, one has to decide the course of action and resources required to fix the problem. Often, for a quick fix, an organisation sends its members to attend seminars and host training programmes to address the problem. Nevertheless, since this doesn't address the root of the problem, the problem continues to persist. This leads to indifference. After a while, employees start expecting nothing from the management and cynicism sets in. For the best results, however, employees must implement recommendations made by the management or by outside resources. The external resource must necessarily be neutral, knowledgeable in team assessment and capable of giving guidance. Assess breadth of the problem and identify causes: Use surveys to determine the breadth and depth of your organisation's symptoms. The former can be divided into: Symptoms within just a few groups: These causes concern the goals, roles and relationships within a team. Intra and intra-group symptoms: Issues that cause negative effects between teams such as a disagreement over responsibilities, allocation of scarce resources and power conflicts are the focus of attention here. Pan-organisation symptoms: Such illnesses could be the result of organisational structure, compensation, management style, performance appraisal, and employee selection process, authority or communication patterns, among others. In fact, the more widespread the organisational sickness, the greater is the possibility of these being the causes. Choose treatments and use them Treating intra-group problems: If problems within a group exist, they can be treated by clarifying roles, setting goals, solving problems and training in small group skills. Treatments for inter-group problems: Peace can be restored within such groups by inter-group teambuilding, where members discuss their problems and arrive at a solution; establishing cross-functional teams to deal with "bridge" issues that cut across organisational lines. Treatments for changing organisation-wide, systems issues: These include changing the organisational structure to be more customer-based, changing market focus and the organisation's strategic plan, among others. Periodic evaluation Organisational health must be aligned with established measures of success, and checkups ought be conducted periodically. Change is an also an integral part of organisational growth and essential for its survival. The question here, however, is not whether to change but when and how it can be brought in successfully. Ironically, man, whose second nature is adaptability resists changes in work environment and of course sometimes at home too. Thus to manage and implement change fruitfully, is a crucial matter. Managers need to be equipped with their most logical arguments and persuasive skills to support it. To be able to handle such situations, it is pertinent to know the nature of and responses to work changes. Check your progress 8. Write a short note on Organisational Health
Self Assessment Questions 1. Define Goals for Change. _____________________________________________________________________________________________________________________________________________________ 2. Explain Corporate Sickness. _____________________________________________________________________________________________________________________________________________________
3.14 Summary
Change is of two types- minor and major. The daily changes are predictable and come under the minor category, where the employees need not make drastic adjustments. The equilibrium, in such situations is reached readily. Major changes like hostile takeovers, buyouts and subsequent organisational restructuring, reengineering, naturals disaster like oil spills and gas leaks, take a longer time to reach a new equilibrium. The onus is on the managers to guide the employees through the emotional shock that usually accompanies such changes.
7. See Section 3.9 8. See Section 3.12 Reference: www.ebsglobal.net/programmes/organisational-behaviour www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.
1. Define the problem The decision-making process begins when a manager identifies the real problem. The accurate definition of the problem affects all the steps that follow; if the problem is inaccurately defined, every step in the decision-making process will be based on an incorrect starting point. One way that a manager can help determine the true problem in a situation is by identifying the problem separately from its symptoms. The most obviously troubling situations found in an organization can usually be identified as symptoms of underlying problems. (See Table 1 for some examples of symptoms.) These symptoms all indicate that something is wrong with an organization, but they don't identify root causes. A successful manager doesn't just attack symptoms; he works to uncover the factors that cause these symptoms.
2. Identify limiting factors All managers want to make the best decisions. To do so, managers need to have the ideal resources information, time, personnel, equipment, and supplies and identify any limiting factors. Realistically, managers operate in an environment that normally doesn't provide ideal resources. For example, they may lack the proper budget or may not have the most accurate information or any extra time. So, they must choose to satisfice to make the best decision possible with the information, resources, and time available. 3. Develop potential alternatives Successful problem solving requires thorough examination of the challenge, and a quick answer may not result in a permanent solution. Thus, a manager should think through and investigate several alternative solutions to a single problem before making a quick decision. One of the best known methods for developing alternatives is through brainstorming, where a group works together to generate ideas and alternative solutions. The assumption behind brainstorming is that the group dynamic stimulates thinking one person's ideas, no matter how outrageous, can generate ideas from the others in the group. Ideally, this spawning of ideas is contagious, and before long, lots of suggestions and ideas flow. Brainstorming usually requires 30 minutes to an hour. 4. Analyze the alternatives The purpose of this step is to decide the relative merits of each idea. Managers must identify the advantages and disadvantages of each alternative solution before making a final decision. Evaluating the alternatives can be done in numerous ways. Here are a few possibilities: Determine the pros and cons of each alternative. Perform a cost-benefit analysis for each alternative. Weight each factor important in the decision, ranking each alternative relative to its ability to meet each factor, and then multiply by a probability factor to provide a final value for each alternative. Regardless of the method used, a manager needs to evaluate each alternative in terms of its Feasibility Can it be done? Effectiveness How well does it resolve the problem situation? Consequences What will be its costs (financial and nonfinancial) to the organization? 5. Select the best alternative After a manager has analyzed all the alternatives, she must decide on the best one. The best alternative is the one that produces the most advantages and the fewest serious disadvantages. Sometimes, the selection process can be fairly straightforward, such as the alternative with the most pros and fewest cons. Other times, the optimal solution is a combination of several alternatives. 6. Implement the decision Managers are paid to make decisions, but they are also paid to get results from these decisions. Positive results must follow decisions. Everyone involved with the decision must know his or her role in ensuring a successful outcome. To make certain that employees understand their roles, managers must thoughtfully devise programs, procedures, rules, or policies to help aid them in the problem-solving process. 7. Establish a control and evaluation system Ongoing actions need to be monitored. An evaluation system should provide feedback on how well the decision is being implemented, what the results are, and what adjustments are necessary to get the results that were intended when the solution was chosen. In order for a manager to evaluate his decision, he needs to gather information to determine its effectiveness. Was the original problem resolved? If not, is he closer to the desired situation than he was at the beginning of the decision-making process?
increase as he or she moves into higher levels of managerial responsibility. A crisis problem is an unexpected problem that can lead to disaster if it's not resolved quickly and appropriately. No organization can avoid crises, and the public is well aware of the immensity of corporate crises in the modern world. The Chernobyl nuclear plant explosion in the former Soviet Union and the Exxon Valdez spill of years past are a couple of sensational examples. Managers in more progressive organizations now anticipate that crises, unfortunately, will occur. These managers are installing early-warning crisis information systems and developing crisis management plans to deal with these situations in the best possible ways. c) Uncertainty When information is so poor that managers can't even assign probabilities to the likely outcomes of alternatives, the manager is making a decision in an uncertain environment. This condition is the most difficult for a manager. Decision making under conditions of uncertainty is like being a pioneer entering unexplored territory. Uncertainty forces managers to rely heavily on creativity in solving problems: It requires unique and often totally innovative alternatives to existing processes. Groups are frequently used for problem solving in such situations. In all cases, the responses to uncertainty depend greatly on intuition, educated guesses, and hunches all of which leave considerable room for error. These unstructured problems involve ambiguities and information deficiencies and often occur as new or unexpected situations. These problems are most often unanticipated and are addressed reactively as they occur. Unstructured problems require novel solutions. Proactive managers are sometimes able to get a jump on unstructured problems by realizing that a situation is susceptible to problems and then making contingency plans. For example, at the Vanguard Group, executives are tireless in their preparations for a variety of events that could disrupt their mutual fund business. Their biggest fear is an investor panic that overloads their customer service system during a major plunge in the bond or stock markets. In anticipation of this occurrence, the firm has trained accountants, lawyers, and fund managers to staff the telephones if needed.
Check your progress 1. List the steps involved in decision making process _____________________________________________________________________________________________________________________________________________________
B. Conflicting individual interests vs. mutual interests C. More time may be needed to reach consensus D. One who has the greatest influence and can willingly change their opinions can reinforce the existing power structure and stifle uture member input and cooperation Group Consensus Guidelines DO: 1. Listen, not only to the words but also to the rationale being offered 2. Pursue, your point and be persistent if you have good information 3. Manage, your time effectively, relative to the number of decisions that are being made 4. Involve all team members to ensure the use of their knowledge and experience 5. Strive for the best answer. Thinking in cause-and-effect terms and avoid dealing only with symptoms DON'T: 1. Argue for the sake of arguing or winning your point. 2. Give up on your convictions simply to avoid conflict. Let objective reasoning or sound information prevail. 3. Allow the group to get stuck on a specific item-move on and come back later 4. Compete by assuming that some win and some lose. Look for the best alternative
Check your progress 4. Explain types of decision making models _____________________________________________________________________________________________________________________________________________________ 5. State the types of decisions
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and quality of their decisions. 8. Organisations do not have good decision-making memory. Most of them do not maintain a database of information about past decision-making either. 9. Organisations underwent significant technological changes to facilitate decision-making, especially across geographical borders. Workers and managers make decisions with people from different locations or shifts on a regular basis. The management provided them with e-mail, teleconferencing and videoconferencing to enable teams from various geographical locations to work together effectively. In today's digital world, conducting business "at the speed of thought" is not just a catchphrase but also an unconditional imperative. However, there are limits to speed, even with the aid of technology. This is more evident in business organisations, where decisions have affected the bottom line.
Check your progress 6. What are various types of decisions? _____________________________________________________________________________________________________________________________________________________ 7. How would you explain the speed of decision making?
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Self Assessment Questions 1. Define Decision-Making Process. _____________________________________________________________________________________________________________________________________________________ 2. Explain the factors Effecting Decision Making Process. _____________________________________________________________________________________________________________________________________________________
3. Write the Dos and dont of Group-decision making process. _____________________________________________________________________________________________________________________________________________________ 4. What is Aristocratic decision-making?
4.6 Summary
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 (1) has the highest probability of success or effectiveness and (2) best fits with our goals, desires, lifestyle, values, and so on.
6. See Section 4.5 7. See Section 4.5 Reference: www.ebsglobal.net/programmes/organisational-behaviour www.nwlink.com/~donclark/leader/leadob.html www.freemba.in/substream.php?stcode=3& =Organisational_Behaviour Organisational Behaviour: Concepts, Controversies and Applications by Stephen P. Robbins - 1997 Organisational behaviour: individuals, groups and organisation by Ian Brooks - 2006 - 336 pages Previous ed.: 2003.