Decision Making

UNIT 9 DECISION MAKING

Objectives
After studying this Unit, you should be able to:

• Appreciate the three steps of the process through which you make any
decision
• Classify the kinds of decisions you make
• Identify the varying degrees of knowledge under which you make
decisions
• Recognize the assumptions of different models which either describe
how decisions are made or prescribe how decisions should be made.
• Understand the necessity of identifying and evaluating a reasonable
number of possible alternative courses of action for accomplishing
organisation objectives
• Display familiarity with various means for generating alternative courses
of action
• Decide to what extent participation of others is desirable; when and how
group decision strategies should be used
• Diagnose roadblocks to effective decision making and develop some
strategies to overcome them.

Structure

9.1 Introduction
9.2 Three Phases in Decision Making Process
9.3 Types of Managerial Decisions
9.4 Decision Making under Different States of Nature
9.5 Models of Decision Making Process
9.6 Techniques Used in Different Steps of Decision Making
9.7 Individual Versus Group Decision Making
9.8 Overcoming Barriers to Effective Decision Making
9.9 Summary
9.10 Self Assessment Questions
9.11 References/ Further Readings

9.1 INTRODUCTION
You will possibly agree that decision making is a part of everyday life. The
fact that you have taken up a course in management or the fact that you are
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Managerial reading this Unit are both products of your decisions to do them against other
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alternatives which were available to you. Whether you are at a board meeting
or in the playground, you are almost constantly making decisions, sometimes
working on several at the same time. These may be major or minor, but some
of these might have proved to be effective decisions, viz. appropriate, timely
and acceptable. Some of your decisions might have been wrong, but you
knew that there was something worse than a few wrong decisions and that
was indecision!
Making decisions has been identified as one of the primary responsibilities of
any manager. Decisions may involve allocating resources, appointing people,
investing capital or introducing new products. If resources like men, money,
machines, materials, time and. space were abundant, clearly any planning
would be unnecessary. But, typically, resources are scarce and so there is a
need for planning. Decision making is at the core of all planned activities. We
can ill afford to waste scarce resources by making too many wrong decisions
or by remaining indecisive for too long a time.

In this Unit, various techniques involved in decision making e.g.

brainstorming, semantics, and nominal grouping are described and discussed.
Then the Unit describes various methods for identification, selection of
various alternatives and implementation of decisions made. Differences and
similarities between individual versus group decision making are then
explained, including the phenomenon of groupthink. Various barriers to
effective decision making are finally enumerated.

9.2 THREE PHASES IN DECISION MAKING

PROCESS
You can define decision making as the process of choosing between
alternatives to achieve a goal. But if you closely look into this process of
selecting among available alternatives, you will be able to identify three
relatively distinct stages. Put into a time framework, you will find:
1. The past, in which problems developed, information accumulated, and
the need for a decision was perceived;
2. The present, in which alternatives are found and the choice is made; and
3. The future, in which decisions will be carried out and evaluated.

Herbert Simon, the well-known Nobel laureate decision theorist, described

the activities associated with three major stages in the following way:

1. Intelligence Activity: Borrowing from the military meaning of

intelligence Simon describes this initial phase as an attempt to recognise
and understand the nature of the problem, as well as search for the
possible causes;
2. Design Activity: During the second phase, alternative courses of action
are developed and analyzed in the light of known constraints; and

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3. Choice Activity: The actual choice among available and assessed Decision Making

alternatives is made at this stage.

If you have followed the nature of activities of these three phases, you should
be able to see why the quality of any decision is largely influenced by the
thoroughness of the intelligence and design phases.

Henry Mintzberg and some of his colleagues (1999) have traced the phases of
some decisions actually taken in organisations. They have also come up with
a three-phase model as shown in Figure I.

Fig. I: Mintzberg's empirically based phases of decision making in organizations

Source: Mintzberg, Raisinghani and Theoret, 1999.

1. The identification phase, during which recognition of a problem or

opportunity arises and a diagnosis is made. It was found that severe
immediate problems did not have a very systematic, extensive diagnosis
but that milder problems did have.
2. The development phase, during which there may be a search for
existing standard procedures, ready-made solutions or the design of a
new, tailor-made solution. It was found that the design process was a
grouping, trial and error process in which the decision-makers had only a
vague idea of the ideal solution.
3. The selection phase, during which the choice of a solution is made.
There are three ways of making this selection: by the judgment of the
decision maker, on the basis of experience or intuition rather than logical
analysis; by analysis of the alternatives on a logical, systematic basis;
and by bargaining when the selection involves a group of decision
makers. Once the decision is formally accepted, an authorization is
made.

Note that the decision making is a dynamic process and there are many
feedback loops in each of the phases. These feedback loops can be caused by
problems of timing, politics, disagreement among decision-makers, inability
to identify an appropriate alternative or to implement the solution or the
sudden appearance of a new alternative etc. So, though on the surface, any
decision-making appears to be a fairly simple three-stage process, it could
actually be a highly complex dynamic process.

Activity A
Before we move on to the next topic on types of decisions that you and other
managers make, let us pause to check whether we have understood the 171
Managerial general nature of any decision making situation. You will recall that decision
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making is a process by which we make a choice among various alternatives
to achieve our goals. Based on this definition and earlier discussion, complete
the missing entries in . Figure II of the Managerial Decision Process.

Fig. II: Managerial Decision Process

Answers:

• Objectives/ Goals
• Identifying/ Defining
• Alternatives
• Evaluating/ Assessing
• Selecting/ Choosing
• Decision/ Choice

9.3 TYPES OF MANAGERIAL DECISIONS

There are many types of decisions which you would be required to make as a
manager. Three most widely recognised classifications are:

1) Personal and Organisational Decisions

2) Basic and Routine Decisions
3) Programmed and Non-programmed Decisions.

The first classification of Personal and Organisational decisions was

suggested by Chester Barnard, nearly fifty years ago in his classic book: "The
Functions of the Executive". In his opinion, the basic difference between the
two decisions is that "personal decisions cannot ordinarily be delegated to
others, whereas organisational decisions can often if not always be delegated"
(Barnard, 1939). Thus, the manager makes organisational decisions that
172 attempt to achieve organisational goals and personal decisions that attempt to
achieve personal goals. Note that personal decisions can affect the Decision Making

organisation, as in the case of a senior manager deciding to resign. However,

if you analyse a decision, you may find that the distinctions between personal
and organisational decisions are a matter of degree. You are, to some extent,
personally involved in any organisational decision that you make and you
need to resolve the conflicts that might arise between organisational and
personal goals.

Another common way of classifying types of decisions is according to

whether they are basic or routine. Basic decisions are those which are
unique, one-time decisions involving long-range commitments of relative
permanence or duration, or those involving large investments. Examples of
basic decisions in a business firm include plant location, organisation
structure, wage negotiations, product line, etc. In other words, most top
management policy decisions can be considered as basic decisions.

Routine decisions are at the opposite extreme from basic decisions. They are
the everyday, highly repetitive, management decisions which by themselves
have little impact on the overall organisation. However, taken together,
routine decisions play a tremendously important role in the success of an
organisation. Examples of, routine' decisions are an accountant's decision on
a new entry, a production supervisor’s decision to appoint a new worker, and
a salesperson's decision on what territory to cover. Obviously, a very large
proportion (most experts estimate about 90 per cent) of the decisions made in
an organisation are of the routine variety. However, the exact proportion of
basic to routine types depends on the level of the organisation a which the
decisions are made. For example, a first-line supervisor makes practically all
the routine decisions whereas the chairperson of the board makes very few
routine decisions but many basic decisions.
Simon (1999) distinguishes between Programmed (routine, repetitive)
decisions and Non-programmed (unique, one-shot) decisions. While
programmed decisions are typically handled through structured or
bureaucratic techniques (standard operating procedures), non-programmed
decisions must be made by managers using available information and their
own judgement. As is often the case with managers, however, decisions are
made under the pressure of time.
An important principle of organisation design that relates to managerial
decision making is Gresham's Law of Planning. This law states that there is a
general tendency for programmed activities to overshadow non-programmed
activities. Hence, if you have a series of decisions to make, those that are
more routine and repetitive will tend to be made before the ones that are
unique and require considerable thought. This happens presumably because
you attempt to clear your desk so that you can get down to the really serious
decisions. Unfortunately, the desks very often never get cleared.

After going through the three types of classification of managerial decisions,

you could see that there is no single and satisfactory way of classifying
decision situations. Moreover, the foregoing classifications have ignored two
important problem-related dimensions: (1) How Complex is the Problem in
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can be placed with the outcome of a decision. Based on these two
dimensions, four kinds of decision modes can be identified: Mechanistic,
Analytical, Judgmental, and Adaptive (See Figure Ill).

Fig. III: Types of Managerial Decisions

1. Mechanistic Decisions: A mechanistic decision is one that is routine and

repetitive in nature. It usually occurs in a situation involving a limited
number of decision variables where the outcomes of each alternative are
known. For example, the manager of a bicycle shop may know from
experience when and how many bicycles are to be ordered; or the
decision may have been reached already, so the delivery is made
routinely. Most mechanistic decision problems are solved by habitual
responses, standard operating procedures, or clerical routines. In order to
further simplify these mechanistic decisions, managers often develop
charts, lists, matrices, decision trees, etc.
2. Analytical Decisions: An analytical decision involves a problem with a
large number of decision variables, where the outcomes of each decision
alternative can be computed. Many complex production and engineering
problems are like this. They may be complex, but solutions can be found.
Management science 'and operations research provide a variety of
computational techniques that can be used to find optimal solutions.
These techniques include linear programming, network analysis,
inventory reorder model, queuing theory, statistical analysis, and so
forth.
3. Judgemental Decisions: A judgemental decision involves a problem
with a limited number of decision variables, but the outcomes of decision
-alternatives are unknown. Many marketing, investment, and resource
allocation problems come under this category. For example, the
marketing manager may have several alternative ways of promoting a
product, but he or she may not be sure of their outcomes. Good
judgement is needed to increase the possibility of desired outcomes and
minimise the possibility of undesired outcomes.
4. Adaptive Decisions: An adaptive decision involves a problem with a
large number of decision variables, where outcomes are not predictable.
Because of the complexity and uncertainty of such problems, decision
makers are not able to agree on their nature or. on decision strategies.
Such ill-structured problems usually require the contributions of many
174 people with diverse technical backgrounds. In such a case, decision and.
 implementation strategies have to be frequently modified to Decision Making

accommodate new developments in technology and the environment.

Activity B
Refer to Figure III and subsequent discussions on four types of managerial
decisions.

Answer the following questions.

1. Which types of managerial decisions correspond to "Programmed"

decision?
.....................................................................................................................
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2. Which types of managerial decisions correspond to "Non-programmed"
decision?
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3. Which types of managerial decisions correspond to "Basic" decision?
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Answers:
1. Mechanistic Decisions and Analytic Decisions.
2. Judgemental Decisions and Adaptive Decisions.
3. Judgemental Decisions, Adaptive Decisions and Analytic Decisions.

9.4 DECISION MAKING UNDER DIFFERENT

STATES OF NATURE
In the previous topic on types of decisions you have seen that a decision-
maker may not have complete knowledge about decision alternatives (i.e.,
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Managerial High Problem, Complexity) or about the outcome of a chosen, alternative
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(i.e., High Outcome Uncertainty). These conditions of knowledge are often
referred to as states of nature and have been labelled:

1. Decisions under Certainty.

2. Decisions under Risk
3. Decisions under Uncertainty

Figure IV depicts these three conditions on a continuum showing the

relationship between knowledge and predictability of decision states.

Fig. IV Decision Making Conditions Continuum

Decision making under certainty: A decision is made under conditions of

certainty when a manager knows the precise outcome associated with each
possible alternative or course of action. In such situations, there is perfect
knowledge about alternatives and their consequences. Exact results are
known in advance with complete (100 per cent) certainty. The probability of
specific outcomes is assumed to be equal to one. A manager is simply faced
with identifying the consequences of available alternatives and selecting the
outcome with the highest benefit or payoff.

As you can probably imagine, managers rarely operate under conditions of

certainty. The future is only barely known. Indeed, it is difficult to think of
examples of all but the most trivial business decisions that are made under
such conditions. One frequent illustration that is often cited as a decision
under at least near certainty is the purchase of government bonds or
certificates of deposit. For example, as per the assurance provided by
Government of India, Rs. 1,000 invested in a 9-year National Savings
Certificate will bring a fixed sum of Rs. 2,015 after six complete years of
investment. It should still be realised, however, that the Government
defaulting on its obligations is an unlikely probability, but the possibility still
exists. This reinforces the point that very few decisions outcome can be
considered a sure thing.

Decision making under risk: A decision is made under conditions of risk

when a single action may result in more than one potential outcome, but the
relative probability of each outcome is known. Decisions under conditions of
risk are perhaps the most common. In such situations, alternatives are
recognised, but their resulting consequences are probabilistic and doubtful.
As an illustration, if you bet on number 9 for a single roll of a dice, you have
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a 1/9 probability of winning in that there is only one chance in six of rolling a Decision Making

9. While the alternatives are clear, the consequence is probabilistic and

doubtful. Thus, a condition of risk may be said to exist. In practice, managers
assess the likelihood of various outcomes occurring based on past experience,
research, and other information. A quality control inspector, for example,
might determine the probability of number of `rejects' per production run.
Likewise, a safety engineer might determine the probability of number of
accidents occurring, or a personnel manager might determine the probability
of a certain turnover or absenteeism rate.

Decision making under uncertainty: A decision is made under conditions

of uncertainty when a single action may result in more than one potential
outcome, but the relative probability of each outcome is unknown. Decisions
under. conditions of uncertainty are unquestionably the most difficult. In such
situations a manager has no knowledge whatsoever on which to estimate the
likely occurrence of various alternatives. Decisions under uncertainty
generally occur in cases where no historical data are available from which to
infer probabilities or in instances which are so novel and complex that it is
impossible to make comparative judgements.

Examples of decisions under complete uncertainty are as difficult to cite as

example of decisions under absolute certainty. Given even limited experience
and the ability to generalise from past situations, most managers should be
able to make at least some estimate of the probability of occurrence of
various outcome. Nevertheless, there are undoubtedly times when managers
feel they are dealing with complete uncertainty.
Selection of a new advertising programme from among several alternatives
might be one such example. The number of factors to be considered and the
large number of uncontrollable variables vital to the success of such a venture
can be mind-boggling. On a personal level, the selection of a job from among
alternatives is a career decision that incorporates a great deal of uncertainty.
The number of factors to be weighed and evaluated, often without
comparable standards, can be overwhelming.

Activity C
Identify six decisions that you have taken during last one year. Check which
decisions were made under Certainty, under Risk and under Uncertainty.

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9.5 MODELS OF DECISION MAKING PROCESS
By now, you have learnt what the different phases of a decision making
process are, what types of decisions you are likely to make in an organisation
and under what states of nature these decisions are made. Now, you are going
to examine three suggested models of the decision making process which will
help you to understand how decisions are made and should be .made. These
three models are: (I) the econologic model, or the economic man, (2) the
bounded rationality model or the administrative man; and (3) the implicit
favourite model or the gameman. You will notice that each model differs on
the assumptions it makes about the person or persons making the decision.

i) Econologic Model or Economic Man Model

The econologic model represents the earliest attempt to model decision
process. Briefly, this model rests on two assumptions: (1) It assumes
people' are economiccally rational; and (2) that 'people attempt to
maximise outcomes in an orderly and sequential process. Economic
rationality, a, basic concept in many models of decision making, exists
when people attempt to maximise objectively measured advantage, such
as money or units of goods produced. That is, it is assumed that people
will select the decision or course of action that has the greatest
advantage or payoff from among the many alternatives. It is also
assumed that they go about this search in a planned, orderly, and logical
fashion.

A basic econologic decision model is shown in Figure V. The figure suggests

the following orderly steps in the decision process:
1. Discover the symptoms of the problem or difficulty ;
2. Determine the goal to be achieved or define the problem to be solved;
3. Develop a criterion against which alternative solutions can be evaluated;
4. Identify all alternative courses of action;
5. Consider the consequences of each alternatives as well as the likelihood
of occurrence of each;

178 Fig. V: An Econologic Model of Decision-making

9 Choose the best alternative by, comparing the consequences of each. Decision Making

alternative (step 5) with the decision criterion (step 3); and 9 Act or
implement the decision.

The economic man model represents a useful prescription of how decisions

should be made, but it does not adequately portray how decisions are actually
made. If you look closely in this prescriptive model you shall be able to
recognise some of the assumptions it makes about the capabilities of human
beings:
First, people have the capability to gather all necessary information for a
decision, i.e., people can have complete information;

Second, people can mentally store this information in some stable form, i.e.,
they can accurately recall any information any time they like;

Third, people can manipulate all this information in a series of complex

calculations design to provide expected values; and

Fourth, people can rank the consequences in a consistent fashion for the
purposes of identifying the preferred alternative.

As you can possibly imagine, the human mind is simply incapable of

executing such transactions at the level and magnitude required for complex
decisions. To that extent, this model is unrealistic. However, due to the
advent of sophisticated data storage, retrieval and processing machines, it is
now possible to achieve economic rationality to some extent.

ii) Bounded Rationality Model or Administrative Man Model

An alternative model, one not bound by the above assumptions, has been
presented by Simon. This is the bounded rationality model, also known
as the administrative man model.
As the name implies, this model does not assume individual rationality in
the decision,' process. Instead, it assumes that people, while they may
seek the best solution, usually settle for much less because the decisions
they confront typically demand greater information processing
capabilities than they possess. They seek a kind of bounded (for limited)
rationality in decisions.
The concept of bounded rationality attempts to describe decision
processes in terms of three mechanisms:
Sequential attention to alternative solutions: People examine possible
solutions to a problem sequentially. Instead of identifying all possible
solutions and selecting the best (as suggested in the econologic model),
the various alternatives are identified and evaluated one at a time. If the
first solution fails to work it is discarded and the next solution is
considered. When an acceptable (that is, `Good enough' and not
necessarily the best') solution is found, the search is discontinued.
Use of heuristics: A heuristic is a rule which guides the search for
alternatives into areas that have a high probability for yielding
satisfactory solutions. For instance, some companies continually select 179
Managerial Management graduates from certain institutions because in the past such
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graduates have performed well for the company. According to the
bounded rationality model, decision makers use heuristics to reduce large
problems to manageable proportions so that decisions can be made
rapidly. They look for obvious solutions or previous solutions that
worked in similar situations.
Satisfying: Whereas the econologic model focuses on the decision
maker as an optimiser, this model sees him or her as a satisficer. An
alternative is optimal if: (1) there exists a set' of criteria that permits all
alternatives to be compared; and (2) the alternative in question is
preferred, by these criteria, to all other alternatives. An alternative is
satisfactory if: (I) there exists a set of criteria that describes minimally
satisfactory . alternatives; and (2) the alternative in question meets or
exceeds all these criteria.
Based on these three assumptions about decision makers, it is possible to
outline the decision process as seen from the standpoint of the bounded
rationality model. As shown Figure VI, the model consists of eight steps:

Fig. VI: A Bounded Rationality Model of Decision Making

1. Set the goal to be pursued or define the problem to be solved.

2. Establish an appropriate level of aspiration or criterion level (that is,
when do you know that a solution is sufficiently positive to be acceptable
even if it is not perfect'?)
3. Employ heuristics to narrow problem space to a single promising
alternative.
4. If no feasible alternative is identified (a) lower the aspiration level, and
(b) begin the search for a new alternative solution (repeat steps 2 and 3).
5. After identifying a feasible alternative (a), evaluate it to determine its
acceptability (b).
6. If the identified alternative is unacceptable, initiate search for a new
alternative solution (repeat steps 3-5).
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7. If the identified alternative is acceptable (a) implement the solution (b). Decision Making

8. Following implementation, evaluate the ease with which goal was (or
was not) attained (a), and raise or lower level of aspiration accordingly
on future decisions of this type.

As can be seen, this decision process is quite different from the econologic
model. In it we do not seek the best solution; instead, we look for a solution
that is acceptable. The search behaviour is sequential in nature(evaluating one
or two solutions at a time). Finally, in contrast to the. prescriptive econologic
model, it is claimed that the bounded rationality model is descriptive; that is
it describes how decision makers actually arrive at the identification of
solutions to organisational problems.

iii) Implicit Favourite Model or Gamesman Model

This model deals primarily with non-programmed decisions. You will
recall that non-programmed decisions are decisions that are novel or
unstructured, like seeking one's first job. Programmed decisions, in
contrast, are more routine or repetitious in nature, like the procedures for
admitting students to a secondary school.
The implicit favourite model developed by Soelberg (1999) emerged
when he observed the job choice process of graduating business students
and noted that, in many cases, the students identified implicit; favourites
very early in the recruiting and choice process. However, they continued
their search for additional alternatives and quickly selected the best
alternative candidate, known as the confirmation candidate. Next, the
students attempted to develop decision rules the demonstrated
unequivocally that the implicit favourite was superior to the alternative
confirmation candidate. This was done through perceptual distortion of
information about the two alternatives and through weighing systems
designed to highlight the positive features of the implicit favourite.
Finally, after a decision rule was derived that clearly favoured the
implicit favourite, the decision was announced. ironically, Soelberg
noted that the implicit favourite was typically superior to the
confirmation candidate on only or or two dimensions. Even so, the
decision makers generally characterised their decision rules as being
multi-dimensional in nature.
The process is shown in Figure VII. As noted, the entire process is
designed to justify to the individual, through the guise of scientific
rigour, a non-programmed decision that has already been made in
intuitive fashion. By doing so, the individual becomes convinced that he
or she is acting in a rational fashion and making a logical, reasoned
decision on an important topic.

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Fig. VII: An Implicit Favourite Model of Decision Making

Source: Behling and Schriesheim, 1999, p. 32.

Activity D
Read the following assumptions about the nature of human beings as decision
makers. Identify which assumptions are made under which models of
decision making.

Answers:
1. Administrative Man Model.
2. Economic Man Model.
3. Gamesman Model.

Activity E
Recall the process through which you decided to apply for joining the course
in management. Which model best characterizes your decision process?
Would you claim that as a rational decision? Why or why not? Prepare a
short note.

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………………………………………………………………………………… Decision Making

9.6 TECHNIQUES USED IN DIFFERENT STEPS

OF DECISION MAKING
In the models of decision making, you must have observed that any
systematic approach to decision making starts with a proper definition of the
problem. You will often experience that a problem well defined is a problem
half-solved because the proper definition helped you to search at relevant
place for promising alternatives. You would also agree that a "fair" approach
to decision-making demands that parameters (for judging alternatives which
are sometimes referred to as "criteria", "level of aspiration", "decision rules",
etc.) should be explicitly developed before the alternatives are generated and
not after. This imperative minimises the chances of unnecessary compromise
which is the hall-mark of a low-quality decision. However, once you have
developed the criteria, keep them aside and forget about them at the time of
generation of the alternatives. This dissociation of criteria from the
alternative-generation phase will improve your chance of coming up with a
reasonably sufficient number of alternatives. You will understand the
importance of generating a "reasonable" number of alternatives by the simple
realisation that the quality of a decision can be no better than the quality of
the alternatives that you identify.

Identification of Alternatives
Generation' of a reasonable number of good alternatives is usually no
problem. Occasionally, however, developing a variety of good alternatives
can be a complex matter requiring creativity, thought, and study. Three
means for generating alternatives are particularly well-known. These are
brainstorming, synectics, and nominal grouping.

Brainstorming: Developed by Alex F. Osborn, brainstorming is the oldest

and best known technique for stimulating creative thinking. It involves the
use of a group whose members is presented with a problem and is asked to
develop as many potential solutions as possible. Members of the group may
all be employees of the same firm or outside experts in a particular field.
Brainstorming is based on the premise that when people interact in a free and
uninhibited atmosphere they will, generates creative ideas. That is, as one
person generates an idea it serves to stimulate' the thinking of others. This
interchange of ideas is supposedly contagious and creates an atmosphere of
free discussion and spontaneous thinking. The objective is to produce as
many ideas as possible in keeping with the belief that the larger the number
of ideas produced, the greater the probability of identifying an acceptable
solution.
Brainstorming is governed by four important rules:

• Criticism is prohibited Judgement of ideas must be withheld until all

ideas have been generated. It is believed that criticism inhibits the
free flow of ideas and group creativity.
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1) Freewheeling' is welcome. The wilder the idea the better. It is easier to
‘tame down’ than to ‘think up’ ideas.
2) Quantity is wanted. The greater the number of ideas, the greater the
likelihood of an outstanding solution.
3) Combination and improvement are sought. In addition to contributing
ideas of their own, group members suggest how ideas of others can be
improved, or how two or more ideas can be combined into still another
idea.

Brainstorming sessions usually involve six to eight participants and run from
thirty minutes to an hour. A one-hour session is likely to produce anywhere
from 50 to 150 ideas. Typically, most ideas will be impractical, but, a few
will merit serious consideration. Brainstorming has given encouraging results
in the field of advertising, in all branches of the Armed Forces, and in various
Central, State, and local agencies.

Brainstorming, however, is not without limitations. It is usually most

effective when a problem is simple and specific. In addition, brainstorming
sessions are time-consuming and, therefore, can be costly. Finally,
brainstorming often produces superficial solutions. This latter limitation, of
course, can be overcome by selecting group members who are familiar with
at least one aspect of the problem being considered.
Synectics: Developed by William J.J. Gordon, synectics is a more recent and
formalised creativity technique for the generation of alternative solutions.
The term synectics is derived from a Greek word meaning "the fitting
together of diverse elements." The basic intent of synectics is to stimulate
novel and even bizarre alternatives through the joining together of distinct
and apparently irrelevant ideas.
Members of a synectics group are typically selected to represent a variety of
backgrounds and training. An experienced group leader plays a vital role in
this approach. The leader states a problem for the group to consider. The
group reacts by stating the problem as they understand it. Only after the
nature of the problem is thoroughly reviewed and analysed does the group
proceed to offer potential solutions. It is the task of the leader to structure the
problem and lead the ensuing discussion in such a manner as to force group
members to deviate from their traditional ways of thinking. Various methods
are employed to "invoke the preconscious mind". These may include role-
playing, the use of analogies, paradoxes, metaphors, and other thought-
provoking exercises. The intended purpose is to induce fantasies and novel
ideas that will modify existing thought patterns in order to stimulate creative
alternatives. It is from this complex set of interactions that a final solution
hopefully emerges. A technical expert is ordinarily present to assist the group
in evaluating the feasibility of their ideas. Thus, in contrast to brainstorming
where the judgement of ideas is-withheld until, all ideas have been generated,
judicial evaluations of members' suggestions do take place from time to time.

184 In general, available evidence suggests that synectics has been less widely
used than brainstorming. While it suffers from some limitations as Decision Making

brainstorming (it can be time-consuming and costly), its sophisticated manner

makes it much more appropriate for complex and technical problems.
Nominal Grouping: Developed by Andre Dellbecq and Andrew-Van de
Ven, nominal grouping differs from both brainstorming and synectics in two
important ways. Nominal grouping does not rely on free association of ideas,
and it purposely attempts to reduce verbal interaction. From this latter
characteristic a nominal group derives its name; it is a group "in name only".

Nominal grouping has been found to be particularly effective in situations

requiring a high degree off innovation and idea generation. It generally
follows a highly structured procedure involving the following stages:

Stage 1: Seven to ten individuals 'with different backgrounds and training are
brought together and familiarised with a selected problem such as, "What
alternatives are available for achieving a set of of ,objectives?"

Stage 2: Each group member is asked to prepare a list of ideas in response to

the identified problem, working silently and alone.

Stage 3: After a period of ten to fifteen minutes, group members share their
ideas, one at a time, in a round-robin manner. A group facilitator records the
ideas on a blackboard or flip chart for all to see. The round-robin process
continues until all ideas are presented and recorded.
Stage 4: A period of structured interaction follows in which group members
openly discuss and evaluate each recorded idea. At this point ideas may be
rewarded, combined, deleted, or added.
Stage 5: Each group member votes by privately ranking the presented ideas
in order of their perceived importance. Following a brief discussion of the
vote, a final secret ballot is conducted. The group's preference is the
arithmetical outcome of the individual votes. This concludes the meeting.

Nominal grouping has been used successfully in a wide variety of

organisations. Its principal benefit is that it minimises the inhibiting effects of
group interaction in the initial generation of alternative solutions. In this
sense, the search process is pro-active rather than reactive. That is, group
members must generate their own original ideas rather than "hitch-hike" on
the ideas of others. Additionally, the use of a round-robin recording
procedure allows risk-inclined group members to state risky solutions early,
making it easier for less secure participants to engage in similar disclosure.
Nominal grouping, however, also has limitations. Like brainstorming and
synectics, it can be time-consuming and, therefore, costly.
Creative Thinking: There are many ways of searching for information and
alternatives in problem solving. Effective managers use all of their capacities-
analytic and creative, conscious and subconscious-and seek both individual
and group involvement in this stage of decision making process.

As you have seen, the basic requirement at the stage of identification of

alternatives is to become more creative. Creativity involves novel
185
Managerial combination of ideas which must have theoretical or social value or make an
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emotional impact on other people, Like the decision' making process itself,
the creative process also has three stages as shown in the following exhibit:

STAGES IN THE CREATIVE PROCESS

Stage Type Behaviours

Preparation Conscious Saturation: Investing the problem in all

directions to become fully familiar with it, its
setting, causes, and effects Deliberation: Mulling
over these ideas, analysing and challenging them,
viewing them from different optics.

Latent Unconscious Incubation: Relaxing, switching off, and turning

Period the problem over to the unconscious mind.
Illumination: Emerging with possible answers-
dramatic, perhaps off beat, but fresh and new.

Presentation Conscious Verification: Clarifying and flushing out the

idea, testing it against the criterion of
appropriateness.

Accommodation: Trying the solution out on

other people and other problems.

Evaluation of Alternatives
Evaluation of various identified possible courses of action constitutes the
second step of decision-making. Having identified a `reasonable' number of
alternatives as a manager you should now be in a position to judge the
different courses of action which have been isolated. Each alternative must be
evaluated in terms of its strengths and weaknesses, benefits and costs,
advantages and disadvantages in achieving organisational goals. Since there
are usually both positive and negative aspects of every alternative, most
evaluations involve a balancing or trade-off of anticipated consequences.
Needless to say, such assessments should be as objective as possible.

Evaluation of the relative merits of various alternatives may be performed by

a single manager or by a group. An evaluation may be completely intuitive or
it may be scientific, using analytical tools and procedures associated with
what is known as operations research (OR). More than likely, it will employ a
combination of both approaches. Whatever the basis of evaluation, the more
systematic the assessment, the more likely it is that the resulting judgements
will be accurate and complete.

Selection of an Alternative
Once appropriate alternatives have been identified and evaluated, you must
select the one alternative with the greatest perceived probability of meeting
organisational objectives. Of course, it is entirely possible that the decision
maker may be made to go back and identify other alternatives if none are
186 judged to be acceptable.
 Decision Making

Theoretically, if the identification and evaluation of alternatives has been

properly. handled, making a choice should be an easy matter, The most
desirable alternative will be obvious. In practice, however, selection of a
course of action is often the result of a compromise. Enterprise objectives are
multiple. As a consequence, choice of an alternative must be made in light of
multiple and often conflicting objectives. Indeed, the quality of a decision
may often have to be balanced against its acceptability. Resource constraints
and political considerations are examples of confounding factors which must
be carefully weighed. At this point, sound judgement and experience play
important roles.

Implementation of Decision
Once a plan (course of action) has been selected, appropriate actions must be
taken to assure that it is implemented. Implementation is crucial to success of
an enterprise. Indeed, it is considered by some to be the key to effective
planning. The best plans in the world are absolutely worthless if they cannot
be implemented. The activities necessary to put plans into operation must be
skillfully initiated. In this respect, no plan is better than the actions taken to
make it a reality.

With selection of a course of action, you must make detailed provisions for
its execution. You must communicate the chosen course of action, gather
support for it, and assign resources to see that it is carried out. Development
of a sound means of implementation is every bit as important as the decision
as to which course of action to pursue. All too often, even the best plans fail
as a result of being improperly implemented.

Activity A
Imagine that you are working in a consulting firm specialising in producing
creative ideas to solve various problems. Current projects involve the
following problems:

1. Creative uses of Used dry cells.

2. Within ten years, all the plants in the world are going to die due to a non-
removable chemical in the polluted soil of the world.

Collect four of your friends to form a group of five.

Spend 30 minutes to "brainstorm" ideas for identifying different alternatives
to the problems.

After recording the ideas, judge how many are realistic. Evaluate them on the
following criteria:

i. Is the idea technically feasible?

ii. Is it economically feasible?
iii. Is it socially acceptable?
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9.7 INDIVIDUAL VERSUS GROUP DECISION

MAKING
You are perhaps aware that in recent times most of the decisions in any large
organisation are usually taken by a group of people (e.g., Board of Directors,
Committees, Task-force, etc.) rather than by a single individual manager,
however, brilliant, bright or powerful the manager may be. Perhaps from
your own experience, you are also aware of some of the obvious advantages
and disadvantages of group decision making like the one given below:

Advantages and Disadvantages of group decision making

Advantages

• Groups can accumulate more knowledge and facts.

• Groups have a broader perspective and consider more alternative
solutions.
• Individuals who participate in decisions are more satisfied with the
decision and are more likely to support it.
• Group decision processes serve an important communication function as
well as a useful political function
Disadvantages
• Groups often work more slowly than individuals.
• Group decision involves considerable compromise which may lead to
less than optimal decisions.
• Groups are often dominated by one individual or a small clique, thereby
negating many of the virtues of group procedures.
• Over-reliance on group decision making can inhibit management's ability
to act quickly and decisively when necessary.

Source: Maier, 1999.

Looking at this kind of a balance-sheet on group decision making, you may
well ask whether, on the whole, groups are superior to individuals as far as'
the decision making effectiveness is concerned. It is not possible to give a
categorical answer without reference to the nature of the people, the nature of
the group and the context in which the group is making a decision. However,
188 what we know about the impact of the groups in decision making process has
been summarised by Harrison (1995) in the following way: Decision Making

• In establishing objectives, groups are typically superior to individuals

in that they possess greater cumulative knowledge to bring to bear on
problems.
• In identifying alternatives, individual efforts are important to ensure
that different and perhaps unique solutions are identified from various
functional areas that later can be considered by the group.
• In evaluating alternatives, group judgement is often superior to
individual judgement because it brings into play a wider range of
viewpoints.
• In choosing an alternative, involving group members often leads to
greater acceptance of the final outcome.
• In implementing the choice, individual responsibility is generally
superior to group responsibility, Regardless of whether decisions are
made individually or collectively, individuals perform better in carrying
out the decision than groups do.

As you can well see, groups do have some edge over individuals in certain
stages of the decision making process. For this reason, you have to `decide' to
what extent you should involve others (particularly, your subordinates in the
work group) to participate in decisions affecting their jobs. In fact, you have
to take a position on the continuum of degrees of participation in decision
making (See Figure I).

Figure I: Continuum of Degrees of Participation in Decision Making

Based on a series of studies on managerial decisions making behaviour,

Vroom and Yetton (1993) found evidence in support of the following
propositions:

• Managers tend to be more participative when the quality of the decision

is important.
• Managers tend to be more participative when subordinate acceptance of
the decision is critical for its effective implementation.
• Managers tend to be more participative when they trust their
subordinates to focus on organisational rather than personal goals and
189
Managerial when conflict among subordinates is minimal.
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• Managers tend to be less participative when they have all the necessary
information to make a high quality decision.
• Managers tend to be less participative when the immediate problem is
well structured or where there is a common solution that has been
applied in similar situations in the past.
• Managers tend to be less participative when time is limited and
immediate action is required.

At this juncture, it will be useful for you to be aware of two phenomena

which have been observed in group decision making situations. Technically
these two phenomena, which are sometimes experienced in a group decision
situation, are referred to as `Risky shift phenomenon' and `Groupthink'.

1. Risky Shift Phenomenon

Contrary to the popular belief that groups are usually more conservative
than individuals there is abundant evidence to support the proposition
that groups make riskier decisions than individuals do. There are four
possible reasons. First, risk takers are persuasive in getting more
cautious companions to shift their position. Second, as members of a
group familiarise themselves with the issues and arguments they seem to
feel more confident about taking, risks. Third, the responsibility for
decision making can be diffused across members of the group. Fourth,
there is the suggestion that in our culture people do not like to appear
cautious in a public context.
2. Groupthink
Closely related to the risky-shift, but more serious, is the phenomenon
known as `groupthink'. This phenomenon, first discussed by Janis
(1991), refers to a mode of thinking in a group in which the seeking of
concurrence among members becomes so dominant that it over-rides any
realistic appraisal of alternative course of action. The concept emerged
from Janis' studies of high level policy decisions by government and
business leaders. By analysing the decision process leading up to each
action, Janis found numerous indications pointing to the development of
group norms that improved morale at the expense of critical thinking.
One of the most common norms was the tendency to remain loyal to the
group by continuing to adhere to policies and decisions to which the
group was already committed, even when the decisions proved to be an
error.

Outcomes of groupthink: Groupthink can have several deleterious

consequences on the quality of decision making. 'First, groups often limit
their search for possible solutions to problems to one or two alternatives and
avoid a comprehensive analysis of all possible alternatives. Second, groups
often fail to re-examine their chosen course of action after new information
or events suggest a change in course. Third, group members spend very little
time considering whether there are any non-obvious advantages to alternative
190 courses of action compared to the chosen course of action. Fourth, groups
often make little or no attempt to seek out the advice of experts either inside Decision Making

or outside their own organisation. Fifth, members show positive interest in

facts that support their preferred decision alternative and either ignore or
show negative interest in facts that fail to support it. Finally, groups often
ignore any consideration of possible roadblocks to their chosen decision and,
as a result, fail to develop contingency plans for potential setbacks.

Activity B
If you are currently a member of a recognised decision making group in your
organisation, what is the purpose or decision on which you are now working?
What specific steps could be taken by individuals to improve the process if
improvement is needed? List your ideas.

…………………………………………………………………………………
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9.8 OVERCOMING BARRIERS TO EFFECTIVE

DECISION MAKING
You have just examined different outcomes of a faulty group decision
process under the phenomenon called groupthink. In fact, these "faults" are
not exclusive to group decisions only. You will appreciate that in the early
stages of any decision process, there is' the likelihood that a variety of
perceptual biases may interfere with problem analysis or the identification of
possible solutions. Elbing (1998) has identified several roadblocks that can
impede managerial effectiveness in arriving at the most suitable decision:

• The tendency to evaluate before one investigates. Early evaluation

precludes inquiry into a fuller understanding of the situation.
• The tendency to equate new and old experiences. This often causes
managers to look for what is similar rather than what is unique in a new
problem.
• The tendency to use available solutions, rather than consider new or
innovative ones.
• The tendency to deal with problems at face value, rather than ask
questions that might illuminate reasons behind the more obvious aspects
of the problem.
• The tendency to direct decisions toward a single goal. Most problems
involve multiple goals that must be handled simultaneously.
• The tendency to confuse symptoms and problems.
• The tendency to overlook unsolvable problems and instead concentrate
on simpler concerns. 191
Managerial • The tendency to respond automatically or to act before thinking.
Processes-II
Problems like these often cause managers to act in haste before the facts are
known and often before the actual underlying problem is recognised or
understood. Knowledge of these roadblocks will assist you in your attempts
to analyse problem situations and make reasoned decisions.

In case you are a member or leader of any decision making group, you would
like to overcome the emergence of a groupthink mentality in groups and
organisations. Taking your cue from Janis you can now formulate several
strategies to overcome the barriers:

• Group leaders can encourage each member to be a critical evaluator of

various proposals.
• When groups are given a problem to solve, leaders can refrain from
stating their own position and instead encourage open enquiry and
impartial probing of a wide range of alternatives.
• The organisation can give the same problem to two different independent
groups and compare the resulting solutions.
• Before the group reaches a final decision, members can be required to
take a respite at intervals and seek advice from other wings of the
organisation before returning to make a decision.
• Outside experts can be invited to group meetings and encouraged to
challenge the views of group members.
• At every group meeting, one member could be appointed as a devil's
advocate to challenge the testimony of those advocating the majority
position:
• When considering the feasibility and effectiveness of various
alternatives, divide the group into two sections for independent
discussions and compare results.
• After deciding on a preliminary consensus on the first choice for a course
of action, schedule a second meeting during which members of the group
express their residual doubts and rethink the entire issue prior to
finalising the decision and initiating action.

In other words, if groups are aware of the problems of groupthink, several

specific and relatively simple steps can be taken to minimise the likelihood of
falling victim to this problem. As you already know, recognising the problem
represents half the battle in the effort to make more effective decisions in
organisational settings.

Activity C
Does the group to which you belong ever engage in a discussion of the
process it is going through? Do you think such a discussion would be helpful
in leading to improvements in the group's effectiveness? How would you
suggest that such discussions be initiated and conducted? Prepare a note.
192
 Decision Making
9.9 SUMMARY
In this Unit, you have made yourself familiar with the three phases of any
decision making situation. You have seen that these phases deal with
identification, evaluation and selection of alternatives to a problem. It is
possible to follow a logical process of taking decisions, as the Economic Man
Model suggests, particularly when your problem is routine, mechanistic and
programmed or when you are taking decisions under conditions of certainty
or risk.
Many analytical techniques under Management Science are available to help
you take decisions. But when your problems are of the non-programmed
variety, it is not sufficient to be alert and analytical. You have to use your
creative thinking in identifying viable alternatives, judgement and discretion
in evaluating and making a choice. We have also brought the issue of group
decision to your attention as you often make decisions as a member of a
group. You have observed certain inherent advantages of group decision
situations. At the same time, we have drawn your attention to some
phenomena like risky-shift or groupthink which might emerge in the group
process and affect the quality of your decisions. Since you have also
reckoned the usual barriers to effective decision making and have noted some
strategies to overcome them, we are sure this Unit will sharpen your skills of
decision making as a manager.

9.10 SELF-ASSESSMENT QUESTION

Go back to the four learning objectives listed at the beginning of the Unit.
Check for yourself, without referring to the main text, whether you have
achieved each of these objectives. After a self-assessment, in case you feel
you have not attained an objective satisfactorily, refer to the main text.
Proceed to the next Unit only when you feel you have attained all the
learning objectives of this Unit.

9.11 REFERENCES/ FURTHER READINGS

Barnard, C.I.,1939. The Functions of the Executive. Harvard University
Press: Cambridge.
Behling, O., and Schriesheim, C.,1999. Organisational Behavior, Theory,
Research and Application. Allyn and Bacon: Boston.
Elbing, A.1998. Behavioral Decisions in Organisations, Scott Foresman:
Glenview.
Soelberg, P.O.,1999. A Study of Decision Making, Job Choice. MIT Press:
Cambridge.
Vroom, V.H. and Yetton, P.W.,1993. Leadership and Decision Making.
University of Pittsburgh Press: Pittsburgh.
Janis, I.L. and Mann, L. 1999. Decision Making: A Psychological Analyais of
Conflict, Choice and Commitment. Free Press: New York.
193
Managerial Maier,N.R.F. 1999. Assets and liabilities in group problem solving: The need
Processes-II
for an 'integrative function. Psychological Review, 4, 239-249.
Mintzberg, H., Raisinghani, D., and Theoret, A., 1999. The structure of
unstructured decision processes. Administrative Science Quarterly, June
1999, 249-295.
Simon, H.A. 1990: The New Science of Management Decision. Harper: New
York.

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