Improving decision making
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Improving decision making
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Improving decision making
- 1. How to improve decision making 1
- 2. Introduction Basically, decision is a choice made between two or more available alternatives. Therefore, decision-making is the process of choosing the best alternative for reaching objectives. Managers all over the world make various decisions while performing their three managerial duties of organizing, influencing and controlling. Decision making involves the concept of opportunity cost, which is the cost of foregoing the next best alternative after choosing the best alternative. Managers have to deal with all sorts of decisions, that is, critical decisions that might have a long term effect on the organization and at times fairly insignificant decisions that might affect only a few organization members and create only a short term effect on the organization. Decisions can be categorized according to how much time a manager must spend in making them, what proportion of the organization must be involved in making them, and the organizational functions on which they focus. Decisions and the decision-making process can also be categorized according to programmed and nonprogrammed decisions. 2
- 3. In 2004, proctor and gamble faced an ethical conflict and the managers of the company were entirely responsible for it as they did not maintain the company’s standard of ethics and corporate social responsibility. The ethical conflict/ dilemma arised because the company started disposing the dangerous chemical waste in the sea, which was against the ethical codes of the company. The production and human resource managers were to be blamed for this as they did not keep a strict control on the operations of the company and workforce. Before the government and the citizens could develop a negative image of the company,the managers had to immediately stop these unethical practices of the company. Through the decision-making process it was decided that the chemical waste of the company would no more be disposed in the sea rather it would be disposed off in some isolated area where it would be burnt down to eliminate its harmful substances. The managers should again read the code of ethics to understand its guidelines and importance and they should make sure that in future such an ethical dilemma should never arise due to unethical operations. 3
- 4. Before this decision was taken by the managers, the negative consequences had already occurred the sea was highly polluted and great number of sea life ( fishes, crabs, shrimps, etc) died. However, this was not it the company’s image and name had also come at stake because the government was about to take action against this illegal practice and the citizens were also planning to boycott purchasing the products of Proctor and Gamble. After the decision, the waste was no more disposed off in the sea and it considerably reduced the sea from getting polluted any further. This situation proves that decision-making is a problem solving process that involves eliminating barriers to organizational goal attainment. The first step of the decision making process is identifying what the problems or barriers are, for only after the barriers have been adequately identified can the management take steps to eliminate them. Then, the second step is to list the alternative problem solutions. The third step is to select the most beneficial alternative out of the list. Lastly, implement the chosen alternative and gather problem-related feedback. 4
- 5. While, taking this decision, the managers of proctor and gamble made use of consensus and group decision making. The advantages of group decision-making are basically that a group can generally come up with more and better decision alternatives than an individual can. Therefore, in our case the whole group of managers of proctor and gamble worked hard and with dedication to make their ethical decision work. (Schafer, J, 2002) All of the group members made sure that waste disposition in the sea is completely stopped and the waste is burnt down in some isolated area. The group decision makers of proctor and gamble relied on the concept of brainstorming while making and implementing this decision. . 5
- 6. In order to make group decision-making process successful, the nominal group technique and the Delphi technique was also used. Moreover, Proctor and Gamble handled and solved this situation by properly following the decision-making process through group decision-making and through the brainstorming technique. The decision making process was also based on the decision-making conditions which are complete certainty condition, complete uncertainty condition, and risk condition. To some extent the decision making tools were also used in making the decision of stopping the disposition of chemical waste in the sea. The decision tools which were used were probability theory and decision trees. Probability theory is always used in risk situations and therefore, Proctor and Gamble was in a risk situation at this point because the managers and the company did not know what outcome their decision would give. Decision trees were also used to evaluate the decision of Proctor and Gamble because the decision involves a series of steps. 6
- 7. After analysis and evaluation, it was found that following ethics and corporate social responsibility has become extremely essential for all organizations nowadays. (F.Luthans,2003). It is extremely important for each and every member of the organization to understand the importance of ethics and CSR and to follow them strictly in all business operations and dealings. Incase, the managers do end up with a critical situation like Proctor and Gamble did, then they should waste no time in making the decision of eliminating the unethical operations or practices which created the ethical dilemma. (F.Luthans, 2003). All managers should understand the types of decisions that can be taken, and the steps of the decision-making process, the decision tools, the decisionmaking conditions and the Delphi, brainstorming and nominal group making techniques all should be accurately understood. The code of ethics and CSR principles should be strongly imposed in every business operation. 7
- 8. Conclusion This presentation was prepared for the purpose of understanding the concept of decision-making and then to significantly improve it in all organizations. Today, many organizations and managers face difficult situations where they cannot make immediate and good decisions due to which the situation gets out of their hands. But with this presentation, we learn that Proctor and Gamble faced a critical situation in which the company was not only ignoring its ethical or corporate social responsibility principles but was also putting its name and image at stake. To immediately handle this situation, the managers of Proctor and Gamble through group decision-making decided to completely stop disposing the chemical waste in the sea and made the decision to burn down the waste in some isolated area. (F.Luthans, 2003). This decision of the company proves that the company neglected its ethical and CSR principles for a short period but then it immediately stopped those operations with the help of effective decision-making. (Kotler, P & Lee, N, 2004) Therefore, effective and appropriate decision-making is essential for the success of every organization. (Schafer, J, 2002) 8
- 9. References Kotler, P & Lee, N 2004, ''Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause'', Wiley Schafer, J, 2002, ''Making Ethical Decisions: practical model- police personnel'', FBI law enforcement bulletin, p. 1-3. Schein, E.H. (2004), Organizational Culture and Leadership (The Jossey-Bass Business & Management Series). Jossey-Bass John B.P (2009)” Organizational Behavior, From theory to Practice”.pp34-56 Schabracq, M.J. (2007) Changing Organizational Culture: The Change Agent's Guidebook. Wiley Bissio, R. (1993), IDB to focus on poverty, environment and private sector. Third World Economics, (16–31 July). F.Luthans (2003).Organizational Behavior (10th Ed.),”Great Leaders: Styles, Activities and Skills”, (pp.581-584) 9
- 10. References Kotler, P & Lee, N 2004, ''Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause'', Wiley Schafer, J, 2002, ''Making Ethical Decisions: practical model- police personnel'', FBI law enforcement bulletin, p. 1-3. Schein, E.H. (2004), Organizational Culture and Leadership (The Jossey-Bass Business & Management Series). Jossey-Bass John B.P (2009)” Organizational Behavior, From theory to Practice”.pp34-56 Schabracq, M.J. (2007) Changing Organizational Culture: The Change Agent's Guidebook. Wiley Bissio, R. (1993), IDB to focus on poverty, environment and private sector. Third World Economics, (16–31 July). F.Luthans (2003).Organizational Behavior (10th Ed.),”Great Leaders: Styles, Activities and Skills”, (pp.581-584) 9
Editor's Notes
- Managers all over the world make various decisions while performing their three managerial duties of organizing, influencing and controlling. In day to day business dealings, all managers face situations in which they have to make all kinds of decisions. For example, decisions for organizing the workforce and their tasks and for influencing them to reach their own goals by achieving the goals of the organization and lastly, controlling the whole management process for the successful running of the company. All of us face such situations in our daily lives where we have to make decisions and choose the best alternative and forego the next best alternative. For example, on a Sunday morning I might feel like watching a movie or playing football with my friends but I cannot do both the things at the same time, hence I will have to make a decision and choose one alternatives of these two. Example of a Programmed decision can involve determining how products will be arranged on the shelves of a supermarket. An example of a nonprogrammed decision can be deciding whether a supermarket should sell an additional type of bread. The manager making this decision must consider whether the new bread will merely stabilize bread sales by competing with existing breads sold in the supermarket or would increase the bread sales on the whole by creating demand of those customers who have never bought bread before. Programmed decisions are routine and repetitive, while nonprogrammed decisions are typically one shot decisions that are less structured.
- When an organization faces a critical situation in which an ethical dilemma arises, then the manager is entirely responsible for such a situation because it is the manager who organizes, influences and controls all the operations of the organization. Therefore, if the manager does not effectively perform his responsibilities he would end up with such situations where he would have to make difficult decisions in order to protect the image and name of the company. The code of ethics is a formal statement that acts as a guide for the ethics of how people within a particular organization should act and make decisions. This decision was taken because proctor and gamble follows the principles of corporate social responsibility, which is the managerial obligation to take action that protects and improves both the welfare of the society as a whole and the interests of the organization.
- The first step of the decision making process is identifying what the problems or barriers are, for only after the barriers have been adequetly identified can the management take steps to eliminate them. Then, the second step is to list the alternative problem solutions, third step is to select the most beneficial alternative out of the list then the fourth step is to implement the chosen alternative.
- Group decision makers are individuals who together make decisions for the organization. Brainstorming is a group decision making process in which negative feedback on any suggested alternative by any group member is forbidden until all members have presented alternatives that they perceive as valuable. Secondly, when a group makes a decision the members of the group tend to support the implementation of the decision more fervently than they would if the decision had been made by an individual. Another advantage of group decision making can be that group members tend to perceive the decision as their own and this ownership perception makes it more likely that they will strive to implement the decision successfully rather than prematurely giving in to failure.
- The nominal group technique is a useful process for helping groups make decisions. This process is designed to ensure that each group member has equal participation in making the group decision. However, the Delphi technique is also a useful process for helping groups make decisions. The Delphi technique involves distributing questionnaires on a specific problem among group members, sharing the questionnaire results with them, and then continuing to re-circulate and refine individual responses until a consensus regarding the problem is reached. The complete uncertainty condition exists when decision makers have absolutely no idea what the results of an implemented alternative will be. Proctor and Gamble was not in the complete certainty situation because the decision makers did not know what the results of their decision would be. (Schafer, J, 2002)
- In business, ethics can be defined as the capacity to reflect on values in the corporate decision-making process, to determine how these values and decisions affect various stockholders groups, and to establish how managers can use these observations in day to day company management. All managers, that is, the Finance Manager, the Production Manager, the Human Resource Manager all should prevent themselves from facing in kind of ethical conflict or dilemma by following the code of ethics and CSR principles. (F.Luthans, 2003).