Group Decision Making


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a look at Group Decision Making in Organizational Behaviour. We have a look at the types, theories & due diligence.

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  • is in essence an attempt to provide business owners and managers with reliable and complete background information on proposed business deals, whether the deal in question is a proposed acquisition of another company or a partnership with an international distributor, so that they can make informed decisions about whether to go forward with the business action.Successful acquisition strategy depends on the structure and depth of the due diligence process."
  • Lead and co-investors, corporate development staff, attorneys, accountants, investment bankers, loan officers and other professionals involved in a transaction may have a need or an obligation to conduct independent due diligence. Target management typically assists these parties in obtaining due diligence information but because it is unwise to totally rely on management third party consultants such as Astute Diligence are often brought in to conduct due diligence.
  • A criterion for the selection of leader of group is seniority. Management gives the responsibility to that person which is senior most among the group members. Top management tries to create positive competition between the groups, which have independent task. If the groups have to depend upon one another for completion of task, then the management induces cooperation among the groups not competition. Nestlé completely discourages intragroup competition to avoid the coalition and groups within the groups. For avoiding intragroup competition, Nestlé gives rewards to groups, basis upon the group performance evaluation.
  • Every individual in the group is asked to think of the ways to achieve those objectives. Every person is free to give his idea. People are encouraged to give as many ideas as they can. . Then after all the ideas have been discussed, some of these are sorted out for later discussion by the consensus the final ideas are selected.
  • After the idea selection the group members discuss different implementation programs and sub-objectives are made which they have to achieve the overall objective of the group formation.
  • Then the group member starts work. During the work the group members meet after short intervals and see that whether they are going in a right way or not. If satisfactory situation is there then they go on the same way. If the sub-goals are not achieved or the group is facing certain problems then the group leader try to solve these problems. If the problem is at group level then the group leader tell the problem to the management.So the corrective actions are taken by the group in their meetings and the decisions are made by consensus regularly.
  • Nestlé increases the cohesiveness among the group members by collective performance rewards and by including the small number of persons in the group. Nestlé increases the group performance by providing them chart in which the clear-cut responsibilities of group members are written and group members also have opportunity to hold meetings with management. In this way, groups can increase their performance.Nestlé is booming its performance due to group work.
  • Clear, honest, two-way communication between management and employees at all levels is intrinsic to the culture of the Tata Steel Group.There are well-established and effective arrangements at each business location for transparent communication and consultation with Works Councils and Trade Union representatives.
  • Group Decision Making

    1. 1. Group Decision Making Types, Theories & Due Diligence Plus case studies on: Nestle, Tata Steel, Pixar & Kasparov vs the World. Presented by: Arpita Baxi #104 Disha Dorkadi #107 Nitisha Goyal #108 Chirag Chauhan #303 Kushal Karamchandani #309 Chittesh Khilnani #310 Ishan Parekh #315
    2. 2. Group decision making Types
    3. 3. Brainstorming • In a typical brainstorming session, a half dozen to a dozen people sit around a table. • The group leader states the problem in a clear manner so that it is understood by all participants. • Members then "freewheel" as many alternatives as they can in a given length of time. No criticism is allowed, & all the alternatives are recorded for later discussion and analysis.  Brainstorming, however, is merely a process for generating ideas. The following two techniques go further by offering methods of actually arriving at a preferred solution.
    4. 4. Typical example Global Warming cars/suvs not recycling chopping down trees Crazy weather too many people loss of polar ice caps Dying of animals
    5. 5. Nominal Group Technique • Group technique members are all physically present, as in a traditional committee meeting, but operate independently. Specifically, a problem is presented &then the following steps take place…. — Each member independently writes down his or her ideas on the problem. — Members then present the idea to the group. Each member takes their turn, presenting a single idea until all ideas have been presented & recorded. No discussion takes place until all ideas have been recorded. — The group now discusses the ideas for clarity & evaluates them — Each group member silently & independently rank-orders the ideas. The ideas with the highest aggregate ranking determine the final decision.
    6. 6. Brainstorming & NGT • Brainstorming & NGT are most applicable when… —Some members are very vocal. —People work better in silence. —Some members are reluctant to participate. —There is concern that enough ideas will be generated. —Some participants are new to the team. —The issue is controversial and the discussion could become heated.
    7. 7. Delphi Stages Delphi Processes Round 1: Participants are chosen. Initial data is gathered. Participants present their views on the policy. Round 2: A list of possible alternatives is compiled & distributed to participants. Ideas are synthesized & a smaller number of possible policy recommendations are compiled. Round 3: An amended list of alternatives is distributed. Ideas are fine tuned by the participants. Study Results One collective policy is established. The Delphi Method
    8. 8. The Delphi method • Most applicable when an expert panel & judgemental data is required ▫ Clear-cut solutions not possible ▫ The problem is complex, large, multidisciplinary ▫ Uncertainties due to fast development, or large time scale ▫ Opinions required from a large group ▫ Anonymity is required
    9. 9. Group decision making Theories
    10. 10. Motivation to decide  Cognitive Dissonance: we try to reduce the discomfort of dissonance.  Consistency Theory: we seek the comfort of internal alignment.  Commitment: we feel obliged to complete a public commitment.  Certainty Effect: a certainty that becomes less likely has high impact.  Choice-supportive bias: Distorting memories to make decisions seem good.  Confirmation Bias: we seek confirmation that we made a good decision.  Scarcity Principle: we anticipate regret and so want what is scarce.
    11. 11. Thinking process  Ambiguity Effect: We prefer a known probability to an unknown one.  Bias Blind Spot: We do not compensate enough for our own bias.  Elaboration Likelihood Model: We either think centrally or take unthinking short-cut decisions.  Heuristic-Systematic Persuasion Model: We either use short-cuts or logic to interpret arguments.  Hyperbolic discounting: We prefer short-term benefits.  Information Bias: Seeking facts when making decision, even when they are irrelevant.  Information Processing Theory: Persuasion requires attention and comparison with previous views.  Source Credibility: Who we are likely to believe.  Unconscious Thought Theory: Letting your unconscious do the thinking.
    12. 12. Deciding  Augmenting Principle: evidence for a decision is accumulative.  Bounded Rationality: we only use limited logic in decisions.  Bias Correction: Well-meaning over-compensation.  Explanatory Coherence: we like simple, explainable hypotheses.  Filter Theory: we make choices through a series of selection filters.  Involvement: when we are involved we need more information.  Multi-Attribute Choice: we use various strategies for different types of choice.  Mere Exposure Theory: simple exposure makes us like things more.  Perceptual Contrast Effect: we decide by comparing things.  Priming: Setting up memory to be used later.
    13. 13. Group decision making Due Diligence
    14. 14. • "The process of researching, understanding and, in some cases, avoiding these risks is known as due diligence.“ • Improving information will improve your ability to make quality decisions • Can save company from making costly mistakes. • A reasonable investigation focusing on material future matters
    15. 15. When it is carried • corporate mergers/acquisitions • Or a major product purchases/sales-sales contracts, rental contracts, employment contracts, inventory lists, customer lists, and equipment lists Areas of due diligence
    16. 16. When it is conducted? • Initial data collection • evaluation commences when a business opportunity first arises and continues throughout the talks. • Thorough detailed due diligence is typically conducted after the parties involved in a proposed transaction have agreed in principle that a deal should be pursued and after a preliminary understanding has been reached, but prior to the signing of a binding contract.
    17. 17. How is Due Diligence Conducted? checklist of needed information Management of the target company prepares some of the information Financial statements, business plans and other documents are reviewed interviews and site visits are conducted research is conducted with external sources -- including customers, suppliers, industry experts, trade organizations, market research firms, and others.
    18. 18. How Much Due Diligence Needs to Be Conducted? is based on many factors- • prior experiences • the size of the transaction • the likelihood of closing a transaction • tolerance for risk • time constraints • cost factors • resource availability. • It is impossible to learn everything about a business but it is important to learn enough such that you lower your risks to the appropriate level and make good, informed business decisions.
    19. 19. Foci for due diligence study • Who conducts due diligence? • Commercial due diligence • Technical due diligence • Legal due diligence • Financial due diligence • Environmental due diligence
    20. 20. fast-changing business environment • outsource the due diligence task to a reputable research firm. • build an efficient in-house program within their legal, marketing, or corporate security sectors • It can only improve the odds. Risk cannot be totally eliminated through due diligence and success can never be guaranteed.
    21. 21. Group decision making Case Study - Nestle
    22. 22. Example Case: Nestle • Nestlé both formal and informal types of groups are working. • Formal groups are made for special tasks. • Nestlé has fifteen basic principles for selection of members of the groups. • While selecting the persons, the management also considers complementary skills and culture
    23. 23. • A criterion for the selection of leader of group is seniority. • Top management tries to create positive competition between the groups • If the groups have to depend upon one another for completion of task, then it induces cooperation instead of competition. • Nestlé completely discourages intra-group competition to avoid the coalition and groups within the groups. • For avoiding intra-group competition, Nestlé gives rewards to groups, basis upon the group performance evaluation.
    24. 24. Group decision making • The groups perform brainstorming sessions by keeping in view the objective or task of the group. All the different ideas are recorded. • Then in the later session, the individuals are asked to clearly discuss their ideas. • They are asked that they should be fully clear about their own ideas so that it won’t take much time in discussion
    25. 25. Idea Selection Implementation program Sub- objectives Overall objective
    26. 26. Post-Decision making Group member starts work. Meetings after short intervals to verify progress If satisfactory situation is there then they continue If the sub-goals are not achieved then the group leader tries to solve these problems. If the problem is at group level then the group leader tells the problem to the management.
    27. 27. Improving group performance • Nestlé increases the cohesiveness by: • Collective performance rewards and by including the small number of persons in the group. • Charted clear-cut responsibilities of group members are written • Group members also have opportunity to hold meetings with management. • The evaluation of groups in Nestlé is a continuous process
    28. 28. Group decision making Case Study – Tata Steel
    29. 29. Company Profile • Established in 1907. • India's second-largest and second-most profitable company in private sector. • Ranked seventh in the global steel sales. • Tata Steel with Corus is the fifth largest global steel producer with a combined output of 23.5 MT. • Tata Steel is among the lowest cost producers of steel in the world.
    30. 30. Group Decision Making at Tata Steel • High degree of employee involvement. • Company Belief: Union is an asset to the management. • Employees of tata steel represented by independent trade unions. • Effort to stay in touch with the employees. • Ensure: Continuous performance improvement. • Closer association of employees with management began in 1919. • Formalized in 1956.
    31. 31. Joint Consultation System (JCS) • JCS existing for past 50 years. • Objective: Ensure employee participation at all levels including top management. • Purpose: Increase Productivity Better understanding to the employees of their role and importance Satisfy the urge for self expression
    32. 32. Three-tier system at Tata Steel • Study operational results and production problems • Improve productivity and discipline and economize cost • Encouragement of suggestions • Improvement of working conditions also Joint Department Councils • Discharge special function Joint Works Councils • Advising management on production and welfare Joint Consultative Council of Management
    33. 33. MD Online • Forum between MD and employees of company. • Share concerns of employees. • MD on first working day of month communicates performance of organization. • Uses webcast and receives feedback. • Hotmail: An e-communication channel. • Feedback provided in 48 hours.
    34. 34. The Experience • TISCO's experience with workers' participation has been satisfactory. • 1957-1972 : 14,104 suggestions • 70% of them implemented. • Covered a wide range of topics and issues. • The councils have been successful in involving workers equally in the process of production.
    35. 35. Group decision making Case Study – Pixar
    36. 36. Company Profile • An American computer animation film studio • Based in Emeryville, California • Won a number of awards 26 Academy Awards 7 Golden Globes 3 Grammy awards
    37. 37. • CGI-animated feature films • Photo Realistic Render Man: Personalized Image rendering API Toy Story A Bug’s life Finding Nemo The Incredible Cars Up
    38. 38. Four stages of Pixar Process Development: Creating the storyline Pre- production: Addressing technical challenges Production: Making the film Post production: Polishing the final product Each stage in the Pixar process involves Typical group decision making technique
    39. 39. Factors leading to excellent group decision making Clear values Constant communication Routine postmortems Regular injection of outsiders to challenge the status quo Employees set free to express their ideas ‘All for one, one for all’
    40. 40. Group Decision Making • Its managers give its directors a lot of autonomy. • Even though directors have autonomy, they get feedback from others. • Pixar uses a process for “postmortems” on the major aspects of movies after they’re completed.
    41. 41. • Restart approach • Extensive educational programme: Improves organizational judgment. • Giving people opportunities to fail together and to recover from mistakes together.
    42. 42. Group decision making Case Study – Kasparov vs the World
    43. 43. Introduction • Kasparov vs the World was a game of chess played in 1999 over the internet. • Playing white, Garry Kasparov faced over 50,000 players from 75 countries. • After 62 moves played over 4 months, Kasparov won the game.
    44. 44. • A good example of decision making process of groups can be greater then for one person who is smarter than the group. 1. Karpov vs the world (1996) 2. Kasparov vs the world (1999)
    45. 45. Decision Making for the world team • A new IT system by microsoft to enable better coordination • Official forum to discuss & coordinate ideas • 4 official advisors to the world team (incl. 2 grandmasters) • Publicly accessible analysis tree; showing moves, countermoves; arguments & refutations • Fascinating case study in the power of collective collabration
    46. 46. How it worked • Public analysis decision tree • Basic idea – anyone could vote for the preferred next move • On a typical move – over 5000 votes were registered • 10% moves – bad; 2.4% moves – illegal !
    47. 47. • In Kasparov’s own words, “it is the greatest game in the history of chess. The sheer number of ideas, the complexity and the contribution it has made to chess make it the most important game ever played.”