Effective Decision Making

Abstract
Managers judge the effectiveness of decision in terms of quality, timeliness, acceptance, and ethical appropriateness. The decision-making process is improved though creative problem solving and brainstorming. They way managers frame problems significantly affect the outcome. The effectiveness of a decision depends on cognitive biases and organizational barriers. Effective leader communicate well and motivate others. Managers match a leadership style with a preferred style for the situation. They develop a range of leadership styles and adapt to different situations. Quality, timeliness, acceptance, and appropriateness are components of decision-making. Transformational leaders have vision that guides and motivates them to higher goals. They motivate other to a higher level. Super leaders go a step further by helping others realize and maximize their abilities. Charismatic leaders motivate followers to make significant changes.

They use different styles in making decision. during the winter business must deal with inclement weather. 2002.Decision-Making Skills The effectiveness of a decision depends on factors such as the characteristics of the decision maker. managers vary in the amount or information. A manger is faced with making a decision on whether workers must come to work during a snowstorm. In decision-making. Diagnosing the factors that influence decision makers can improve effectiveness as managers and workers have a better understanding of the way the decision-making process unfolds (Gordon. and influence others. 140). 140). Others rely on their intuitive sense about a situation or focus on the “big picture. various cognitive biases. For example. or experience they have. An individual making crucial decisions may consult outside resources and incorporate knowledge of experts in the area. Interpersonal or leadership skills relate to the way individuals lead. 2002. Some focus on the details of a situation and compile them into a sensible decision. pg. and organizational barriers.” Due to the complexity and uncertainty inherent in certain situations. communicate with. skills. managers face enormous challenges in making effective decisions. motivate. Technical or task skills refer to the individual’s knowledge of the content area of the decision. There are three types of decision-making skills. pg. The manager may consult the local news or various weather channels in order to make the best decision (Gordon. These skills affect the acceptance of a .

Managers who can identify a person’s style have a better chance at matching work assignments to this style. 2002. pg. Personal style characterizes a person in terms of how well he tolerates ambiguity and whether he values task (technical) concerns or people (social) concerns. 2002. A group will list as many options as possible before pursuing a limited number of them. and behavioral. pp. Ideas are not evaluated during the initial stages. pg. 141). Combining these two dimensions results in fours styles— analytical. encourage creativity. directive. It includes situational analysis. 150-151). 140). and ask each participant to offer a specific number of new ideas. evaluation. managers should list and record all ideas. A person’s personality can also influence the decision-making process. Brainstorming Managers use a variety of approaches for improving decision making. see the big picture. conceptual. objective setting. and selection of alternatives (Gordon. 2002. expect results. In brainstorming sessions. . and need affiliation. Listing alternatives without evaluating them encourages people to generate ideas rather than defending or eliminating existing ones. or decision makers who solve problems. offer ideas related to those already listed. Decision-making skills refer to the basic abilities to perform the components of the rational decision-making process. Mangers should also set a time limit for brainstorming (Gordon. and generation. respectively (Gordon.decision. Individuals or groups use brainstorming to generate numerous ideas or alternatives without evaluating their merits. The key decision maker in a business must communicate well with his superiors and subordinates to ensure that the correct decision is made and implemented.

They attach a priority to each grouping and then write a summary sentence. 151). 2002. The process allows team members to identify causes of problems and possible solutions. affinity diagrams offer a special way of structuring brainstorming. This technique allows groups of workers to organize ideas. It also gives team members an equal voice in specifying the key issues (Gordon.Brainstorming helps decision makers think of unexpected and potentially useful possibilities for addressing a problem. Managers commonly use affinity diagrams as part of continuous improvement efforts. Team members generate ideas related to a theme. However. They then group and regroup these ideas until they have about five to 10 groupings. increases understanding in a group. When specialized knowledge is required. 2002. pg. It focuses team members on areas of agreement. and develop action steps. 151). break down communication barriers. It can aid in gaining a consensus among people with different viewpoints (Gordon. The nominal group technique (NGT) describes a structured group meeting in which individuals brainstorm and then rank-order a series of ideas as a way of . so that the process reduces potential conflict over causes of problems and potential solutions. it can also push members to offer new ideas and usually increases the overall creativity of individuals and work groups. Brainstorming can result in many shallow and useless ideas. Managers can use software to encourage brainstorming by generating and applying an assortment of potential solutions. Managers can also encourage brainstorming by creating the proper environment for it. it is limited since it sacrifices the quality of an idea for a quantity of ideas. Working on an affinity diagram helps promote teamwork. For example. It highlights important interdependencies that need to be considered in addressing the problem. show their interrelationships. pg.

An improved nominal group technique offers a number of advantages over the standard nominal group technique. the NGT becomes more useful.resolving differences in the group’s opinion. 2002. The group then lists and shares the solutions as in brainstorming. pp. It requires members to anonymously offer their input to the list of solutions and then vote secretly. limits conflict. 152-153). NGT encourages innovation. NGT gives individuals time to think about the key issues before offering solutions and provides a mechanism for reaching a decision expediently through the ranking-voting procedure. It fosters creativity by allowing extensive individual input into the process. Strong personality types will less often dominate the group because the NGT provides all group members with an opportunity for systematic input. Each group meeting has a clearly focused agenda that limits discussion to a single aspect of the decision. They discuss and clarify the ideas before ranking and voting their preferences. If the group does not agree. 152-153). As a group increases in size and diversity of expertise. pp. they repeat the ranking and voting procedure until the group reaches some agreement. Discussion of items focuses solely on the advantages and disadvantages of various alternatives. emphasizes equal participation by all members. 2002. and incorporates the preferences of individuals in decision-making choices (Gordon. Individuals can rework alternatives to improve them (Gordon. This technique delays evaluation of ideas until all inputs are displayed. This group reviews a problem. helps generate consensus. It also ensures that participants have opportunities to discuss displayed items before voting. The Delphi technique refers to a structured group decision-making technique that uses repeated administration of rating scales to obtain opinions about a . and each member individually offers alternative solutions in writing.

through exploration of these ideas. The process repeats until group members reach agreement and develop a common view of the issues. When selecting a style—task oriented or relations-oriented—a leader considers the awareness of employees’ expertise. The Delphi technique also helps managers who cannot apply precise analytical techniques to solving the problem. 2002. 154).decision. permissible error rate. effective leaders will diagnose a situation and identify the most effective style. It provides a systematic way for considering all ideas that is particularly useful in the case of significant disagreements. and psychological characteristics. The Delphi technique works well when face-to-face conversation is not possible but the input of many people is valuable. Then. It tabulates and returns results for discussion. If the individuals involved failed to communicate effectively in the past. hierarchical level. It also protects individual anonymity. Supervisor considerations reflect a leader’s degree of upward influence and similarity of attitudes and behaviors with those in higher positions. Group members first explore the subject individually. It can increase the effectiveness of group meetings when they occur and reduce the likelihood of the group developing a sense of invulnerability and infallibility. it focuses them until a decision is reached. A leader will consider the task—time urgency. In the conventional Delphi technique. presence of . experience. the Delphi procedures offer a systematic method for ensuring that their opinions are presented (Gordon. relatively fixed. competence. job knowledge. Situational Variables by Fred Fiedler Although leadership style is. pg. but prefer to use subjective judgments on a collective basis. amount of physical danger. He will match the preferred style to the situation. a small group of these people designs a questionnaire and then polls a larger group. It begins with unfocused ideas.

2002. According to Fiedler and his associates. For example. and position power. a leader considers three situational variables—leader member relations. and cooperate. passive. pg. pg. and considerate). degree of job scope. pp. Leader-member relations refer to the extent to which the group trusts the leader and willingly follows his directions. active. When attempting to create a match between style and situation. set goals. In low-stress . If necessary. Fiedler and his associates developed the Least-Preferred Co-worker (LPC) scale to help identify managers’ preferred styles (Gordon. 2002. Effective leaders usually develop a range of leadership styles that they adapt to different situations (Gordon. degree of autonomy. 256). Leader ability contributes to group performance when the leader is directive. Effective leaders seek a match between their preferred style and the situation.external stress. and relation-oriented (permissive. a line manager or night supervisor has position power. 255-256). task structure. If not the manager has poor leader-member relations. a staff member. they change the situation to fit their preferred style. The two leadership styles are task-oriented (controlling. Fiedler also proposed a cognitive resource theory suggesting that leader intelligence and experience influence group performance. and structuring). such as a quality control analyst does not (Gordon. however. Task structure refers to the degree to which the task is clearly defined. 2002. a leader matches his style to the situation. Position power refers to the extent in which the leader has official power to influence others. his style is relatively fixed. 256). and degree of ambiguity of the work being performed. importance and meaningfulness of the tasks. Aspects of each dimension that influence leadership style vary in different situations. The manager has good leadermember relations if employees readily follow instructions.

2002. stockholders. For example. and suppliers. Quality refers to the content or substance of the decision being made. no relationship or a negative relationship exists between intelligence and decisions. and ethical appropriateness are elements in effective decision-making. Highquality decisions do not equate to optimal decisions. executives. better service. It can result in higher profits. pg. customers. and staffing constraints. Timely decision for managers is critical for a firm’s success in the competitive global environment. A satisfactory or acceptable decision may be adequate. 2002. increase the stock value for stockholders. given time. Failure to make timely decisions results in inefficient use of . a sales decision may limit the number of customers but increases overall sales.conditions. financial. Experience and quality of leadership decisions are related in conditions of high interpersonal stress. acceptance. high intelligence results in good decisions. It can improve the working conditions of employees. In high stress conditions. pp 256-258). timeliness. or market share of the company. Elements in an Effective Decision Quality. 134). but no relationship exists in low-stress conditions (Gordon. or advance the professional goals of a manager. It may have the same financial results as doubling the number of customers (Gordon. a staffing decision has a high quality if the employees hired accomplish their work in a timely fashion and their salaries fall within a specified budget. A high-quality decision helps accomplish strategic goals. A good-quality decision results in desired outcomes while meeting a series of specified criteria or constraints. The decision to launch a new product has high quality of it results in increasing the reputation. and improved performance. profits. For example. A high-quality decision also meets the needs of employees.

pp. Workers resistant to this decision may fail to respond to requests for information for the Web site. For example. 2002. In some industries. and an inability to compete effectively in the marketplace. Good decisions result when those affected by the decision understand it. values. Ethical dilemmas result when there are conflicting stakeholders. In contrast. some managers still disregard them in making decisions. 136139). and can implement it. and ambiguous laws. Managers and decision makers must also evaluate a decision according to its ethical justness.resources. Even the best decision loses value when make too late. many people in the financial market industry have been cited for using insider information for personal gain. but others have conducted unethical business unnoticed. an e-commerce company decides to redesign their Web site. Some have been prosecuted for violating SEC laws. Code of Conduct and ethics classes is not only common but also mandatory in many firms. . 135). Support from workers at all levels is critical when implementing significant decisions (Gordon. accept it. pg. 135). 2002. unhappy workers. Although ethical considerations receive the highest priority in many organizations. pg. Tough standards of ethical behavior are now common in the United States. the government mandates them (Gordon. worker support for the redesign may increase the speed and responsiveness of providing information. For example. 2002. Managers need to develop a reasonable timetable for making both major and minor decisions. interests. Many firms now implement extensive training in ethical decisionmaking. They must understand the interrelationships of the various decisions and who is responsible for making and implementing them (Gordon.

The leader helps workers or other managers reframe the way they think about the organization. Their behavior contrasts with transactional leaders who focus more on compliance with existing organizational rules and trade rewards for agreement with the leader’s wishes. They have developed a vision for their organization. They should review the harmful consequences of behaviors to certain constituencies. A transformational leader helps employees see a need to revitalize their organization. pp. . performance. In addition. They motivate others by focusing on higher goals. Managers and employees should apply personal moral or societal codes of values in evaluating decisions. or work group. 2002. In these situations. and organizational barriers (Gordon. and productivity. Transformational leaders motivate others to do better than they expected by raising their consciousness about the importance of certain outcomes such as high productivity or efficiency. The effectiveness of a decision depends on factors such as the characteristics of the decision maker.Managers who operate in cross-cultural situations must deal with variations in personal and societal definitions of ethical or moral behavior. various cognitive biases. cause. Transformational Leadership and Super Leadership Transformational leaders are often charismatic. Employee visits to other organizations can also motivate change. 136-139). they need to determine their own and their company’s ethical standards and use them as guidelines for making decisions. Transformational leaders involve employees in planning for and creating a new vision. This vision guides them in attaining quality. They show the value of what benefits their work team rather than on their personal interest.

270-271). and the leader has an unrealistic assessment or distorted perception of market and constituent needs. transformational leaders may be so driven to achieve a vision that they ignore the costly implications of their goals. and long-term personal commitment to new business development. using the appropriate strategy. pg. They build confidence among their employees by helping them increase their competence and giving them the freedom to take initiative. These CEOs and top-performing managers also rate higher on transformational leadership than a group of ordinary managers. Some research suggests that transformational leadership flows from the leader to his followers. These CEOs inspire commitment by insisting that the firm or department pursue new business development and assign it to the best people. pg. They demonstrate intense. CEOs that succeed in developing new businesses differ from those who attempt new business development and fail. 2002. Superleadership . responsibility. Failure results when the vision reflects the internal needs of the leader rather than those of the market or constituents. 2002. the leader has miscalculated the resources needed to achieve the vision. and managing failures. 2002. A leader may also fail to recognize environmental changes preventing redirection of the vision (Gordon. They apply appropriate discipline to the process by carefully selecting the new venture. 272). undistracted. In some cases. pp. 272).they raise the workers’ need levels so that they value challenges. Training higher-level managers in transformational skills should have a more widespread impact than training only lower-level managers (Gordon. and growth (Gordon.

increased responsibility. challenging. and changing his assumptions. beliefs. The leader trains and supports others in setting accepted. a manager may describe a situation as a winning or losing situation. Framing the Problem The way a decision maker frames a problem has a significant impact on its outcome. mental images. and maximize their abilities. pg. evaluating. He makes sure activities result in a sense of competence.Superleaders go beyond the transformational leader by helping followers discover. 273). and self-congratulations. such as a sense of competence. The leader uses natural rewards that stem from the task. He displays selfleadership behaviors and encourages others to rehearse and practice them. A leader becomes a superleader by becoming a self-leader. and self-administered rewards. He encourages employees to create self-set goals. This leader also creates a culture of selfleadership. A superleader models self-leadership. such as self-recognition. rewards. A superleader creates positive thought patterns by continuously observing. He relies on teams to reinforce principles of self-leadership and provide a context for responsibility and goal setting. They transform employees into self-leaders who take responsibility for motivating and directing their personal behaviors. He uses an array of behavioral and cognitive strategies that include personal goal setting. and attainable goals. For example. The superleader extends self-leadership throughout the organization (Gordon. purpose. He rewards self-leadership behaviors and constructively criticizes other behaviors. They empower followers to contribute fully to organizations. and thinking. Managers tend to take fewer risks regarding choices they frame in a . 2002. use. practice. self-praise. or punishments to oneself. A superleader uses teamwork to promote self-leadership. and self-control.

Some . For example. 142-143). Research has shown. A manager will chose a sure gain of $25 over a 25 percent chance of winning $100 and a 75 percent chance of winning nothing. Structural factors can determine who can legitimately make decisions. that groups increased their commitment to investment decisions in a failing course of action because they inaccurately assessed the probability of a turnaround. for example. The extent of the organizations’ hierarchy and its chain of command may legitimize certain decision makers. In addition to characteristics of the decision maker. They take a greater risk by choosing a 75 percent chance of losing $100 and a 25 percent chance of losing nothing over a sure loss of $75. many dot-com companies give their employees freedom and flexibility in making decisions. 2002. characteristics of the organization can influence decision-making and its effectiveness. People often estimate the likelihood of uncertain events. This assumption causes a decision maker to err in the evaluation of alternatives by using inaccurate probabilities. even though their estimates tend to be inaccurate. For example. they avoid risks by choosing a guaranteed outcome versus a certain percentage chance of a better outcome.positive fashion and more risks about choices they frame negatively. they would respond differently to a situation framed as a gain of $10 a week for two months as opposed to a lump-sum profit of $90 at the end of two months. They value a series of small gains over a single gain of the same summed amount. For example. pp. They kept trying to recoup their losses. In contrast. Flattening the organization by reducing the hierarchy also gives more decision-making responsibility to lower-level managers and employees. managers and employees in a state government often look to their supervisors for approving decisions and handling exceptions. even when a realistic assessment of the situation would have caused them to cut their losses (Gordon.

Companies can encourage worker initiative in reaching good decisions by rewarding creativity. Such expertise can be valuable. the leader formulates her vision of the future and relies on impression management skills to convey this impression to others. moral conviction. however insisting on it in all situations can slow down routine decisions (Gordon. 270). Charismatic leadership occurs in three stages. they actually desire highquality effort and performance.companies limit decision-making responsibilities to those with extensive expertise by emphasizing specialization of functions. and charisma to motivate followers and make significant changes in organizational functioning. In the first stage. effort. Charismatic Leadership A charismatic leader uses self-confidence. They have a unique . In the second stage. They can provide the tools workers need to get the information required for high quality decision-making (Gordon. A company can influence decision-making through its reward system. they might reward employees’ work attendance. and outcomes. pg. dominance. 143). Companies can reward the quality or quantity of decisions made. as well as using personal power to accomplish his vision (Gordon. pg. 143). the leader critically evaluates the current situation. 2002. the third stage. Finally. At this stage. 2002. Former President John F Kennedy and Former President Bill Clinton are considered some of the most charismatic leaders in the world. Frequently they reward one type of behavior while desiring a different type. charismatic leaders show sensitivity to environmental constraints and are more sensitive to follower abilities and needs. the leader deploys innovative and unconventional means. however. 2002. pg. For example.

The Charismatic Leader will typically attach themselves firmly to the identity of the group. Such leaders serve as role models to followers. and obey their leader. . Charismatic leaders who are building a group often focus strongly on making the group very clear and distinct. A “dark side” to charismatic leadership may exist if the leader overemphasizes devotion to himself. Charismatic leaders emerge more often when an organization experiences stress or transitions. They oppose status quo and strive to change it. and influential. such that to join the group is to become one with the leader. Charismatic leaders manage others’ impressions of their leadership so that others view the leader as competent and successful. 2009). inspirational. They are able to transform people to share the radical changes advocated. They will then build the image of the group in the minds of their followers. Subordinates see their empowered supervisors as innovative. Followers trust the correctness of a charismatic leader’s beliefs. They strongly articulate future vision and motivation to lead. often stating ideological goals for followers and setting high expectations for their behavior. Their power base stems from personal power (based on expertise. separating it from other groups. that person feels like he or she is the most important person in the world. They pay a lot of attention to the person they are conversing with and often times. They accept. they create an unchallengeable position for themselves (Communication-Skills-4-Confidence. Their behavior is unconventional or counter-normative. respect. and admiration for a unique hero). show affection for. They are experts in using unconventional means to transcend the existing order. In doing so. They can “work a room” as they move from person to person. as being far superior to all others.ability to captivate people into following them. Their trustworthiness is demonstrated through incurring great personal risk and cost.

2011. Such leaders tend to be egotistical. . New Jersey: Prentice Hall.).makes personal needs paramount. J. 270-217). Organizational Behavior: A Diagnostic Approach (7th ed.communication-skills-4confidence. (2009).html Gordon. Retrieved April 20. References Leadership Styles. They may also have a flawed vision due to seriously miscalculating the resources needed to achieve it or unrealistically assessing the market or changes in the environment (Gordon. and act unethically. or uses highly effective communication skills to mislead or manipulate others.com/leadershipstyles. pp. from Communication-Skills-4Confidence: http://www. (2002). 2002. R. focus on their personal power and achievement.