Semester 2 Assgn 1 Management & Organization

Assignment 1

MANAGEMENT & ORGANISATION Executive MBA/MPA

ZAHID NAZIR Roll # AB523655 Semester: Spring 2009 Zahid Nazir Roll # AB 523655

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Question 1

Considering the current scenario, some of the evolutionary changes have been taken place that present critical challenges for the managers today. List and briefly explain all these challenges?

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CRITICAL CHALLENGES FACING MANAGERS Managers must understand how to lead and why people at work behave the way do in order to accomplish the goals of their organization. Understanding organizational behavior becomes a prerequisite of good management. But there is nothing static about this process because the science of management is forever evolving and the context in which managers work is in continual flux. People change too; they change their aspirations and expectations, their hopes and dreams, their lifestyles. All of these changes-environmental changes and personal changesconverge to produce particular challenges for managers today. Four of the most critical challenges in the role of management at the start of the twenty first century are: • • • •

Globalization Managing diverse workforce Technological change Managing ethical behavior

Although we can analyze each of these aspects of management separately, they are joined, interlinked like Olympic circles. They share common cause and are affected by the convergence of economic, political, scientific, social and competitive factors. 1. Managing in a Global Environment. • Globalization is a world that is free from national boundaries or a “borderless world.” • Transnational organizations operates in a large global distances and employ multicultural people. • Ex. US managers need to understand the way other countries handle business. • Understanding Cultural Differences in Global Environment 1. Individualism versus Collectivism Zahid Nazir Roll # AB 523655

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Individualism - People are responsible for their own interest, primary concerns is for themselves and their families. Individualistic managers emphasize and encourage individual achievement. Collectivism - individuals depend strongly on extended families or clans. Collectivistic managers seek to fit harmoniously within the group. 2. Power Distance Unequal distribution of power. High Power Distance – bosses are afforded with more power, titles are used, formality is the rule. Low Power Distance – Managers are given power only if they have expertise. Managers and employees are seen as similar. 3. Uncertainty avoidance The degree to which a culture tolerates ambiguity and uncertainty High Uncertainty Avoidance – concerned with security and tend to avoid conflict. People have need for consensus Low Uncertainty Avoidance – people are more willing to take risk and more tolerant of individual differences. 4. Masculinity versus Femininity Masculinity - orientation in which assertiveness and materialism are valued. Men should be assertive, tough and decisive. - cultural orientation in which relationships and Femininity concern for others are valued. Women should be nurturing , modest and tender. 5. Time Orientation Zahid Nazir Roll # AB 523655

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Cultures values are oriented toward future (long- term orientation). Values such are thrift, and persistence which focus on the future. Cultures value past and present ( short-term orientation). Values respect for tradition (past) and meeting social obligations (present) 2. Managing Diverse Workforce 1. Cultural Diversity Social and demographic changes that are producing diversity in organizations. 2. Gender Diversity Glass Ceiling - a transparent barrier that keeps women from rising above a certain level of organizations. 3. Age Diversity Aging workforce. 4. Ability Diversity Workforce full of individuals with different abilities and disabilities. 5. Differences are assets Encompasses religion, social status and sexual orientation. Ex. Acceptance to gay and lesbian employees. People who worked in the organization full or stigma and distrust are not likely to perform well. Minorities are rated lower than white. Diversity’s Benefit and Problem

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Benefits: 1. Diversity management can help firms attract and retain the best available human talent 2. Diversity can enhance marketing efforts 3. Diversity promotes creativity and innovation 4. Diversity results in better problem solving 5. Diversity enhances organizational flexibility Problems: 1. Resistance to change 2. Lack of cohesiveness 3. Communication problem 4. Conflicts 5. Decision making

3. Managing Technological Innovation • The intellectual and mechanical processes used by organization to transform inputs into products or services that meet organizational goals. • Managers face the challenge of rapidly changing technology and of putting it to optimum use • Alternative Work Arrangement Telecommuting - transmitting work from a home computer to the office using a modem Hoteling - hotel work space

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Satellite offices - large offices are broken into network of smaller workplaces that are closely located to the employees

4. Managing Ethical Behavior • Ethical decisions to be able to make “right” choices. • Ethical Theories 1. Consequential theories Emphasizes the consequences or results of behavior. 2. Rule-based theories Emphasizes the character of the act itself rather than its effects in arriving at universal moral rights and wrongs. Moral rights - basis for legal rights 3. Character theories Emphasizes the character, personal virtues and integrity of the individual. Virtues – summary of ideals that defines good character. Ex. Honesty, loyalty, trustworthiness. • People need ethical theories to help think through confusing, complex, difficult moral choices and ethical decisions. Key Areas of Ethical and Moral Dilemmas 1. Employee Rights Managing the rights of employees at work creates many ethical dilemmas in organization. Safeguarding the employees right to privacy. Ex. Employee data from computerized information system, layoffs, Persons with AIDS (PWA)

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2. Sexual Harassment An unwelcome sexual intention whether verbal or physical that affects an employee job conditions or create hostile work environment Managers should take necessary actions on sexual harassment complaints and a clear policies and guidelines should be crafted. 3. Romantic Involvements Relationships between Supervisors and staff or coworkers. Managers should realize that workplace romance can not be eliminated though there must be a clear rules and policies to avoid problems on productivity or workplace morale. 4. Organizational Justice Distributive justice - fairness of outcomes that individuals received. Ex. Salaries and benefits Procedural justice - fairness of the process by which outcomes are allocated Ex. Has the organization used the correct procedure of allocating resources? 5. Whistle-Blowing Whistle-blowers - employees who inform the authorities of wrongdoing by their companies or coworkers. Organization should communicate to the employees on proper disclosure of wrongdoings.

Reference: Management & Organization (AIOU) Zahid Nazir Roll # AB 523655

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Question 2

How content theories of motivation are different from the process theories of work motivation?

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MOTIVATION – Is the result of an interaction between the person and a situation; it is not a personal trait. – Is the process by which a person’s efforts are energized, directed, and sustained towards attaining a goal. • Energy: a measure of intensity or drive. • Direction: toward organizational goals • Persistence: exerting effort to achieve goals.

MOTIVATION Direction

Intensity

Persistence

THEORIES OF MOTIVATION: 1. Content Theories of Motivation • • • •

Alderfer's ERG Theory Herzberg's Motivation-Hygiene Theory Maslow's Hierarchy of Needs McClelland's Acquired Needs Theory

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2. Process Theories of Motivation • Adams' Equity Theory • Vroom's Expectancy Theory • Kahler's drivers CONTENT THEORIES OF MOTIVATION Content theories tend to explain "What are the things that satisfy or motivate people?" They are also called Need theories. These theories explain why individual's needs keep changing. If these needs are identified, it is easy to motivate an individual. These theories are not absolutely right, but give some idea about how people are motivated. 1. Alderfer's ERG Theory ERG theory and Maslow's Hierarchy theory are based on similar principles. At the first level, are the needs of existence, including basic psychological and other material desires. At second level are the needs to relate to other people. Third level of this theory is growth, which forces a person to utilize his capabilities to do some productive or creative work.

Similarities to Maslow's Needs Hierarchy After the original formulation of Maslow's Hierarchy of Needs, studies had shown that the middle levels of Maslow's hierarchy overlap. Zahid Nazir Roll # AB 523655

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Alderfer addressed this issue by reducing the number of levels to three. The letters ERG represent these three levels of needs: • • •

Existence refers to our concern with basic material existence motivators. Relatedness refers to the motivation we have for maintaining interpersonal relationships. Growth refers to an intrinsic desire for personal development.

Like Maslow's model, the ERG motivation is hierarchical, and creates a pyramid or triangle appearance. Existence needs motivate at a more fundamental level than relatedness needs, which, in turn supercedes growth needs.

Growth Self-Actualization

External Esteem Needs

Relatedness Internal Esteem Needs

Social Needs

Existence Safety Needs

Physiological Needs

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2. Maslow's Hierarchy of Needs This theory is based on assumption that human needs are the main factors which motivates an individual. According to Abraham Maslow human needs can be divided into five categories or levels. First level needs are basic physiological needs, and includes food, shelter and cloths. After these needs are satisfied a person moves to second level, the safety and security needs. These needs include safety around home and work place. Third level of Maslow's hierarchy includes social need of love and affection. After belonging or social needs are satisfied an individual moves to esteem needs level. At this level a person needs self respect, confidence and responsibility. The final level of Maslow's hierarchy is self actualization needs where a person wants to utilize his full potential.

Maslow’s Hierarchy of Needs

BECOMING ALL THAT ONE CAN BECOME Self-perception as a worthwhile person Desire for love, affection, and belonging. Job tenure, savings accounts, insurance policies Food, water, sleep, oxygen, warmth, freedom from pain

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3. Herzberg's Motivation-Hygiene Theory Frederick Herzberg's motivation theory is one of the content theories of motivation. These attempt to explain the factors that motivate individuals through identifying and satisfying their individual needs, desires and the aims pursued to satisfy these desires. (cf: Maslow's Needs Hierarchy ) Frederick Herzberg studied clinical psychology in Pittsburgh, researching workrelated motivation of thousands of employees. He published his findings in "The Motivation to Work" (1959). This theory of motivation is known as a two factor theory. It is based upon the notion that motivation can be split into hygiene factors and motivation factors. He concluded that there were two types of motivation: Hygiene Factors which can demotivate when not present. Hygiene Factors affect the level of dissatisfaction, but are rarely quoted as creators of job satisfaction. Motivation Factors which will motivate when present. Job dissatisfaction isn't usually blamed on Motivation Factors, but they are cited as the cause of job satisfaction. These two separate 'needs' are the need to avoid unpleasantness and discomfort and, at the other end of the motivational scale, the need for personal development. A shortage of the factors that positively encourage employees (the motivating factors) will cause employees to focus on other, non-job related 'hygiene' factors

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Herzberg’s Motivation-Hygiene Theory

Herzberg’s Two-Factor Theory Dissatisfaction and demotivation

Not dissatisfied but not motivated

Hygiene Factors •Company policies •Quality of supervision •Relations with others •Personal life •Rate of pay •Job security •Working conditions

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Positive satisfaction and motivation

Motivational Factors •Achievement •Career advancement •Personal growth •Job interest •Recognition •Responsibility

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4. McClelland's Acquired Needs Theory This theory is also known as Acquired theory or Learned theory. As the name suggests this theory is based on needs of an individual, which are the source of motivation. These needs include • The need for achievement • The need for power • The need for affiliation Individual, whose desire for achievement is high, will be motivated with tasks which are difficult and challenging. Individual, who want to exercise power will be motivated to lead others. The need for affiliation is satisfied by good interpersonal relations and friendly environment.

Process Theories of Motivation According to process theories of motivation, motivation is a cognitive rational process and concentrates on psychological and behavioral processes that motivate an individual. Main process theories include Vroom's Expectancy Theory, Adams Equity Theory and Handy's Motivation Calculus. 1. Adams' Equity Theory According to Equity theory a person judges his inputs to his outcomes with others in an organization. If an individual perceives that he is getting less output for his inputs as compared to others he will feel inequity and eventually will be de motivated. This inequity will be reduced by individual in different ways like reducing his inputs, by demanding increase in outputs in form of increase in salary etc. Inequity may be positive or negative. One main factor to be considered is that many people overestimate others reward and there own contribution or inputs. Inequity may be tolerated for a short Zahid Nazir Roll # AB 523655

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period but if it exists for a longer period it may cause a serious impact on individual's motivation, his work quality and overall output of an organization.

2.Vroom's Expectancy Theory Individuals have their own goals which may be different from the overall organizations goals, however if these individual and organization goals are harmonized, considerably good results can be obtained. According to Victor Vroom a person's motivation depends on three variables, which are Force, Valence and Expectancy. The force or strength of an individual preference depends on two factors namely Valence and Expectancy. Valence defines an individual's strength for an Zahid Nazir Roll # AB 523655

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outcome; if an individual desire for that outcome is strong he will put more effort. Expectancy is a person's perception about the results which will be achieved from a certain behavior. This can be written as Force /Instrumentality = Valence X Expectancy Thus an individual effort or force depends on preference for a certain outcome and the expectancy that a certain behavior will result in that outcome. If both valence and expectancy for an out come are strong there will be more force and if any of these variables is less the force will be comparatively low.

How Expectancy Theory Works Your tutor offers you £1 million if you

memorise the textbook by tomorrow morning.

Expectancy

Instrumentality

Valence

Effort - Performance Link

Performance - Rewards Link

Rewards - Personal Goals Link

No matter how much effort you put in, probably not possible

Your tutor does not look like someone who has £1 million

There are a lot of wonderful things you could do with £1 million

to memorise the text in 24 hours E=0

I=0

V=1

Conclusion: Though you value the reward, you will not be motivated to do this task.

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Simplified Expectancy Model

3.Kahler's drivers Kahler (1975) identified five common drivers that motivate us, and which can be at the root of dysfunctional behaviors. These are commonly framed as the Transactional Analysis drivers, although they can be used stand-alone. • • • • •

Be Perfect Be Strong Hurry Up Please Others Try Hard

Any of these can be rooted in early admonishment from teachers and parents who are seeking to help the child become socially functional, but perhaps do not offer sufficient guidance and praise for adequate behavior, thus leaving the child over-doing things. Zahid Nazir Roll # AB 523655

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In reasonable quantities, these drivers are effective in creating functioning and successful adults. When people do not know when to stop, then dysfunctional behavior can set in, causing stress and consequent further coping.

Reference: www.mindtools.com

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Question 3

Are you in favor of fragmenting the fixed salary system and replacing it with the piece-rate system? Discuss the strengths and weaknesses of the piecerate system? In what kind of workplace setting, it is practicable and why?

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FIXED SALARY SYSTEM: A salary that is set at a certain amount, and does not increase or decrease as a result of certain events occurring or not occurring, such as a level of business being done by the employer.

PIECE RATE SYSTEM - Motivation in Practice Piece-rate pay gives a payment for each item produced – it is therefore the easiest way for a business to ensure that employees are paid for the amount of work they do. Piece-rate pay is also sometimes referred to as a “payment by results system”. Piece-rate pay encourages effort, but, it is argued, often at the expense of quality. From the employee’s perspective, there are some problems. What happens if production machinery breaks down? What happens if there is a problem with the delivery of raw materials that slows production? These factors are outside of the employee’s control – but could potentially affect their pay. The answer to these problems is that piece-rate pay systems tend, in reality, to have two elements:

• A basic pay element – this is fixed (time-based) •

An output-related element (piece-rate). Often the piece-rate element is only triggered by the business exceeding a target output in a defined period of time. Most high achievers I know are on a very competitive base salary with commission attached. This way it's easy for the company to entice highachievers to join their company, the company understands that sales people will always have a bad month or two... yet the sales person can achieve as much money as the business they're bringing in the door. Just offering commission will get you sales people, but not high achievers... and just offering salary will get you complacent sales people, not high achievers. Zahid Nazir Roll # AB 523655

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It all comes down to whether or not the company is willing to pay for performance. If you want the best, you need to pay them the best or they will not last long in your organization. STRENGTHS OF PIECE RATE SYSTEM : • A piece rate/commission pay scheme means that your employees are paid purely on results. This means that if targets were not met, you do not have to pay for work that has not been done; which can improve the efficiency of your business. • A key benefit is that a piece rate scheme helps to reward extra productivity, as employees are paid directly on performance. This means that employees who make extra effort will be rewarded for it, and are likely to feel more appreciated by your business. • A piece rate system makes flexible hours (flexitime) and ‘rota’ schemes much easier to implement, as you can adjust an employees hours to match the amount of sales/production you believe is needed. WEAKNESSES OF PIECE RATE SYSTEM: • A piece rate or commission pay scheme is much harder to administrate than other pay schemes. Each employee needs to have their wages calculated every payroll, which raises your costs in providing and accounting for their pay. • Employees may worry about losing pay if sales or production is lowered. This can make them de-motivated, especially when you need to change hours or rates; as they are left uncertain as to the safety of their finances. Zahid Nazir Roll # AB 523655

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• Employees may become angry if productivity (and therefore pay) is lowered because of the actions of other employees, management, or by external forces; as they will be losing money and not be able to do anything about it. WHEN SHOULD IT BE USED? A piece rate or commission pay scheme is most appropriate for jobs that rely almost entirely on sales or production, and have relatively stable requirements throughout the year.

Case study: Piece-rate pay in practice in the UK – Home-based workers In the UK many thousands of people engage in what is known as “homebased work”. This refers to work: • In the home, or near the home in premises that are not those of an employer • For a cash income (i.e. not unpaid household work) Whilst there are many successful business people and well-paid professionals working from home, the use of piece-rate pay is focused is on those at the other end of the scale – home-based workers, mainly women, who earn only a subsistence level income. Subsistence level home-based workers fall into two broad categories: • Those who work for an employer, intermediary or subcontractor for a piece-rate, who are not responsible for designing or marketing the product, but simply contribute their labour. These workers are often called subcontracted or dependent home-workers

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• Workers who design and market their own products, but who cannot be considered to be running small businesses - known as own-account workers. The majority of home-based workers are women who do home based work in order to combine earning cash with other responsibilities, such as child-care and household management. Many earn well below the local minimum wage or average earnings. Most dependent workers work informally, without a proper employment contract. They are rarely organized or supported by formal trade unions. Home-based work is found in most sectors of the economy, both modern and traditional industries. Good examples include: • Production of garments and shoes • Assembly of electronic, plastic and metal components • Many kinds of packing work • Weaving and dyeing of textiles in the traditional sectors • Handicraft work • Sewing and knitting garments • Assembling toys • Data-processing It used to be thought that home-based work was an old-fashioned form of employment that would die out with the rise of modern industry. However, over the last 20 years much large-scale industry has reorganized its production, subcontracting work to smaller companies, often in other countries. At the end of the chain there are often informal workshops and home-based workers. Subcontracted homework is a form of production which allows companies to reduce their costs by:

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• Outsourcing production to lower-paid workers, usually without formal contracts, employment and social protection or even a regular supply of work. • Passing on some of the costs of heating, lighting and storage to the workers themselves. • Avoiding responsibility for health and safety for these workers. • Using home-based workers as a source of flexible labour. Some of the problems faced by home-based workers include: • Irregular work – and therefore irregular income • Earnings well below average • No economic or social security for sickness, maternity or old age • Long working hours • Potential health problems caused by repetitive processes and inadequate health and safety

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Question 4

Employees working in an organization normally try to become a part of a group despite the reason, this participation tends to be challenging, stressful, unpredictable and sometimes conflict-ridden. What are the key benefits associated with joining either formal or informal groups?

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WHAT IS A GROUP “A group is two or more individuals interacting with each other in some manner to accomplish common task or to achieve specific goals.” Groups come in many forms, shapes, and sizes. Most managers belong to several different groups at the same time, some at work, some at community, some formally organized, and some informal and social in nature. The most basic way of identifying types of groups is to distinguish between: • Formal groups • Informal groups

1. Formal Groups The organization’s managers to accomplish goals and serve the needs of the organization deliberately create formal groups. The major purpose of formal groups is to perform specific tasks and achieve specific objectives defined by the organization. The most common type of formal work group consists of individuals cooperating under the direction of a leader. Examples of formal groups are departments, divisions, taskforce, project groups, quality circles, committees, and boards of directors. Zahid Nazir Roll # AB 523655

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Formal groups are created by the organization and are intentionally designed to direct members toward some important organizational goal. Some examples of formal groups are: • Command Groups: Groups that are determined by the organization chart and composed of individuals who report directly to a given manager. • Task Group: Groups composed of individuals brought together to complete a specific job task; their existence is often temporary because once the task is completed, the group disbands. • Cross-Functional Teams: Groups that bring together the knowledge and skills of individuals from various work areas or groups whose members have been trained to do each others jobs. • Self-Managed Teams: Groups that are essentially independent and in addition to their own tasks, take on traditional managerial responsibilities such as hiring, planning and scheduling and performance evaluations. 2. Informal Groups Informal groups in organizations are not formed or planned by the organization’s managers. Rather, they are self-created and evolve out of the formal organization for a variety of reasons, such as proximity, common interests, or needs of individuals. It would be difficult for organization to prohibit informal working relationships from developing. Informal groups develop naturally among an organization’s personnel without any direction from management. One key factor in the emergence of informal groups is a common interest shared by its members. For example, a group of employees who band Zahid Nazir Roll # AB 523655

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together to seek union representation may be called an interest group. Of course, sometimes the interests that bind individuals together are far more diffuse. Groups may develop out of a common interest in participating in sports, or going to the movies, or just getting together to talk. These kinds of informal groups are known as friendship groups. Leaders in Informal Groups: • There may be several leaders within groups for one reason or another, but the fact remains that a leader would always be an important factor within the group for the influence or experience they give. • A leader is mostly, but not necessarily, an important or high ranking employee in the organization. • An informal leader could also benefit from some organizational benefits because of his status within his colleagues. • Leaders are usually spotted in organizations as the people a ratio of the employees go to for advice, like hanging out with or even sit beside him in the cafeteria. • Even within managers in the company, a leader emerges as the on most of the other managers look up to for decisions or advice. WHY PEOPLES FORM GROUPS Peoples join the groups (formal or informal) because of the following reasons. Need satisfaction Economic motives Achievement of goals Zahid Nazir Roll # AB 523655

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Proximity and attraction Factors attracting people to a group Goals of group are compatible and clearly specified Group has a charismatic leader Reputation of group indicated it successfully accomplishes its task Group is small enough to permit members to have their opinions heard and evaluated by other Members support and help one another to overcome barriers to personal growth and development STAGES OF GROUP DEVELOPMENT: Group development is a dynamic process. Most groups are in a continual state of change. Even though groups probably never reach complete stability, research shows they go through five stages, these are forming, storming, norming, performing and adjourning.

Tuckman’s Five-Stage Theory of Group Development Performing Adjourning Norming Storming Forming

Return to Independence

Dependence/ interdependence Independence

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Stages of Group Development Prestage I

Stage I Forming

Stage II Storming

Stage III Norming

Stage IV Performing

Stage V Adjourning

1. Forming is the process of getting oriented and getting acquainted 2. Storming is characterized by the emergence of individual personalities and roles and conflicts within the group 3. Norming conflicts are resolved, close relationships develop, and unity and harmony emerge 4. Performing members concentrate on solving problems and completing the assigned tasks 5. Adjourning members prepare for disbandment BENEFITS OF GROUPS IN ORGANISATION • Makes a more effective total system. • Lightens workload on management. • Helps get the work done. Zahid Nazir Roll # AB 523655

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• • • • • •

Tends to encourage cooperation. Fill in gaps in a managers abilities. Gives satisfactions and stability to work groups. Improves communication. Provides a safety valve for employee emotions. Encourages managers to plan and act more carefully

Reference: www.authorstream.com managementskills-information.blogspot.com

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QUESTION 5

A number of decision-making techniques are used in an organization to come at right decision. Explain each technique with the help of example? Which technique you think is most effective in your organization and why?

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DECISION MAKING “Decision making is the study of identifying and choosing alternatives based on the values and preferences of the decision maker.” Making a decision implies that there are alternative choices to be considered, and in such a case we want not only to identify as many of these alternatives as possible but to choose the one that • has the highest probability of success or effectiveness and • best fits with our goals, desires, lifestyle, values, and so on. “Decision making is the process of sufficiently reducing uncertainty and doubt about alternatives to allow a reasonable choice to be made from among them.” This definition stresses the information-gathering function of decision making. It should be noted here that uncertainty is reduced rather than eliminated. Very few decisions are made with absolute certainty because complete knowledge about all the alternatives is seldom possible. Thus, every decision involves a certain amount of risk.

THE DECISION MAKING PROCESS

Define Your Problem

Check The Result

Make a Decision

Choose The Best Alternative

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Gather Information and Resources

Identify the alternatives

Weigh and Compare Alternatives

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DECISION MAKING TECHNIQUES Different decision making techniques are:

Grid Analysis

Paired Comparison Analysis

Pareto Analysis

Decision Tree

Force Field Analysis

Stepladder Technique

Starbursting

'Plus/Minus/Interesting'

Cost/Benefit Analysis

Six Thinking Hat

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GRID ANALYSIS Grid Analysis (also known as Decision Matrix Analysis, Pugh Matrix Analysis or MAUT, which stands for Multi-Attribute Utility Theory) is a useful technique to use for making a decision. It is particularly powerful where you have a number of good alternatives to choose from, and many different factors to take into account. STEPS: 1. Lay out your options as rows on a table. 2. Set up the columns to show your factors. 3. Allocate weights to show the importance of each of these factors. Score each choice for each factor using numbers from 0 (poor) to 5 (very good). 4. Multiply each score by the weight of the factor, to show its contribution to the overall selection. 5. Finally add up the total scores for each option. Select the highest scoring option. Example: A windsurfing enthusiast is about to replace his car. He needs one that not only carries a board and sails, but also that will be good for business travel. He has always loved open-topped sports cars. No car he can find is good for all three things. His options are: • • • •

An SUV/4x4, hard topped vehicle. A comfortable 'family car'. A station wagon/estate car. A convertible sports car.

Criteria that he wants to consider are: • • • • •

Cost. Ability to carry a sail board safely. Ability to store sails and equipment securely. Comfort over long distances. Fun! Zahid Nazir Roll # AB 523655

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•

Nice look and build quality to car.

Firstly he draws up the table shown in Figure 1, and scores each option by how well it satisfies each factor: Figure 1: Example Grid Analysis Showing Unweighted Assessment of How Each Type of Car Satisfies Each Factor Factors:

Cost

Board Storage Comfort

Fun

Look

Total

Weights: Sports Car

1

0

0

1

3

3

SUV/4x4

0

3

2

2

1

1

Family Car

2

2

1

3

0

0

Station Wagon

2

3

3

3

0

1

Next he decides the relative weights for each of the factors. He multiplies these by the scores already entered, and totals them. This is shown in Figure 2: Figure 2: Example Grid Analysis Showing Weighted Assessment of How Each Type of Car Satisfies Each Factor Factors:

Cost

Board Storage Comfort

Fun

Look

Weights:

4

5

1

Sports Car

4

0

SUV/4x4

0

Family Car Station Wagon

Total

2

3

4

0

2

9

12

27

15

2

4

3

4

28

8

10

1

6

0

0

25

8

15

3

6

0

4

36

This gives an interesting result: Despite its lack of fun, a station wagon may be the best choice. If the wind-surfer still feels unhappy with the decision, maybe he has underestimated the importance of one of the factors. Perhaps he should give 'fun' a weight of 7, and buy an old station wagon to carry his board!

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PAIRED COMPARISON Paired Comparison Analysis helps you to work out the importance of a number of options relative to each other. It is particularly useful where you do not have objective data to base this on. This makes it easy to choose the most important problem to solve, or select the solution that will give you the greatest advantage. Paired Comparison Analysis helps you to set priorities where there are conflicting demands on your resources. It is also an ideal tool for comparing "apples with oranges" – completely different options. STEPS: 1. List the options you will compare. Assign a letter to each option. 2. Mark the options as row and column headings on the worksheet. 3. Note that the cells on the table where you will be comparing an option with itself have been blocked out - there will never be a difference in these cells! 4. The cells on the table where you will be duplicating a comparison are also blocked out. 5. Within the remaining cells compare the option in the row with the one in the column. For each cell, decide which of the two options is more important. Write down the letter of the more important option in the cell, and score the difference in importance from 0 (no difference) to 3 (major difference). 6. Finally, consolidate the results by adding up the total of all the values for each of the options. You may want to convert these values into a percentage of the total score. EXAMPLE: This example matrix shows a personal choice amongst seven different fruit

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(A)Apple (O)Orange (M)Melon (K)Kiwi (B)Banana (P)Pear (C) Cherries (A)Apple

C ***

C * O ***

(O)Orange (M)Melon

C ** M * M *

C * A ** O ** M **

(K)Kiwi

C * B * B * B * B *

(B)Banana (P)Pear

C * P * P * M ** K ** P *

Total stars for each fruit over whole table Cherries get 9 Apples get 2 Oranges get 5 Melons get 6 Kiwis get 2 Bananas get 4 Pears get 3

1. Arrange a matrix as show above, giving each item a unique one-letter abbreviation (e.g. O for Orange in the example). 2. Mark each cell in the matrix to indicate which fruit you prefer of the two items it represents. You could also show how strong each preference is as the example illustrates. For instance, in the example


‘C ***’ means: Cherries very much preferred




‘B *’ means: Bananas slightly preferred’

3. Now sum up the total number of preferences or ‘*’s each item has. For instance:


There are 6 cells where Cherries are preferred (‘C’) which between them have 9‘*’s, thus Cherries get a total score of 9.




Conversely there are only 2 cells where Oranges are preferred (‘O’) with 5 ‘*’s between them, so Oranges get a total score of 5.

4. These total scores are shown in the right-hand column. Clearly, Cherries win by quite a wide margin, followed by Melons, Bananas and Pears.

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PARETO ANALYSIS Pareto analysis is a very simple technique that helps you to choose the most effective changes to make. It uses the Pareto principle – the idea that by doing 20% of work you can generate 80% of the advantage of doing the entire job. Pareto analysis is a formal technique for finding the changes that will give the biggest benefits. It is useful where many possible courses of action are competing for your attention. STEPS: 1. 2. 3. 4.

List the problems you face, or the options you have available. Group options where they are facets of the same larger problem. Apply an appropriate score to each group. Work on the group with the highest score.

Example 1 Below is a simple example of a Pareto diagram using sample data showing the relative frequency of causes for errors on websites. It enables you to see what 20% of cases are causing 80% of the problems and where efforts should be focused to achieve the greatest improvement. The value of the Pareto Principle for a project manager is that it reminds you to focus on the 20% of things that matter. Of the things you do during your project, only 20% are really important. Those 20% produce 80% of your results. Identify and focus on those things first, but don't totally ignore the remaining 80% of causes.

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Example 2: A manager has taken over a failing service center. He commissions research to find out why customers think that service is poor. He gets the following comments back from the customers: 1. Phones are only answered after many rings. 2. Staff seem distracted and under pressure. 3. Engineers do not appear to be well organized. They need second visits to bring extra parts. This means that customers have to take more holiday to be there a second time. 4. They do not know what time they will arrive. This means that customers may have to be in all day for an engineer to visit. 5. Staff members do not always seem to know what they are doing. 6. Sometimes when staff members arrive, the customer finds that the problem could have been solved over the phone. The manager groups these problems together. He then scores each group by the number of complaints, and orders the list: • • •

Lack of staff training: items 5 and 6: 51 complaints Too few staff: items 1, 2 and 4: 21 complaints Poor organization and preparation: item 3: 2 complaints

By doing the Pareto analysis above, the manager can better see that the vast majority of problems (69%) can be solved by improving staff skills. Once this is done, it may be worth looking at increasing the number of staff members. Alternatively, as staff members become more able to solve problems over the phone, maybe the need for new staff members may decline. It looks as if comments on poor organization and preparation may be rare, and could be caused by problems beyond the manager's control. By carrying out a Pareto Analysis, the manager is able to focus on training as an issue, rather than spreading effort over training, taking on new staff members, and possibly installing a new computer system.

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DELPHI TECHNIQUE • This technique developed by OLAF HELMER and his colleagues at RAND Corporation, has a degree of scientific respectability and acceptance. • A panel of expert on a particular problem area is selected, usually from both inside and outside the organization. • The expert are asked to make (Secretly, so that they will not influenced by others) a forecast as to what they think will happen, and when, in various areas of new discoveries or development.

DELPHI TECHNIQUE PROBLEM PRESENTED

QUESTIONNAIRE COMPLETED

RESULT COMPILED, DISTRIBUTED

SECOND & SUBSEQUENT QUESTIONNAIRE COMPLETED

CONSENSUS

Fig: Diagram representation of the Delphi technique employed Zahid Nazir Roll # AB 523655

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DECISION TREES Decision Trees are useful tools for helping you to choose between several courses of action. They provide a highly effective structure within which you can explore options, and investigate the possible outcomes of choosing those options. They also help you to form a balanced picture of the risks and rewards associated with each possible course of action. STEPS: 1. Draw a small square to represent this on the left hand side of a large piece of paper, half way down the page. 2. From this box draw out lines towards the right for each possible solution, and write a short description of the solution along the line. Keep the lines apart as far as possible so that you can expand your thoughts. 3. At the end of each line, consider the results. If the result of taking that decision is uncertain, draw a small circle. If the result is another decision that you need to make, draw another square. Squares represent decisions, and circles represent uncertain outcomes. Write the decision or factor above the square or circle. If you have completed the solution at the end of the line, just leave it blank. 4. Starting from the new decision squares on your diagram, draw out lines representing the options that you could select. From the circles draw lines representing possible outcomes. Again make a brief note on the line saying what it means. Keep on doing this until you have drawn out as many of the possible outcomes and decisions as you can see leading on from the original decisions. Example

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The illustration provided here is a cannonical example in data mining, involving the decision to play or not play based on climate conditions. In this case, outlook is in the position of the root node. The degrees of the node are attribute values. In this example, the child nodes are tests of humidity and windy, leading to the leaf nodes which are the actual classifications. This example also includes the corresponding data, also referred to as instances. In our example, there are 9 "play" days and 5 "no play" days.

FORCE FIELD ANALYSIS Force Field Analysis is a useful technique for looking at all the forces for and against a decision. In effect, it is a specialized method of weighing pros and cons. By carrying out the analysis you can plan to strengthen the forces supporting a decision, and reduce the impact of opposition to it. STEPS: 1.

Describe your plan or proposal for change in the middle. Zahid Nazir Roll # AB 523655

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2.

3. 4.

List all forces for change in one column, and all forces against change in another column. Assign a score to each force, from 1 (weak) to 5 (strong). Once you have carried out an analysis, you can decide whether your project is viable, based on the total score.

Example: Imagine that you are a manager deciding whether to install new manufacturing equipment in your factory. You might draw up a force field analysis like the one in Figure 1:

Once you have carried out an analysis, you can decide whether your project is viable. In the example above, you might initially question whether it is worth going ahead with the plan. Where you have already decided to carry out a project, Force Field Analysis can help you to work out how to improve its probability of success. Here you have two choices: Zahid Nazir Roll # AB 523655

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• •

To reduce the strength of the forces opposing a project, or To increase the forces pushing a project

Often the most elegant solution is the first: just trying to force change through may cause its own problems. People can be uncooperative if change is forced on them. If you had to implement the project in the example above, the analysis might suggest a number of changes to the initial plan: • • • • •

By training staff (increase cost by 1) you could eliminate fear of technology (reduce fear by 2) It would be useful to show staff that change is necessary for business survival (new force in favor, +2) Staff could be shown that new machines would introduce variety and interest to their jobs (new force, +1) You could raise wages to reflect new productivity (cost +1, loss of overtime -2) Slightly different machines with filters to eliminate pollution could be installed (environmental impact -1)

These changes would swing the balance from 11:10 (against the plan), to 8:13 (in favor of the plan).

STEP LADDER TECHNIQUE The Stepladder Technique is a useful method for encouraging individual participation in group decision making. The Stepladder Technique is a simple tool that manages how members enter the decision-making group. Developed by Steven Rogelberg, Janet Barnes-Farrell and Charles Lowe in 1992, it encourages all members to contribute on an individual level BEFORE being influenced by anyone else. These results in a wider variety of ideas, it prevents people from "hiding" within the group, and it helps people avoid being "stepped on" or overpowered by stronger, louder group members. STEPS: 1. Before getting together as a group, present the task or problem to all members. Give everyone sufficient time to think about what Zahid Nazir Roll # AB 523655

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2. 3.

4.

5.

needs to be done and to form their own opinions on how to best accomplish the task or solve the problem. Form a core group of two members. Have them discuss the problem. Add a third group member to the core group. The third member presents ideas to the first two members BEFORE hearing the ideas that have already been discussed. After all three members have laid out their solutions and ideas, they discuss their options together. Repeat the same process by adding a fourth member, and so on, to the group. Allow time for discussion after each additional member has presented his or her ideas. Reach a final decision only after all members have been brought in and presented their ideas.

Application: The stepladder technique has many potentially useful applications, notably in business, education and any general organizational context where people get together in order to make decisions. This technique has been tested mainly with 4-people groups. The research literature on group decision-making generally agrees that any decision-making group larger than 9 or 10 people starts losing productivity and quality of decisions, an effect due mainly to social loafing (free rider effect). This effect also exists in small groups but is less likely, and can be further reduced through the use of the stepladder technique. A recent application for this technique has been with audio conferencing, as suggested in a 2002 study by Rogelberg, O'Connor and Sederburg. Consistent with research conducted on face-to-face groups, the stepladder technique was found to facilitate the decision-making performance of groups interacting via audioconference.

PLUS/MINUS/INTERESTING (PMI) PMI stands for 'Plus/Minus/Interesting'. It is a valuable improvement to the 'weighing pros and cons' technique used for centuries. PMI is an important Decision Making tool: the mind tools used so far in this section have focused on selecting a course of action from a range of options. Before you move straight to action on this course of action, it is important Zahid Nazir Roll # AB 523655

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to check that it is going to improve the situation PMI is a good way of weighing the pros, cons and implications of a decision. When you have selected a course of action, PMI is a good technique to use to check that it is worth taking. STEPS: 1. Draw up a table with three columns headed plus, minus and Interesting. 2. Write down all the positive points of following the course of action, all the negatives, and all the interesting implications and possible outcomes within the table. 3. If the decision is still not obvious, you can then score the table to show the importance of individual items. The total score should show whether it is worth implementing the decision. Example: A young professional is deciding where to live. Her question is 'Should she move to the big city?' She draws up the PMI table below: Plus

Minus

More going on (+5) Easier to see friends (+5) Easier to get places (+3)

Interesting

Have to sell house (- Easier to find new 6) job? (+1) Meet more people? More pollution (-3) (+2) More difficult to get Less space (-3) own work done? (-4) No countryside (-2) More difficult to get to work? (-4)

+13

-18

-1

She scores the table as 13 (Plus) - 18 (Minus) - 1 (Interesting) = - 6 For her, the comforts of a settled rural existence outweigh the call of the 'bright lights' - it would be much better for her to live outside the city, but close enough to travel in if necessary. Zahid Nazir Roll # AB 523655

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STAR BURSTING Star bursting is a form of brainstorming that focuses on generating questions rather than answers. It can be used iteratively, with further layers of questioning about the answers to the initial set of questions.The best way to see the power of this simple but effective technique is to think of a product, challenge or issue to work on, and follow the steps STEPS: 1. Draw a large six-pointed star in the middle, and write your idea, product or challenge in the centre. 2. Write the words Who, What, Why, Where, When and How at the tip of each point of the star. 3. Brainstorm questions about the idea or product starting with each of these words. The questions radiate out from the central star. Don't try to answer any of the questions as you go along. Instead, concentrate on thinking up as many questions as you can. 4. Depending on the scope of the exercise, you may want to have further star bursting sessions to explore the answers to these initial questions further

Example: Figure below shows some of the questions you might generate in a short starbursting session on the skates mentioned above.

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Starbursting is a form of brainstorming that focuses on generating questions about an idea or challenge in a systematic, comprehensive way. It's a useful tool to support your problem solving or decision making processes by helping you to understand all aspects and options more fully.

COST BENEFIT ANALYSIS Cost Benefit Analysis or CBA is a relatively simple and widely used technique for deciding whether to make a change. As its name suggests, you simply add up the value of the benefits of a course of action, and subtract the costs associated with it.

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STEPS: 1. Firstly work out how much the change will cost to make. Then calculate the benefit you will from it. 2. Where costs or benefits are paid or received over time, work out the time it will take for the benefits to repay the costs. 3. Cost/Benefit Analysis can be carried out using only financial costs and financial benefits. You may, however, decide to include intangible items within the analysis. As you must estimate a value for these, this inevitably brings an element of subjectivity into the process. 4. Larger projects are evaluated using formal finance/capital budgeting, which takes into account many of the complexities involved with financial Decision Making. Example: A sales director is deciding whether to implement a new computer-based contact management and sales processing system. His department has only a few computers, and his salespeople are not computer literate. He is aware that computerized sales forces are able to contact more customers and give a higher quality of reliability and service to those customers. They are more able to meet commitments, and can work more efficiently with fulfillment and delivery staff. His financial cost/benefit analysis is shown below: Costs: New computer equipment: • • • • •

10 network-ready PCs with supporting software @ $2,450 each 1 server @ $3,500 3 printers @ $1,200 each Cabling & Installation @ $4,600 Sales Support Software @ $15,000

Training costs: • • •

Computer introduction - 8 people @ $400 each Keyboard skills - 8 people @ $400 each Sales Support System - 12 people @ $700 each

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Other costs: • • •

Lost time: 40 man days @ $200 / day Lost sales through disruption: estimate: $20,000 Lost sales through inefficiency during first months: estimate: $20,000

Total cost: $114,000 Benefits: • • • • • •

Tripling of mail shot capacity: estimate: $40,000 / year Ability to sustain telesales campaigns: estimate: $20,000 / year Improved efficiency and reliability of follow-up: estimate: $50,000 / year Improved customer service and retention: estimate: $30,000 / year Improved accuracy of customer information: estimate: $10,000 / year More ability to manage sales effort: $30,000 / year

Total Benefit: $180,000/year Payback time: $114,000 / $180,000 = 0.63 of a year = approx. 8 months Inevitably the estimates of the benefit given by the new system are quite subjective. Despite this, the Sales Director is very likely to introduce it, given the short payback time.

SIX THINKING HATS "Six Thinking Hats" is a powerful technique that helps you look at important decisions from a number of different perspectives. It helps you make better decisions by pushing you to move outside your habitual ways of thinking. As such, it helps you understand the full complexity of a decision, and spot issues and opportunities which you might otherwise not notice. To use Six Thinking Hats to improve the quality of your decision-making, look at the decision "wearing" each of the thinking hats in turn. Each "Thinking Hat" is a different style of thinking. These are explained below:

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•

White Hat: With this thinking hat, you focus on the data available. Look at the information you have, and see what you can learn from it. Look for gaps in your knowledge, and either try to fill them or take account of them. This is where you analyze past trends, and try to extrapolate from historical data.

•

Red Hat: Wearing the red hat, you look at the decision using intuition, gut reaction, and emotion. Also try to think how other people will react emotionally, and try to understand the intuitive responses of people who do not fully know your reasoning.

•

Black Hat: When using black hat thinking, look at things pessimistically, cautiously and defensively. Try to see why ideas and approaches might not work. This is important because it highlights the weak points in a plan or course of action. It allows you to eliminate them, alter your approach, or prepare contingency plans to counter problems that arise. Black Hat thinking helps to make your plans tougher and more resilient. It can also help you to spot fatal flaws and risks before you embark on a course of action. Black Hat thinking is one of the real benefits of this technique, as many successful people get so used to thinking positively that often they cannot see problems in advance, leaving them under-prepared for difficulties.

•

Yellow Hat: The yellow hat helps you to think positively. It is the optimistic viewpoint that helps you to see all the benefits of the decision and the value in it, and spot the opportunities that arise from it. Yellow Hat thinking helps you to keep going when everything looks gloomy and difficult.

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•

Green Hat: The Green Hat stands for creativity. This is where you can develop creative solutions to a problem. It is a freewheeling way of thinking, in which there is little criticism of ideas. A whole range of creativity tools can help you here.

•

Blue Hat: The Blue Hat stands for process control. This is the hat worn by people chairing meetings. When running into difficulties because ideas are running dry, they may direct activity into Green Hat thinking. When contingency plans are needed, they will ask for Black Hat thinking, and so on.

Example: The directors of a property company are looking at whether they should construct a new office building. The economy is doing well, and the amount of vacant office space is reducing sharply. As part of their decision they decide to use the 6 Thinking Hats technique during a planning meeting. Looking at the problem with the White Hat, they analyze the data they have. They examine the trend in vacant office space, which shows a sharp reduction. They anticipate that by the time the office block would be completed, that there will be a severe shortage of office space. Current government projections show steady economic growth for at least the construction period. With Red Hat thinking, some of the directors think the proposed building looks quite ugly. While it would be highly cost-effective, they worry that people would not like to work in it. When they think with the Black Hat, they worry that government projections may be wrong. The economy may be about to enter a 'cyclical downturn', in which case the office building may be empty for a long time. If the building is not attractive, then companies will choose to work in another betterlooking building at the same rent. With the Yellow Hat, however, if the economy holds up and their projections are correct, the company stands to make a great deal of money. Zahid Nazir Roll # AB 523655

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If they are lucky, maybe they could sell the building before the next downturn, or rent to tenants on long-term leases that will last through any recession. With Green Hat thinking they consider whether they should change the design to make the building more pleasant. Perhaps they could build prestige offices that people would want to rent in any economic climate. Alternatively, maybe they should invest the money in the short term to buy up property at a low cost when a recession comes. The Blue Hat has been used by the meeting's Chair to move between the different thinking styles. He or she may have needed to keep other members of the team from switching styles, or from criticizing other peoples' points.

Which technique you think is most effective in your organization and why? In our organization the group decision making is the most suitable technique i.e. Any decision-making process that is performed by several individuals. The most popular of group decision making technique is Delphi Technique. Advantages Of Group Decision Making. • The amount of information and experience available can be increased by including more individuals in the decision-making process. • Group decision making tends to generate more alternatives, possibly allowing the organization to optimize more. Communication and understanding are also increased when group decision making is used. This, in turn, increases the likelihood of the decision's being accepted and supported.

Reference: www.mindtools.com www.decision-making-confidence.com

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