Assignment 1

MANAGEMENT
&
ORGANISATION
Executive MBA/MPA

ZAHID NAZIR
Roll # AB523655
Semester: Spring 2009
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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 changes-
converge 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

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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.

Femininity - cultural orientation in which relationships and

concern for others are valued. Women should be nurturing ,
modest and tender.

5. Time Orientation

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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)

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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.

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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 work-
related 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 Not dissatisfied Positive

and but satisfaction
demotivation not motivated and motivation

Hygiene Factors Motivational Factors

•Company policies
•Achievement
•Quality of supervision
•Career advancement
•Relations with others
•Personal growth
•Personal life
•Job interest
•Rate of pay
•Recognition
•Job security
•Responsibility
•Working conditions

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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

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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

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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 Your tutor does not look There are a lot of wonderful things
you put in, probably not possible like someone who has £1 million 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.

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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 piece-
rate 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 high-
achievers 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.

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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.

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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 “home-

based 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.
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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

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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

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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
Return to
Forming Independence
Dependence/
interdependence

Independence

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 Stages of Group Development

Prestage I Stage I Stage II

Forming Storming

Stage III Stage IV Stage V

Norming Performing 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.
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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

Gather
Check The Result Information and
Resources

Make a Decision Identify the

alternatives

Weigh and
Choose The Best Compare
Alternative 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!
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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
2 3 3 3 0 1
Wagon

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 Total

Weights: 4 5 1 2 3 4

Sports Car 4 0 0 2 9 12 27

SUV/4x4 0 15 2 4 3 4 28

Family Car 8 10 1 6 0 0 25

Station
8 15 3 6 0 4 36
Wagon

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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 Total stars for each fruit
(A)Apple (O)Orange (M)Melon (K)Kiwi (B)Banana (P)Pear
over whole table
(C) C C C C C C
Cherries get 9
Cherries *** * ** * * *
O M A B P
(A)Apple Apples get 2
*** * ** * *
M O B P
(O)Orange Oranges get 5
* ** * *
M B M
(M)Melon Melons get 6
** * **
B K
(K)Kiwi Kiwis get 2
* **
P
(B)Banana Bananas get 4
*
(P)Pear 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. List the problems you face, or the options you have available.
2. Group options where they are facets of the same larger problem.
3. Apply an appropriate score to each group.
4. 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

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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.

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 2. List all forces for change in one column, and all forces against
change in another column.
3. Assign a score to each force, from 1 (weak) to 5 (strong).
4. 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:

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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

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 needs to be done and to form their own opinions on how to best
accomplish the task or solve the problem.
2. Form a core group of two members. Have them discuss the
problem.
3. 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.
4. 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.
5. 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

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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 Interesting

Have to sell house (- Easier to find new
More going on (+5)
6) job? (+1)
Easier to see friends Meet more people?
More pollution (-3)
(+5) (+2)
Easier to get places More difficult to get
Less space (-3)
(+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.
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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 better-
looking 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.

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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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