Decision Making in an Organizational Context
Decision making is part of everyone’s life and all of us have to make decisions every moment. Right from choosing what to wear to what to eat to where we live and work and extending to whom we marry, decisions are an integral part of our lives. In an organizational context, it is worthwhile to […]
Checklist for Effective Resume Writing
A resume is also known as CV or curriculum vitae. Resume is an influential and credible summary of an individual’s employment qualifications. There is no standard format for a resume. It gives an idea to the reader that how you can be an asset to their organization. A resume should be: – Neat– Have factual […]
What is Public Administration? – Meaning and its Definition
Public administration is like any other administration which is carried out in public interest. Before we dwell deeper into understanding public administration it would be beneficial to try and see how different authors have tried to define what administration is. Marx defines administration as – Administration is determined action taken in pursuit of a conscious […]
Role of Management/Organization in Overcoming Leadership Challenges
It is rightly said that if you get a good boss, you are the luckiest employee and if your boss does not support you, God can only save you! Leaders are appointed to provide a direction to the team members and also motivate them to deliver their level best. Is there any employee who admits […]
Top Down Decision Making versus Bottom Up Decision Making
The previous articles touched upon the role of hierarchy in decision making. In this article, we consider whether top down decision or bottom up decision making is effective. To consider this comparison it would be useful to think of top down decision making as being akin to someone sitting on top of a tree telling […]
Managers in contemporary organizations are confronted with uncertainty and ambiguity in their everyday lives. Not only do they have to contend with rapidly changing trends and fluid situations, the data they get from the ground or from market research becomes redundant with no time. This has given rise to confusion and chaos in the way organizations approach the future. This situation can be remedied by the use of scenario based decision-making where the managers draw up possible scenarios that the company might have to contend with in the short term, medium term, and longer term.
By drawing up scenarios that consist of simulations of the best-case situation and the worst-case situation, the managers would be better able to take the right decision when the situation manifests itself.
The point here is that looking into the future is impossible except for oracles and clairvoyants. Hence, some sort of grip on the future must be firmed up by planning for all possibilities.
Over the last couple of years, global businesses had to contend with multiple economic shocks starting with the bankruptcy of the investment bank, Lehmann Brothers that nearly brought down the global financial system. Next, the Eurozone crisis erupted that threatened to bring entire governments to their knees. Now, we have the specter of diminishing resources and runaway inflation. In this context, it becomes important for managers to draw up scenarios that would happen with a certain degree of probability. For instance, it would be better for managers to think of the eventuality of Greece leaving the Eurozone and then planning for it accordingly. For managers in sectors that do not have exposure to financial instruments in a major way (after all, which sector is immune from financial shocks?), they can simulate models and scenarios where a war in the Middle East is predicted and then base their strategies accordingly.
The point here is that when there is so much uncertainty, it becomes tough to anticipate events. Hence, by drawing up scenarios that simulate the worst and the best as well, decisions can be taken that would derive advantage to the organizations. When one adds complexity to the uncertainty and ambiguity that pervades the current world, one is even more muddied and muddled to take decisions. For this, managing the present, it is a challenge and hence many organizations leave future forecasts to consultants and management experts. However, this need not be the case and in-house expertise can be developed to deal with emerging scenarios.
A case in point is NASSCOM (the Apex body of IT and ITES companies in India) that has been advising IT companies in India to plan for the downturn and the possible aftershocks from the Eurozone crisis and the upcoming “fiscal cliff” in the United States. NASSCOM has also been asking IT companies to draw up scenarios for these events that if not planned for have the potential to blow up on everyone’s face. Unfortunately, many organizations are rushing into the future without any thought or idea on how they would deal with “Black Swan” events. A Black Swan event is a low probability but high impact event that can surprise people with its occurrence.
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