Expectancy Theory of Motivation
The expectancy theory was proposed by Victor Vroom of Yale School of Management in 1964. Vroom stresses and focuses on outcomes, and not on needs unlike Maslow and Herzberg. The theory states that the intensity of a tendency to perform in a particular manner is dependent on the intensity of an expectation that the performance […]
Motivation and Morale – Relationship and Differences
Morale can be defined as the total satisfaction derived by an individual from his job, his work-group, his superior, the organization he works for and the environment. It generally relates to the feeling of individual’s comfort, happiness and satisfaction. According to Davis, “Morale is a mental condition of groups and individuals which determines their attitude.” […]
The Three Types of Value at Risk (VaR)
The value at risk (VaR) model is a mechanism of calculating the maximum probable loss from a given data set. It needs to be understood that the method being used is a statistical method. Hence, it uses the data given to calculate the probability and extent of the loss. Just like all other statistical models, […]
Problems Faced by Less Developed Countries
Population Growth Among all the developing countries, population growth remains one of the reasons for these countries to remain poor. To take specific examples, both India and China have historically been among the poorer countries because of their huge populations. It was only after the economic liberalisation and opening up of their respective economies that […]
Team Management in Agile and Automated Organizations
How does Top Down Management Work and how does Flatter Management Work? Traditionally, managers were used to the Top Down Hierarchical and Command and Control organizations where orders were sent from above and the managers had to implement them with little autonomy or agency for their individual decision making abilities. Further, team management in such […]
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 note that decision making needs the right kind of information, the complete information and the ability to synthesize and make sense of the information. While the first two attributes depend on external sources, the ability to make informed decisions is a personality trait. Hence, successful CEO’s are those who can take into account the different viewpoints and divergent perspectives and arrive at the right decision.
The business landscape of the current times is littered with examples of companies that have made strategic errors and these are mostly to do with lack of proper decisions taken by the CEO’s and managers in these firms. For instance, the failure of Chrysler and Ford (the automobile majors in the United States) to meet the challenge of competition from Japanese auto majors like Toyota was mostly due to the lack of imaginative decisions that would have responded to the threat in a coherent manner. Of course, it is another matter that these companies (Chrysler in particular) under the stewardship of Lee Iacocca were able to successfully meet the competition by the Japanese because of firm decisions taken by him.
The other aspect that relates to decision making in an organizational context is that there must be complete and accurate information made available to the decision maker. In Economics, there is a term called “asymmetries of information” that indicates how incomplete and insufficient information leads to poor decisions and wrong choices. What this concept means is that having partial information or faulty information often leads to “analysis paralysis” which is another term for poor decision making abilities. Finally, even with reliable and accurate information, the decision maker ought to have good problem solving skills and astute decision making abilities to arrive at sound judgments regarding the everyday problems and issues.
The overriding rule in decision making is that the decision maker ought to have legitimacy and authority over the people who he or she is deciding upon.
In other words, decision makers succeed only when their decisions are honored and followed by the people or groups that the decision impacts. The reason for mentioning this towards the end is that in many cases, the fragmented nature of the organizations with different interests represented by factions often undermines the decision making capabilities of the decision maker. Hence, it is worth mentioning that such authority must be vested with the decision maker.
Hence, it is clear that the topic of decision making encompasses several elements (some of which have been briefly discussed in this article). We hope to cover more of these elements in detail in the subsequent articles and this article is thought of as setting the tone for the rest of the module on decision making.
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