Decision making in organizations

- Big strategic issues and daily operational problems

New markets, products or investments
Distribution of resources
Projects
Promotions/layoffs
Delivery/postponement
Control or 'freedom'

Decision making
- Not a goal but a means to realize a goal or solve a problem
Company profit
Good customer relations
Employee satisfaction
Well being of environment
- Decisiveness & commitment
Task & relation

Leadership
- Who?
Based on what? - Why him/her?
Leader emergence; who is seen as being leader?
- Emotionally stable, extravert
- Visionary/strategical
Effectiveness; when is a leader effective?
- Attempted leadership
- Successfull leaership
- Effective leadership; Effective leader influences behavior of followers to
mutual satisfaction.
Universal or culturally bound?
- Meta-analysis on 73 samples
Government/army; emotional stability, extraversion, conscientiousness
Industry; emotional stability, extraversion, openness to experience
Students; emotional stability, extraversion, openness,
conscientiousness and agreeableness
- Concept of leadership;
Difference between leader and manager?
- Manager is a role
Ensures 'law and order'
Organizing, planning, problem solving (cognitive and business skills)
Dependent upon subordinates
- Leadership is emergent (not formalized)
Ensures vision and change (strategy)
Guiding, coaching, connecting ((relationship management)Strategic and
interpersonal skills)
Dependent upon followers
- Why desire to lead?
Affective-identity motive
- Need for power and control
Tendency to take charge in groups
Instrumental motive
- Personal advantages
Sociaal-normative motive
- Unselfish - calling or honorable

What contributes to leader effectiveness?

1. Power approach; leadership leads power and possibility to influence others
Ways of power;
Legitimate power
 Reward power
Coercive power
Referent power
Expert power -- Cut accross hierarchical structures
Downside of power; power tends to cuorrupt and absolute power corrupts
absolutely
Unrealistic self image
Overestimating one's influence
Underestimation of subordinates
'Hungry' for more power
2. Trait approach
What should a leader be?
Universeel met leiderschapstrekken;
- Intelligentie
- Extraversie
- Verantwoordelijkheid
- Zelfvertrouwen
- Vocabulair
- Geslacht
3. Behavioral approach
What should a leader do?
Universeel met bepaald gedrag; (OHIO/MICHIGAN STATE STUDIES)
- Task oriented; initiating structure
- Relation oriented; consideration
4. Contingency approach
What should a leader DO IF...?
Contingent met leiderschapstrekken; (FIEDLER MODEL)
- Contingenties: Effectivity of leadership style is depented upon
subordinates and situation
Contingent met bepaald gedrag;
- Path-goal Theory
- Vroom-Yetton
- Situational leadership theory
Effective leadership behavior is dependent upon maturity (KSA and self-
confidence) of subordinates.
- LMX theory

Modern leadership approaches

- In modern leadership theories the focus is on the relationship between leader and
subordinate
Leader-Member Exchange (LMX) theory
Transformational leadership
- Transformational leader 'seduces' people to perform at the best of their
abilities in service of a higher collective goal
- Appeals to noble motives - what is good and fair
Contrary to a transactional leader = closes a deal in order to reach a
personal goal
- Uses the 4 I's;
Idealized influence
Inspirational motivation
Intellectual stimulation
Individual consideration
4 * I = Performance beyond Expectation
- Inspirational leader
- Leader and follower increase eachothers morality and motivation; both
become more powerful
Charismatic leadership
- Inspirational leader
- Focus on the person of the leader him/herself
 - USes charm to make people hold on to him/her - seeks admiration
- Focus on loyality - followers get emotionally dependent; smaller
- Breeding ground for power abuse

Vroom-Yetton model
- Choise between autocracy, consultation or group decision;
How much time is available?
Who has the relevant information?
How big is the chance of disagreements within the group about the
alternatives?
How important is the quality of the decision?
How important is the acceptance of the decision - would an autocratic
decision be accepted?

(Dis)advantages of group decision making

- Advantages;
More information
More experience
More alternatives
Better acceptance of the decision
Legitimacy (understanding for the decision)
- Disadvantages;
Groups need more time
Diffuse responsibility
Pressure to conform & other traps
- Traps;
1. Conformity; people tend to adapt their behavior and ideas to that of
the group
Ash's Experiment (1950)
- Conformity dependent on group size and unanimity
2. Shared Information Bias; groups tend t ospend more time on shared
information rather than on unique information
3. Confirmation Bias; groups tend to seek for information that confirms
their point of view and ignore information that contradicts their point of view
4. Group polarization; groups make more extreme choices (risk seeking
or risk avoiding) than the average individual choice before the discussion
- Through social comparison (group becomes reference point)
- Through normative influence

Improve decision making in groups?

- Methods to generate ideas;
Brainstorming;
- Free generation of ideas - no criticism, 'out of the box' thinking - ideas
are collected for the discussion
- Methods to reach a decision;
Nominal group Technique (NGT)
- Everyone writes down ideas (in silence)
- Ideas are presented one by one, without criticism
- Group discussion
- Individual ranking of alternatives leading to the winning idea
Delphi
- Like NGT, but then electronical, improves anonymity, fairness, speed