- Discuss group decision making and how organizations make decisions
We already discussed how groups and teams can be more creative than individuals. If an organization is looking to get really creative solutions to an issue, assigning a group might be the best alternative. The combined expertise of group members helps them define problems better, then develop and analyze better alternatives.
Groups rely on the same decision making models that individuals use. They can use linear models to analyze positive and negative alternatives, and use intuition when there’s no past history of the situation. Similarly, though, groups also fall victim to decision making biases. In fact, their structure can present special challenges:
- Groups are subject to groupthink and conformity pressures.
- Groups have internal structures that affect the way individuals participate, and that can hinder the decision making process.
- Groups develop norms that could have an impact on decision making, either helping it or damaging it.
Thankfully, there are some tools available to groups to help them avoid biases and other pitfalls. These models reduce fear and conformity, discourage censorship and can increase the number of quality alternatives the group develops.
Nominal Group Technique
The nominal group technique is a structured group process of generating and ranking problem solving ideas. It’s “nominal” because the technique actually reduces interaction between the group members at some stages.
As you can see in the model, the steps of the nominal group technique are:
- Step 1. Individuals in the group are given a problem. Each individual writes down his or her alternatives to that problem.
- Step 2. All of the alternatives submitted by the individuals are shared with the group and written down.
- Step 3. Without disclosing who came up with what alternative, the group discusses each idea, narrows the list.
- Step 4. The group votes on that narrowed-down list of alternatives to determine which are the best.
The process can be repeated more than once to reach an agreement on the solutions to the problem. The key to the success of this technique is to limit the interaction between the group members during the initial alternative-gathering stage. The technique does, however, require a manager or facilitator that can manage the process well.
The Delphi Technique
The Delphi technique obtains opinions about an issue through a series of formal surveys and rating scales. A facilitator or a small group might get together and develop a questionnaire that asks the opinions of others on a particular topic. When those responses are returned, the group or facilitator summarizes those responses, then develops a more focused questionnaire. This can be repeated several times, though usually twice is enough to get to the heart of the issue.
The Delphi technique can be used with large groups of people and assures anonymity, thereby reducing conformity pressure. It’s efficient, reduces interpersonal conflict and can easily be done using technology (email, survey tools, etc.). It is time consuming, though, and ultimately, decisions can’t be made using this technique alone.
There are other group support systems available to help with group decision making. Groupware is software designed to enhance and support group interaction. Computer-aided decision systems is a type of software that collects data from group members to be used in decision making. In both cases, these systems can be helpful but should not be the only means by which group members interact and develop alternatives.
How Does an Organization Actually Make a Decision?
So far, we’ve discussed the methods by which individuals and groups can make decisions, the obstacles they will face and how those obstacles can be minimized to generate the best, most creative alternatives to a problem. But is that actually how decisions are made within an organization?
Like we mentioned earlier, the decision making model that is most commonly used by organizations is the model of bounded rationality. While the rational decision maker requires that an individual or group evaluate all the alternatives, the likelihood that all alternatives will be considered, or even conceived of, is pretty small. There are just things you won’t think of on your own, alternatives that are floating out there that will never get dragged into the conversation.
The most that organizations can hope for is that individuals and groups think of as many alternatives as they can. That’s really what bounded is all about.
What other ways do organizations help or hinder the decision making process? Here are a few:
- Performance evaluations. Employees want to deliver on what’s expected of them. For instance, if managers don’t want to hear anything negative, employees will do their best to stifle any negative information. This can lead to the evaluation of limited numbers of alternatives.
- Reward systems. An organization’s reward system can affect decision making processes by suggesting to their employees which selections are preferable. An organization that rewards risk aversion will not be considering too many alternatives that have a measurable amount of risk. One that promotes and supports risk will have the opposite result.
- Formal regulations. An organization sometimes outlines the function of a job a little too clearly, leaving little room for personal interpretation. Retail workers, like a cashier or stock person, have little autonomy to come up with solutions to address problems they face every day.
- Time constraints. Organizations are impatient! They set deadlines for reports, budgets, performance evaluations…and frequently those deadlines don’t allow enough time for creative alternatives to grow.
- Historical precedence. Organizations do a have a past history of decisions and their results, and even the newest manager can draw from those lessons when making a decision.
Successful organizations do their best to minimize the structural and hierarchical obstacles and clear the way for innovative decision making. As Marcia Blenko, leader of Bain & Company’s Global Organization Practice, wrote,
Ultimately, a company’s value is no more (and no less) than the sum of the decisions it makes and executes. Its assets, capabilities, and structure are useless unless executives and managers throughout the organization make the essential decisions and get those decisions right more often than not.
With co-writers Michael Mankins and Paul Rogers, Blenko went on to explain that a CEO’s best move is to reorganize a company in a way that promotes the most innovative and quickest decisions, because that’s how organizations compete and win today. In their research, they rated decision quality and effectiveness of organizations and found that there was a 95% correlation between quality decisions and financial success.
What about organizations that aren’t solely focused on financial success? Nonprofit organizations can surely benefit from an organizational structure that promotes better, quicker, more innovative decisions. But their mission is not profit—it’s social benefit.
Where nonprofits have their own set of hindrances, the more successful nonprofits are able to systemize their decision making models and repeat them. Their objectives center chiefly around operations and fundraising, and the decisions they make center around those two things. On the other side of the coin, they are subject to impact from both the internal and the external environments. Decision makers aren’t always clearly defined in a non-profit, either, which can make it difficult when a contingency of the organization needs someone to make a final call.
Organizations can do their best to foster innovative decision making by providing the right tools and removing the obstacles that are likely to hold up the process.
- Blenko, Marcia W., Michael Mankins, and Paul Rogers. "The Decision-Driven Organization." Harvard Business Review. June 2010. Accessed April 15, 2019. https://hbr.org/2010/06/the-decision-driven-organization. ↵
- Ibid. ↵