Introduction

Decision-making is a human process whereby a person chooses a course which he thinks is the best. Decision-making is a blend of thinking, choice and action, deciding and acting, it requires a succession of activities and routine decisions all along the way. Decisions also have a time dimension and a time lag. A manager takes time to collect facts and to weigh various alternatives. Moreover, after he decides, it takes still more time to carry out a decision and, often, it takes longer before he can judge whether the decision was good or bad. It is also difficult to isolate the effects of any single decision.

Decision-making, i.e., the selection from among alternatives of a course of action, is required at the individual, group and organisational levels. It is an important activity even when done quickly and with little thought of when it influences action for only a few minutes. Decision-making involves establishing goals, defining tasks, searching for alternatives and choice of the best alternative. The process of decision-making in an organisation may be carried out by an individual or a group. In modern organisations facing the environmental uncertainties, group decision-making has become almost indispensable.

Nature of Decision-Making:

Decision-making is the process of selection from a set of alternative courses of action which is thought to fulfil the objectives of the decision problem. It is an act of choice wherein a manager selects a particular course of action from the available alternatives in a given situation.

The basic characteristics of the decision-making process are listed below:

1. It is a human process involving to a great extent the application ofIntellectual abilities.

2. It is a process of choosing a course of action from among alternative courses of action.

3. It is the end process preceded by deliberation and reasoning.

4. It is always related to a situation. A manager may take one decision in a particular set of circumstances and another in a different set of circumstances.

5. Decision-making involves a certain commitment, may be even for a short period.

6. Decision-making in business is always related to certain objectives.

Rationality in Decision-Making –

Many a times, we take decisions based on intuition rather than careful analysis of available alternatives. We often feel that a particular course of action is the best one under a given situation. This kind of feeling has no logic behind it. Moreover, it is difficult to explain why one is feeling in a particular way. Psychologists emphasise that there are forces other than reason within a person which influence his decision-making. Decisions based on intuition are subjective and are taken without any conscious effort to weigh the advantages and disadvantages of various alternatives. On the other hand, if a decision is taken after thorough analysis and reasoning and weighing the consequences of various alternatives, such a decision will be called an objective or rational decision. These are the two extremes in decision-making.

In actual practice, people take decisions which involve a combination of intuition and rational thinking. A person who depends much upon intuition is more subjective and a person who depends much upon logical thinking is more objective. This is what Herbert Simon has called the ‘principle of bounded rationality. Simon emphasised that a person makes decisions not only on absolutely logical analysis offacts, but also on his intuition, value system and way of thinking, which are subjective in nature. The subjectivity in decision making arises because of the following factors:

1. The does not want to study and analyse the problem because of his preconceived notions.

2. He does not have the full knowledge of the alternatives and/or their consequences.

3. He interprets the organisational goals in his own way. He adopts a course of action which according to him will  meet the goals effectively.

4. He is lazy or careless in taking the decision. He may be indifferent towards the consequences of his decision.

Rationality of the individuals is generally bounded by these limitations. The concept of bounded rationality explains the behaviour of people, in practice. It recognises that a person cannot be expected to have full knowledge and information and his capacity to perceive, retain and retrieve information is not unlimited. Human goals are multiple and conflicting. The traditional theory of completely rational and economic man does not work in practice. However, irrational decisions can prove to be very costly in modern organisations. That is why, many management thinkers propagate group decision-making to avoid the pitfalls of individual decision-making.

 

Decision-Making By Groups:

Organisations are composed of individuals and groups. Both formal groups (e.g. work-teams, committees) and informal groups are supposed to take decisions to resolve various problems. Decision-making in groups is a collective process which is based on the old adage that “two heads are better than one”. In group decision-making, the group members interact with each other, deliberate on the problem and arrive at some collective decision. The decision may be arrived at through either consensus or simple majority. Consensus implies that all members must agree to the proposed decision, where majority vote implies that it is enough for the majority of the group members to agree on the decision arrived at.

Merits of Group Decision-Making

The potential advantages of group decision-making are as follows:

1. The knowledge base of the group is greater which can help in taking better decisions.

2. The group members may have different specialities as in case of cross-functional teams. This will allow the group to analyse the problem from different perspectives or aspects. In such a situation, the decision is likely to be comprehensive in nature.

3. The input from the members of the group can eliminate the biases that generally creep in the process of individual decision-making. It also reduces the unreliability of individual’s decisions.

4. The group format allows participation of group members in the decision-making. This can lead to better decision besides providing satisfaction to the participants.

5. Group decision-making can be used as a training ground for new members to learn decision-making and communication skills. Thus it can serve as an instrument of human resource development.

6. Group decisions are likely to be implemented effectively. The group members who have participated in taking the decision jointly are supposed to lend full support to the decision because of their greater commitment to the decision. However, it is important that the decision should be accepted by all the members of the group.

 

Pitfalls (Disadvantages) of Group Decision-Making –

The potential disadvantages of group decision-making are as under:

1. Group decision-making is a time consuming process. Usually, a group takes more time in reaching a decision since there are too many opinions to be taken into consideration. The greater the differences among group members, the greater is the time taken in decision-making.

2. Sometimes, the group leader or some member may dominate in the group deliberations which might result in taking a biased decision.

3. A group may make a decision that is simply a compromise between the various views held by individual members. This is particularly true when a group must make a decision on a controversial issue.

4. Some members may simply agree with the others for the sake of consensus since there are social pressures to conform and not to be the odd man out. Thus the desire to be a good group member tends to silence disagreement and force consensus among the members. The social pressures can be very strong.

5. The participants in group decisions may have their own axes to grind or their own interest to protect. These self-centred interests. Lead to personality conflicts that may create interpersonal obstacles and diminish the efficiency of the process as well as the quality of the decision.

6. When there is a conflict between the group goals and the organisational goals, the group decision is likely to be detrimental to the interests of the organisation.

7. Group decision-making may be affected by the problem of ‘groupthink’. Under this, the desire of the group members for complete consensus may override their motivation to disagree with an alternative or to evaluate other available alternatives. Naturally, the effectiveness of group decision-making will suffer.

8. Group decision-making may prove to be more risky than individual decision-making. Since it is a collective decision, the group may be tempted to take more risk than warranted by the situation. Such a tendency is known as ‘risky shift’.

 

Techniques Of Group Decision-Making :

The techniques of group decision-making include: (i) brainstorming, (ii) nominal group technique (NGT), (iii) Delphi technique, (iv) fish bowling technique, and (v) consensus mapping technique. These techniques are discussed below :

1. Brainstorming

Alex F. Osborn is credited with the development of the technique of brainstorming for problem solving. It involves a group of people, usually between five and ten, sitting around a table in a classroom setting, generating ideas in the form of free interaction. The primary focus of the brainstorming technique is more on “generation of ideas”, rather than on “evaluation of ideas”.The rationale of this technique is that if a large number of ideas can be generated, then it is likely that there will be a unique and creative solution among them. All these ideas are written on the blackboard so that everybody can see every idea and try to improve upon them. The leader of the group defines and explains the nature of the problem to the group members and the rules to be followed. For example, the problem may be finding a suitable name for a new soft drink or a beauty-aid. The four basic rules of brainstorming are as under:

1. No criticism is allowed.

2. Freewheeling is always welcome. The wilder the idea the better it is. It is easier to jot down than to think up ideas.

3. Quantity is desirable.

4. Combination and improvements are sought from the members.

One session of brainstorming exercise may generate around 50 ideas. Brainstorming is very useful in advertising agencies, armed forces, governmental and non-governmental organisations. The ideas are based on spontaneous thinking and the atmosphere of the group is supportive in nature. An idea generated by a member acts as a stimulus for generating ideas by others. A brainstorming session may last 40 to 60 minutes.

‘Brainstorming’ suffers from the following limitations :

1. It is not effective when the problem is complex and vague.

2. Arranging the session is a time-consuming process.

3.  It is a costly technique if experts from outside are invited.

4. It might produce superficial ideas or solutions.

2. Nominal Group Technique

This technique is used when a high degree of innovation and idea generation is required. A nominal group exists in name only as the members have minimal interaction before producing a decision. This technique is highly structured and contains the following steps:

1. Around six to ten participants are brought together and presented with a problem.

2. They develop solutions independently, often writing them on cards.

3. Their ideas are shared with others in a structured format (e.g., a round-robin process that ensures all members get the opportunity to present their ideas). There is no discussion. The ideas are put on a blackboard or flip chart for all to see.

4. Brief time is allotted so that questions can be asked-but only for clarifications.

5. Group members individually designate their preferences for the best alternatives by secret ballot.

6. The group “decision” is announced.

The nominal group technique has two principal advantages. It helps overcome the negative effects of power and status differences among groupmembers. There is no chance of domination by any member. It can be used to explore problems to generate alternatives, or to evaluate them. Its primary disadvantage lies in its structured nature, which may limit creativity. The group members may feel frustrated as they don’t get any opportunity to benefit from cross-fertilization of ideas.

3. Delphi Technique

The Delphi technique was originally developed by Rand Corporation as method to systematically gather the judgments of experts for use in developing forecasts. It is designed for groups that do not meet face to face. For instance, the product development manager of a major toy manufacturer might use the Delphi technique to obtain the views of industry experts to forecast developments in the dynamic toy market.

This technique involves four basic steps. Firstly, a panel of experts on the particular problem at hand is drawn from both inside and outside the organisation. Secondly, each expert is asked to make anonymous predictions or forecasts. Thirdly, each expert is provided composite feedback of the ways various experts have answered the problem. Lastly, each expert is free to change his opinion on the basis of the feed-back. This process is repeated several times till consensus decision is reached.

The Delphi technique is used to:

1. Determine or develop a range of possible alternatives;

2. Explore or expose underlying presumptions of information leading to different judgments;

3. Seek information which may generate a consensus on the part ofthe respondent group;

4. Correlate informed judgments on a topic spanning a wide range of disciplines; and

5. Educate the respondent group on the diverse and inter-related aspects of the problem.

Delphi technique is time consuming, but the availability of computers and electronic transmission (e-mails) of responses can speed up the Delphi process. Through their use, the interactive process of collecting input and feeding back group data can be greatly abbreviated. Thus, use of advanced information technology has helped overcome the major limitation of the Delphi process.

4. Fishbowling Technique

This technique is a variation of brainstorming process, but is more structured and focused. Here, the group of experts (from six to eight) is seated around a circle with a single chair in the centre of the circle. One member of the group or the group leader is invited to sit in the centre chair and give his views about the problem and his proposition of a solution. The other group members can ask him questions but there is no cross-talk. Once the member in the centre chair has finished talking and I viewpoint is fully understood, he leaves the centre chair and joins the group in the circle. Then the second member is called upon to sit in the centre chair and give his vie in the light of the views expressed earlier. The members can ask questions the centre based upon the new ideas presented by the member in the centre as well as the ideas presented earlier. Exchange between the centre chair and the group members continues until the turn of each member to occupy the central chair is over.

All the members work upon the same database, though their views over the problem may differ. After all the experts have presented their views from the centre chair, the group will discuss the various alternatives suggested and ultimately arrive at a consensus decision.

5.Consensus Mapping Technique

Consensus mapping technique is used for consolidating results from several task-forces or project groups and is suited for problems that are multi-dimensional, have interconnected elements. This technique begins after a task group has developed and evaluated a list of ideas.

Consensus mapping technique of group decision-making tries to pod the ideas generated by several task sub-groups to arrive at a decision. The facilitators encourage participants to search for clusters and categories of ideas. This search for structure includes the listing and discussion of alternative clusters and categories by the sub-groups, and then generation of a single classification scheme by group members working as a group or in pairs of trios. Then the facilitators consolidate the different schemes developed by sub-groups into a representative scheme that acts as a ‘strawman map’ for the entire group. Group members then work to revise the strawman map into a mutually acceptable solution. This exercise is repeated until the group as a whole arrives at a single, consolidated map and a final decision based on that.