The Main Advantages And Disadvantages Of Individual Versus Group

Highlight the main advantages and disadvantages of individual versus group decision making. Discuss the main factors affecting decision-making processes in organisations. How can managers ensure effective decision-making? January 2001, Word Count: 3113.

§Decision making is the process of making a choice between alternatives ¨ Rollinson (1998).

Decision-making is almost universally defined as choosing between alternatives within an organisation. It is both an objective and subjective process involving both the identification of goals and formulating an orderly process for attaining them, but also the actual decision makers characteristics and traits may promote expendancy shortcuts and excepting less than ideal alternatives. It should further be noted that in accordance with Minzberg and his conceptualised empirically based three stage phases of decision making: identification, development and selection, he deduces that it is also a dynamic process as there are continuous feed-back loops in each of the phases. §Feed-back loops can be caused by problems of timing, politics, disagreements among managers, inability to identify an appropriate alternative or implement the solution, turnover of managers, or the sudden appearance of a new alternative ¨ Herbert A Simon (1955).

Decision-making is one of the foremost primary responsibilities of management and executives alike at all levels of the business organisation, and is directly related to all of the traditional management functions. Subsequently it is adhered to be one of the riskiest and toughest purposes that managers have to undertake. The quality of a managers decisions directly effects his or her career opportunities, rewards and job satisfaction, but more prominently the resulting decisions contribute to the success or potential failure of an organisation. Bad decisions have the potential to irreparably damage a business or career. Decision-making is a sequential process rather than a series of steps, and should be thought of by managers as a means rather than ends. Best decisions result in a chosen solution produced with full information and in adequate time to resolve a well-defined problem. Rollinson (1998) defined a good decision as § KOne that helps improve the performance of the organisation, not hinder its progress ¨.

Simon (1960) suggests that you can divide decision-making into two categories: programmed; routine types. Existing norms, rules, laws and regulations have previously been defined and enforced, and non-programmed where the decisions held in hand are novel or unstructured. Unlike programmed decisions there is no set procedure to follow as they are usually complex or have high priority of importance, they therefore require special treatment as they have a higher propensity of risk. Ideally, the primary concern of top management should be the latter, with senior mangers handling programmed decisions.

Hickson (1986) clarifies decision-making processes in terms of three types, Sporadic; information is clearly discontinuous and dispersed, as characterised by many sources of experts the quality of information readily available varies greatly, with high levels of informal interaction. Secondly Fluid; decisions are reached relatively quickly, ultimately because the decision-makers hold formal meetings, which help retain momentum thus the procedure runs smoothly. And thirdly Constricted. Information is slightly discontinuous within the firm and narrowly channelled rather than dispersed, but information is available without the need to hold formal meetings to derive a decision.

It is still predominantly apparent that a majority of individuals firmly believe that group decision making is far superior to individual decision making, due to the extra wealth of knowledge and expertise a pool of people would possess over an individuals experience. However research suggests that it actually depend on the situation, with the key variable being the nature of the problem, as to which type would be superior. For example when it comes to generating ideas, recalling information accurately, estimating and evaluating uncertain or ambiguous situations, or in any combination of these objectives, the group appears to be advanced to the individual. On the other hand when it comes to thinking out problems that require long chains of thought and decisions, the individual is often superior to the group. In accordance with Stuart Hart (1985), §All successful groups are likely to employ both individual and group decision making ¨.

He also notes that § Kalthough groups primarily perform at a higher level than the competence of its average member, they rarely do as well as the most effective members ¨. Yetton and Bottger (1987) derived that if a group adopted a decision of a single member, who was then judged to have the best member strategy, they in fact did as well as teams that talked over their strategy and collectively decided what to do. John Rohrbaugh (1981) own research collaborated with the findings of Yetton and Bottger, deriving very similar results when they tested the method on high technological companies in the early 1980 s. Four out of the five individual decisions taken were of a higher degree than groups of people who had collectively determined what to do.

Including groups in the decision-making process has both strong arguments for and against. On the positive side groups contain a greater pool of knowledge so can bring much more information and experiences to bear on a decision than can an individual acting alone, thus this can also create a deeper comprehension of the decision as the individuals who will be directly affected by the outcome of the process will be directly involved in the give and take of the discussions about alternative courses of actions, hence will be able to fully understand the comprehension and rational behind the final decision.

Consequently this can in turn produce a higher degree of decision acceptance , as those who play an active roll in the process tend to view the outcome as ours rather than theirs , Kreitner (1998). Groups can also provide far more varies of perspectives as they are more likely to bring an abundance of experiences and interests that can help the group see decisions and problems from divergent angles. Group decision-making can play a key role in training the inexperienced employee. Less experienced participants within the group environment can learn how to cope with group dynamics by directly being involved, one of the key elements in organisational training. Further to this in accordance with Mullins (1994) §Interactions among members can have a snowball effect and provoke future thoughts and ideas in the minds of others ¨.

In respect to the above one might therefore expect a higher standard of decision-making to result from group discussions. Nevertheless there is an ascendant concept of compromise and decisions only being made inline with the majority of the group, or the highest common view . At the other end of the spectrum there is the Risky Shift phenomenon which possess intrinsic characteristics that intrigues researchers. When making decisions, individuals tend to be more conservative than when they are placed within a grouped environment, where it is evident that there are greater risk takers. In accordance with Darwin Cartwright (1971) there are five main explanations for this. He exclaims that when in a group it allows for diffusion of responsibility in the event of a wrong decision. Risky people are more influential in group discussions than conservative people as risk taking is deemed socially desirable in our culture, and socially desirable qualities are more likely to be expressed within a group rather than alone, ultimately group pressure towards venturesome behaviour endorses organisational creativity.

Risky people are more likely to bring individuals around to their point of view, especially if there is an aspect of pressure being enforced from seniors to get a unanimous opinion. However, this subsequently fuels over confidence and promotes group-think . This can act as a measure of resistance to consider alternative solutions proposed by individuals. Popularised by Irvin Janis in the 1970s, he deludes that it results in a §Deterioration of mental efficiency and moral judgement that results from inter-group pressure ¨. This designation denotes a concept that explains why groups make poor decisions . Some prime examples of group-think are Britain s do-nothing policy prior to World War Two, the USA attack on Pearl Harbour, and the recommendation by President Kennedy to go ahead with the Bay of Pigs Invasion. Nevertheless, on the positive side this pressure can also bring about organisational creativity, as in the case of subordinates who push their superiors towards riskier and enhanced creative results.

However, to directly quote Solomon Asch, whom fifty years ago conducted a series of laboratory experiments, which in-adversely revealed a negative side to group dynamics through The Asch Effect. Asch had groups of 7-9 volunteer s look at 12 pairs of cards, card a) had one line drawn in the centre, and Card b) had three lines drawn on it, one line was the same length as on card a). The simple objective of the test was to identify which line that was the same length as the standard line on card a). Each individual had to announce his/her choice to the group. Since the differences in the line lengths were so obvious there should have been a unanimous agreement during each of the 12 rounds. This wasn t the result. Due to in-group pressure: Group Think, and the Risky Shift phenomenon, Asch was astounded by the results: there was no unanimous agreement in more than 6 of the rounds conducted. A prime example of grouped decision failure.

A further negative variable of grouped decision making, which could also have directly affected Aschs results, is that of social pressure. The unwillingness to rock the boat and pressure to conform may combine to stifle the creativity of individual contributors. Log-Rolling : political wheeling and dealing can displace sound thinking when individuals pet projects or vested interests are at stake. Finally goal displacement , § Ksometimes secondary considerations such as winning an argument, making a point, or getting back at a rival displace the primary task of making a sound decision or solving a problem ¨ Kreitner (1998) To ordain whether groups are more effective than individuals adheres on the criteria used to define effectiveness.

Group decisions tend to be more accurate due to the amount of time spent over the decision period, and the added element of more than one opinion. Evidence also suggests that groups make better quality decisions on average than individuals. However, if decision proficiency is defined in terms of time and speed, individuals are far superior, if creativity is at the forefront, then groups tend to be more effective than individuals, but in terms of efficiency, the individual is again superior as groups making decisions consume far more work hours than if an individual were to undertake the same enigma.

Decision-making models can be divided into three main groups: normative, descriptive and other models. Normative models relate to the rationality principle that all information and alternatives are available for decision making. Descriptive models refer to the decision making process in the absence of all-relevant information or alternatives, that is the bounded rationality theory. Simon (1987) primarily describes this theory of one when limited time, information and resources are forefront restraints to hinder the decision-making progress. The main reason bounded rationality occurs is due to human limits, mainly the limitation of the brain. There is only a limited amount of information that the brain can process at any one time, otherwise people can forget or disregard potentially relevant information. An example of other models of decision making is that of the Management Science Approach. This was mainly developed for the armed forces at targeting the enemy. The Carnegie model is a coalition formation based approach.

It is directly aimed at organisational group decision-making, as it is specifically directed to how they can make superior decisions. Minzberg developed the Incremental Decision Process Model by incorporating three stages; the identification, development and selection phase. This was to entice more cohesion and decision clarity in the feed-back process to inevitably induce a desirable right decision. Anderson (1983) researched the Decision-Making by Objection model. In 1983 he undertook a detailed analysis of the 1963 Cuban Missile crisis. He specifically studied archival records on the workings of the Executive Committee of the NSC as they sought to determine what actions to take to remove Soviet nuclear missiles form Cuba.

On the basis of his research he found that § K decision-making more commonly involves sequential yes / no choices over an array of compatible courses of action, and that goals are discovered in the course of making that decision ¨. He argues that the goal discovery theory means that the decision-making process can begin without waiting for clarification of all goals, and thus when complex policy matters arise one wouldn t get overwhelmed when primarily considering all the alternatives, as it would be a staggered process.

An even broader descent on the concept of rationality was previously mounted by March and Olsen. A simplistic insight of the Garbage-Can model is that organisational decisions aren t always exertions in purpose and control. They oppugn that traditional theories underestimate the confusion surrounding most decisions. Cohen (1972) deliberates this point by suggesting that in fact managers indirectly enforce organised anarchy s . Managers continuously work among a great deal of disorder, preferences are rarely well ordered or stable, and criterion for judging the relevance of information is typically vague. Consequently decision processes rarely unfold in a logical orderly manner. In the long run can cause important problems to be neglected and certain solutions overworked.

Hickson (1986) developed the Top Decision model. He found that there are two main variables in the process and direction of organisational decision making. Firstly the complexity of the decision in hand, and secondly the political influence, for example the regulation of the process from the stakeholders in regards to their own interests.

The decision-making process is influenced by a manifold of environmental and behavioural factors due to differences in perceptions, values and personalities each individual possesses. This explains why different decision-makers may not select identical alternatives in the same situation. Some of these factors only influence minor aspects of the process, while others have the potential to influence the entire process negatively.

Every individual has specific values developed through traits, the very basic unit of an individual s behaviour. Developed over a period of time values become set, and therefore managers can make specific judgements and decisions on the basis of these principles, consequently, strongly effecting their decision-making logic. A second influential factor is a person s Propensity of Risk . In accordance with Whyte (1991) this is directly linked with an individuals personality and thus there are two types of characteristics they can fit into: a high or low aversion of risk. The former individual wanting to avoid any speculative decisions, and would therefore play safe and choose the safer, programmed decision. While the latter individual with the low aversion to risk might choose a more diverse process, where obviously more risk of outcome would be involved as the chosen alternative could be a considerable gamble.

Propensity for risk almost entirely depends on ones perception V the loss / gain outcome factor of the decision, and how one feels a decision would turnout. Festinger (1957) argues that one of the primary influences on decision-making is that of the potential for dissonance. What anxieties do decision-makers experience once they have their decision, if any, and how this could effect future decisions on specific subjects. If has been proven that if the decision is a financial or social one then the anxiety experienced is high, as there is more apparent concern for the decision made to be the right choice. Also the anxiety is likely to be greater if there are numerous foregone alternatives which have favourable features.

Escalation of commitment or Escalation of mistakes is another prominent behavioural influential factor. Staw (1981) explains that at a time when a decision has been concluded, and the makers start getting a hint that it was the wrong choice of decision, they will just carry on regardless. For example, gamblers carry on betting to try and recoup their losses. Any rational man would stop and comprehensively review the situation. As evidenced by Lyndon Johnson, escalation of commitment refers to § Kthe tendency to stick to an ineffective course of action where it s unlikely that a bad situation can be reversed ¨. Case studies indicate that escalation of commitment is partially responsible for some of the worst financial losses experienced in organisations. A prime example of this is Nick Leeson and the downfall of Bearings Bank.

He continuously made a series of disastrous financial decisions for years, in the full knowledge that they were having catastrophic effects, but again he was under the false pretences that he could reclaim the losses through further deceptive, bad decision making. One cause of this escalation is organisational determinants, the breakdown in communications, workplace politics, and organisational inertia; all of these can cause firms to maintain bad courses of action. Barry Shaw and Jenny Ross V the researchers, who originally identified the phenomenon of escalation recommended several ways to reduce it, Set minimum targets for performance and have decision makers compare their performance with these targets, have different individuals make the initial and subsequent decisions about a project. Make decision makers aware of the costs in persistence, and reduce the risk of penalties for failure by providing more frequent feedback ¨.

In line with Minzberg, feedback is another influential tool on decision making. Before a decision is made feedback should be expelled from all relevant people involved directly or indirectly with the process. Whether it is specialists, other members of the group, or other external bodies within the firm, feedback should be sought and results collectively analysed and collaborated so that the best decision can be reached. A further type of feedback is that received after the decision has been made. If the results are negative to the decision, this can lead to the decision maker(s) experiencing regret, and even hinder their future prominence in other decision-making programmes. However, if the feedback is positive this can lead to confidence within an individuals skills and rewards in terms of organisational effectiveness and efficiency.

Within the working environment, most of the time it s deemed as uncertain as one cant foresees events that could effect certain motives for choosing one alternative over another. Only if the organisation information allows it to know exactly what the competition will do can the firm operate decisions under conditions of certainty. When the organisation is operating under conditions of uncertainty, for example when a firm is creating a new product and trying to determine the best course for advertising, the firm can experience considerable uncertainty as there are no fixed rules or norms to guide them, they would be at an impasse in assignment probabilities of gains or losses. The firm therefore needs to turn to a criterion that has been developed for specifically dealing with these situations. The predominantly popular of these being the Maximum criterion, in which the individual / group chooses the plan with the highest minimum payoff, regardless of the competitors strategy.

A final behavioural influence is that of Hidden-Traps within the decision-making process, examples of these include the Anchoring, Sunk Cost, the Overconfident and the Prudence Trap. This influential factor differs from all the above as to quote John Hammond (1998), § Ksometimes the faults lie not in the decision-making process but in the mind of the decision-maker ¨. The way the brain works can sabotage decisions. For example the discontinuation of information, and information overload can lead to the omission of certain factors, and thus can distort the decision-making process. This distortion of information can lead to biased and sensory misconceptions or irrational anomalies in our timing . These psychological traps are assumed dangerous because of their invisibility and failure to recognise . For executives and senior managers alike these traps are especially dangerous. However Ralph Keeney and Howard Raiffa (1998) suggest that the best form of defence against these influential factors is simply awareness.

Managers make decisions on the basis of the information (communications) they receive through the organisational structure and the behaviour of individuals and groups within it. The quality of a managers decision determines their effectiveness as managers, §The quality of these decisions is the yardstick of managerial effectiveness ¨ Brian Mullen (1991). In accordance with Hoskings and Morley a skilful leader is one who is very knowledgeable about the environment that governs the work place and is adept at interpreting information, and making decisions on the basis of analysing that information to the benefit of themselves and all those whom directly incur it. From this we can derive that to ensure effective decision making managers need to make sure they adopt a systematic approach, not just through the different stages the process travels, but particularly when gathering and analysing the information to consider all the alternatives.

All the relevant information available should be made a priority to gather, so when the final decision is made it s fair and just, with the confidence and full knowledge that all alternatives have been widely explored and the solution deplored upon is the right one. Further more managers need to ensure that decisions are made within an acceptable timeframe so that the final decision is still relevant. Failure to meet this criterion would result in an inefficient use of probable scarce resources, decreased worker satisfaction and an inability to compete effectively in the market place. A decisions acceptance is the key characteristic to its success. To guarantee this, managers need to make sure that it is understood and implemented by those who it concerns, so that they don t feel alienated from the decision made, other wise this could cause disastrous backlash effects from employees.

Improving the actual decision-making process can further ensure effective decision- making. For example in line with Judith Gordon (1992), the use of brainstorming within the group processes generates large numbers of ideas without evaluating their merits: the Japanese focus one phase primarily on this variable in their systematic, 4-part process, and thus again promotes the Snow-ball effect previously mentioned. More over simply knowing when to use groups, individuals or a mixture of both, to tackle certain decisions is a major advantage. Finally effective decision-making involves managers periodically measuring results, by comparing them with planned results; thus changes will have to be made if deviations are prominent. Without this there is no way to judge performance, and continuously strive for improvement.

BIBLIOGRAPHY Books:

“X Organisational Behaviour: Theory and Practice, Hodgetts. M. Richard, 1991, Macmillan Publishing Company, New York “X Organisational Behaviour, Fred Luthans, 1995, 7th Edition, McGraw Hill Publishing, USA “X Organisational Theory and Design, A.G. Bedeian, R.E Zammuto, 1991, The Dryder Press International Edition, Orlando “X Management and Organisational Behaviour, Laurie J Mullins, Pitman Publishing, 1996, 4th Edition, “X Organisational Behaviour, Hellnegel, Slocum, Woodman, 1995, 7th Edition, West Publishing Company, America “X Organisational Behaviour, Robert Kreitner, Angelo Kinicki, 5th Edition 2000, McGraw Hill Publishing “People in Organisations V An Introduction to Organisational Behaviour, T.R Mitchell, J.R Larson Jnr, 1987, International Edition, McGraw Hill Publishing International Photocopies / Journals: “Group Versus Individual Decision Making, Frederick C. Miner, 1984 (Organisational Behaviour and Human Performance) ” The Hidden Traps in Decision Making, John S. Hammond, Ralph L. Keeney, Howard Raiffa, Harvard Business Review, September V October 1998, Volume 76 World Wide Web ” www.researchassistant.com “www.slu.edu/department/managemen/chapter6.htm