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Managing Organization ABE Graduate Diploma (QCF Level -6)

Prepared & Presented

By

Pyi Kyaw LynnB.A (English), Yangon University

M.B.A (Finance), Assumption University of Thailand

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CHAPTER [VI] : AUTHORITY & DECISION - MAKING

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TODAY’S AGENDA

A. Authority

B. Delegation

C. Empowerment

D. Decision –Making

E. The Process of

Decision Making

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[A] AUTHORITY

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AUTHORITY

The right to do something or right to issue valid instructions which others must follow.

Authority can be conferred “from the bottom up” via the process “election”. It rest in the position within the firm.

The ultimate authority rest with its owner in case of private sector & with the elected government in the public sector.

RESPONSIBILITY

The obligation to achieve certain objectives through making decisions or carrying out tasks.

Any person who accepts responsibility also accepts the need to be accountable for that responsibility.

ACCOUNTABILITY

The obligation to report [give an account] to a higher authority for the discharge of those responsibilities.

Accountability flows upwards whereas responsibility is assigned downwards in a firm.

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Power & Politics

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Power The ability to

direct or modify the behavior or attitudes of another person. It is the ability to influence.

Politics The use of

power to attempt to influence decisions so that a desired outcome is achieved.

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The Meaning of Power

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Power is the capacity of a person, team, or organization to influence others.

The potential to influence others People have power they don’t use

and may not know they possess Power requires one person’s

perception of dependence on another person

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Why does having power matter? With power you can…

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Intercede/intervene favorably on behalf of someone in troubleIntervene

Fulfill desire

Approval

Agenda

Fact access

Contact

Information

Get a desirable placement for a talented subordinate

Get approval for expenditures beyond the budget

Get items on and off agendas

Get fast access to decision makers

Maintain regular, frequent contact with decision makers

Acquire early information about decisions and policy shifts

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Charles Handy ‘s 6 types of power

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POSITION POWER

RESOURCE POWER

EXPERT POWER

NEGATIVE POWER

PERSONALPOWER

Associate with the job & derive form the authority in a firm. One’s structural position. The power a person receives as a result of his position in the formal hierarchy of an organization

Derives form the control over resources which are valued by the individual or group to be influenced.

Belongs to the individuals due to their expertise, only effective only if others acknowledge them to be experts. comes from knowledge and skill. Steve Jobs has expert power from his ability to know what customers want—even before they can articulate it.

Derives from the ability to use disruptive attitudes & behavior to stop things form happening.

Derive from the popularity or charisma of the individual.

PHYSICAL POWER

The power of superior force which is absent from most firms but sometimes evident in poor industrial relations, such as when there is shop floor intimidation <blue collar threat>

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Consequences of Power

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Commitment

RewardPower

Position/Legitimate Power

Negative/CoercivePower

ExpertPower

Resource/ReferentPower

Resistance

Compliance

Sources of Power

Consequences of Power

Organizational Politics

Politics is also a natural process that happens when an organization faces choices between alternative courses of action. It can be seen as a positive force which helps to shape objectives and strategy, to overcome differences and conflicts.

Attempts to influence others using discretionary behaviours to promote personal objectives Discretionary behaviours — neither explicitly

prescribed nor prohibited

Politics may be good or bad for the organization.

Natural Process

Influence

Good or Bad

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Organizational Politics

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Organizational politics are informal, unofficial, and sometimes behind-the-scenes efforts to sell ideas, influence an organization, increase power, or achieve other targeted objectives.

Organizational politics can be a nasty business where people promote their own self-interests at the expense of company goals.

Tactics ofOrganizational

Politics

Forming/Buildingcoalitions

Expanding/Cultivating

networks

Enhancing legitimacy &

expertise

Making preferences explicit, but keeping power implicit

Five Main Tactics Used in Organizational Politics

Controlling decision

premises/information

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Five Main Tactics Used in Organizational Politics

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Building coalitions

Making persuasions others to support for a particular individual or interest and often happens outside of formal meetings & structures. Part of building relationships so that support is given when decisions are made.

Expanding Networks

Developing the number of supporters, persuading others to support an individual or interest in active fashion , improving the chances of success in negotiations.

Enhancing legitimacy

Expanding the areas in which one is seen to have expertise increase the range of influence. People have most influence in areas where they are perceived as an expert.

Controlling decision premises

Influencing the basis on which the decision will be taken so that it is more favorable to the individual or interest supported. Also known as limiting the boundaries of a decision (highlighting positive issues and ignoring other factors.

Explicit preference, Implicit power

It is important to be cleared what one thinks is the best way forward, but not to be explicit about the power that an individual has. People in organization know who has most power.

Political Antics Top the “Most Unethical List”: Survey Results

Gender discriminationin recruitment or hiring

Arrangements with vendorsleading to personal gain

Nonperformance factorsused in appraisals

Gender discriminationin compensationNot maintaining

confidentialityUsing discipline

inconsistentlyGender discrimination

in promotionSexual

harassmentAllowing differences in pay

due to friendshipsHiring, training, or promoting

based on favouritism

0 5 10 15 20 25 30 35

Situation

Percentage Responding with a 4 or 5 on a five-Point ScaleMeasuring Degree of Seriousness (where 5=“very great”)

(22.6)

(23.1)

(23.5)

(25.8)

(26.4)

(26.9)

(26.9)

(28.4)

(30.7)

(30.7)

Potentiallypolitical

behaviours

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[B] DELEGATION

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DEFINITION

Delegation is assigning responsibility from one level of management to a lower level within the hierarchy.

3 Types of responsibilities can be identified to be assigned as follow.

Assigning responsibility for the performance of tasks

Allocating authority to issue orders.

Allocating decision – making powers in defined areas.

PURPOSES OF DELEGATION

Fundamental to organization < without delegation, no different

levels of staff reporting to superior> Decisions taken at most

appropriate level < Delegation permit decision making

at the lowest level > Distribution of workload < Delegation enables the workload to

be spread among personnel> Development of ability < Improve skills, morale & growth of

personnel via contribution >

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Flow Chart

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The Process of Delegation

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Checking progress & results to control & to support when necessary.

MONITORING & REVIEW

Determinig objectives & scope of the responsibility to be delegated

Comminication or explanation of the terms to the staff

SPECIFICATION OF THE TERMS

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PLANNING

The identification of tasks or functions for delegation

The selection of capable staff

The Benefits of Delegation

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Freeing up manager to lead & more time for planning Available for consultation Less worry & nervous strain Relief from the worry of minor details Promotion process is supported if someone is trained to take over

Work is carried out more efficiently by distribution of tasks Less time is lost [more time gained ] Morale imporve & less recruit from outside. Labor turnover is reduced.

BENEFITS TO ORGANIZATIONBENEFITS TO MANAGERS

It provides training on the job It gives supervisory experience & confidence It helps to develop a sense of responsibility.

BENEFITS TO EMPLOYEES

Barriers to Effective Delegation

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Nature of the Task, or Decision

Company Policy

Co-ordination & Span of

Control

Abilities of Staff

Not appropriate to delegate. E.g., confidential work or highly sensitive nature or highly specialized work.

Delegation below a specified level may not be permitted. E.g., restrictions on some levels in terms of expenditures.

Very wide delegation may stretch the span of control & make it increasingly difficult to co-ordinate activities.

Delegation is not an suitable option if there is no capable staff & training or coaching facilities are unavailable

Some managers prefer to continue to exercise close control over their responsibilities. E.g., more time to explain for delegation, lack of skills of staffs, lack of trust in staffs, lack of willingness of staffs [no additional pay or reward]

Characteristics & Willingness of Managers

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[C] EMPOWERMENT Allowing individuals greater freedom, autonomy & self control over

their work & responsibility to make decisions. Associated with decentralization.

True empowerment is possible only if managers act as facilitators & develop leadership.

True empowerment can be recognized as an aspect of leadership rather than management.

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DEF

ADV

DIS

Reduction in management levels & provide financial saving Shorter line of vertical communication, increase speed & accuracy. Improve motivation due to more autonomy. Increase sense of

contribution & commitment & competences by training.

Potential breakdown in co-ordination between departments. Loss of management control & too wide span of control Difficulties & mistakes encountered due to inexperience of staff &

Management resistance : managers may become protective of their positions.

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Organizational Design & Management

Organizational design encourages participation of staffs.

Participative management style involve staffs in decision-making within clear guidelines & create motivation of staff. [Ouchi]

Job Design

JD set out to meet the needs of the organization for effectiveness, efficiency, quality & productivity

JD set out to meet the needs of individual for job satisfaction arising from interesting & challenging work.

Training & Career Development

Empowerment to occur in line with proper training & development to be successful.

Staffs need to be equipped with the abilities to make sound decisions.

To be accompanied by career development programs.

Feedback & Communication

The role of management changed by empowerment.

Constructive feedback is based on effective communication between empowered teams & their managers.

Facilitating Empowerment Techniques

Comparisons Of Delegation & Empowerment

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DELEGATION

Defined area of freedom An aspect of

management Tighter job description Off loading of

management duties Training & development

of personnel Acceptance of the

dependency relationship Depends on

management staff relationship & leadership

EMPOWERMENT

Greater freedom Autonomy Greater self control An aspect of

leadership Manager act as

facilitator A staff development

tool Loose job description

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Delegation & Empowerment

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[D] DECISION-MAKING IN THEORGANIZATION

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RIGHT DECISION resolves the problems to be made by analyzing the circumstances & objectives of the problem

RIGHT TIMEdecisions are followed by actions to be made at the appropriate time so that effective action can be taken

RIGHT PLACE to be made in the most effective location in the structure .& related to where the action will be carried out

Levels of Decision Making

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STRATEGIC

TACTICAL

This level concerned with the direction of the organization. This level set policies within which all others decisions are

taken. Not too technical information are not required.

Concerned with day to day operations Important for the successful running of the organization. Highly detailed information required for quick & fast action

to be taken.

OPERATING

Concerned with the set up of working plans & implementation. [medium term]

Related to specialist functions. Technical detailed information by specialists More frequent reports to allow plans & implementation to be

monitored and adjusted.

[E] THE PROCESS OF DECISION MAKING

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DEFINITION

OBJECTIVES

ALTERNATIVESCOURSES OF

ACTION

EVALUATION OF

ALTERNATIVES

DECIDIING BETWEEN

ALTERNATIVES

IMPLEMENTATION

specifying the exact nature of the problem

defining what to achieve in solving the problem

generating alternative courses of action in achieving objectives

determining the best available options in achieving objectives

decision is to be taken if alternatives are not favorable.

putting the decision into practice

monitoring the effectiveness of the decision in resolving the problem

REVIEW

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Steps in Decision Making

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Problem Definition (Identification of the purpose of the decision) In this step, the problem is thoroughly analyzed and defined. What

exactly is the problem? It is important to differentiate between symptoms of a problem &

cause of the problem. E.g., supervision / communication problem. Why the problem should be solved? Who are the affected parties of the problem? Does the problem have a deadline or a specific time-line?

Step 1

Step 2

Objective & Information gathering Objective need to be clearly set which resolve the problem. The

solution must be compatible with the objectives & policies of the organization. Constraints to be considered in developing in decision objectives. E.g., budget and time

In the process of solving the problem, you will have to gather as much as information related to the factors and stakeholders involved in the problem. For the process of information gathering, tools such as 'Check Sheets' can be effectively used.

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Cont’d

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Step 4

Step 5

Evaluation of alternatives There may be a number of possible solutions to a problem and the

task is to asses decision-making criteria to evaluate each alternative. In this step, experience and effectiveness of the come into play. You

need to compare each alternative for their positives and negatives.

Select the best alternative Once you go through from Step 1 to Step 4, this step is easy. In addition, the selection of the best alternative is to be decided

since you have already followed a methodology to derive and select the best alternative. A decision may be taken when the available information is not sufficient for an alternative action.

Step 3

Alternatives Courses of Action Generating ideas which may result possible solutions or

alternatives to the problems and to meet the set objectives. Brainstorming to list down all the alternatives is the best option. It

is vital to understand the causes of the problem . This may be based on research that examines all the actions taken

in the past or using cause-effect diagrams.

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Cont’d

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Implementation (Execute the decision) Converting decision into a plan or a sequence of activities. Executing plan by yourself or with the help of subordinates. At this stage, communication is important because of those who

have to implement know exactly what it is they are expected to do. Timing of the action is also important. Some decisions have to be

implemented immediately. E.g. timing of the sale or the launch of a new company at the stock market.

Step 7

Review (Evaluation of the results) Evaluate the outcome of your decision. See whether there is

anything you should learn and then correct in future decision making. This is one of the best practices that will improve your decision-making skills.

Monitoring is also the continuous process and performed by collecting information on performance. Reviews are either performed periodically or an ad-hoc basis.

Step 8

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Decision Making Techniques

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OPERATIONAL RESEARCH

A whole range of techniques which use scientific & mathematical methods in decision-making process.

Three evaluation criteria are as follows. Minimax rule : Finding out a solution which guarantee either a

minimum benefit or losses will not exceed a given level. Maximax rule : Selecting an alternative which yield the highest

possible benefits even though the risks are so high. Average rule : The aims is to be prepared to take reasonable risks

which are carefully balanced against greater benefits.

COST/BENEFITANALYSIS

To help to take account of the consequences or side effects that arise out of a given decision. Costs include capital, labor, resources & time. The course of action with the highest ratio of benefits over costs is to be adopted.

A method of breaking down the implications of different decisions & predicting the consequences with flow from them. The model can either be simple or complex with numerous possible choices.

DECISION TREES

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Decision Trees Diagrams

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Techniques of Operation Research

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The Human Factor [Key Psychological Influences on Decision Making]

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BIAS

PERSONALITY INTUITION/INSIGHT

Bias effect on decision making. Bias formed by parents, education,

media, peer group, environment & experiences, personal interests.

To be minimized by admitting or declaring its influences.

Intuition : useful approach for sudden & quick decisions are required.

Insight refers to the sudden breakthrough which perceives a new solution to a problem.

Extrovert person : high risk taker.

Introvert person : low risk taker.

LogicalNo thoughtHesitant Emotional Compliant Intuitive : based on

personal feelings

Situation Analysis

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FORCE FIELDANALYSIS

An evaluation strategy which is partly to do with identifying choices, partly to do with choosing between them & partly to do with implementation.

The forces are referred to as : Restraining forces : those that constrain action & act against

success Facilitating forces : those which enable action & act for

success.

SUCCESS

Restraining Forces

Facilitating Forces

How to analyze ??

List all the restraining forces List all the facilitating forces Identify which forces in each list are most critical

to success or failure Identify ways of reducing significant restraining

forces & of strengthening significant facilitating forces.

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Thank You !!

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Q & A

1. You recently overheard one of your managers say, ‘The idea of empowerment is all right in theory but as I am held responsible for the performance of my staff in my department, them it is only right that I should exercise close control and power over them’. You were then asked to attend a meeting with your manager to discuss empowerment.

Critically evaluated the concept of ‘empowerment’. Use relevant theory and examples from the workplace to support your answer. [15 marks]

2. You have recently been appointed regional manager for an international chain of supermarkets, and you are aware that the organization is operating in a more dynamic business environment. You are therefore considering delegating more responsibilities to your store managers.(a) Discuss the benefits delegation would bring to store managers and yourself. Use relevant theory to support your answer. [10 marks](b) Discuss the barriers to effective delegation [10 marks]

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3. Effective decision making is an essential skill for a manager.Explain the main characteristics of the decision making process at different levels with an organization. [10 marks]Critically evaluate two different models of decision making that enable a manager to make informed and effective decisions. [15 marks]

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Q & A