Structuring the decision process

This chapter includes a discussion of leadership decisions and stress. Many leaders are daily exposed to stress when they must make decisions, and there are often social reasons for this. Social standards suggest that a leader must be proactive and make decisions and not flee the situation. Conflict often creates stress in decision-making situations. It is important for leaders to understand that it is not stress in itself that leads to bad decisions, rather, bad decisions may be the result of time pressure in the sense that leaders have not been able to gather enough relevant information. Thus, it is worthwhile for leaders to be able to prioritize properly in order to cope with stressful situations. In some situations, a leader chooses to delegate the decisions to his/her team and then it is important to guard against «groupthink», a phenomenon where members of a team put consensus before anything else as a result of the peer pressure. A number of methods are presented that enable leaders to avoid this phenomenon. Often leaders are involved in decision-making situations where they are forced to navigate between objectives that are in strong conflict with each other. We are talking about «decision dilemmas». These are characterized by the existence of a conflict between the top leadership's desire to control the activities and their wish to give autonomy and independence to the various units. It is important for leaders to be able to strike a balance in different dilemma situations and understand how to best manage conflicts when they aris

Implementing leadership decisions

In this chapter it is demonstrated that the way in which leaders implement a decision largely depends on the nature of it, that is, whether it is strategic or not. Leaders must be as open as possible and not withhold information from the persons involved in the process. Therefore, they should distribute as much relevant information as possible to meeting participants before a meeting. At the same time, they must be able to steer the process. It is not unusual for there to be a separation between the formulation and implementation of a strategic decision. Often, it is the top leadership that formulates the decision problem and the middle managers that implement its solution. For this reason, it is relatively common that the top leadership signals that the implementation has been successful as soon as the middle managers begin to report positive results. This can sometimes happen even though most of the implementation is incomplete. However, there are also cases where the top leaders rule out certain implementation processes as failures when in fact they prove later on to be successful. A common problem in organizations is that leaders often inherit the task of implementing decisions that past leaders have made. In order to succeed with an implementation, leaders must understand the importance of the process. They must communicate their vision clearly, evaluate and monitor continuously, and allow interested parties to participate actively in the process. They should also understand that what at first may look like a failure, at a later stage may prove to be a succes

Facilitating leadership decisions

This chapter illustrates that in order to reach a decision a leader must decide which persons should be involved in the process and when. A relatively common method of involving others is delegating the decision to a group. A main objective of this is often to generate as many innovative ideas as possible, and different techniques can be employed for this, including brainstorming. The proposal generated must then be validated by the group using different criteria on the basis of which it is then relatively easy to filter out proposals that do not reach the goals that have been set. However, a leader needs to collect additional information in order to reach a decision. By the use of information technology vast amounts of information may be accumulated. Thus, different kinds of filtering or weeding methods must be used in order to quickly obtain relevant information. This information can help leaders create forecasts and minimize risks. They must also be able to present their ideas in the most attractive way possible in order to be heard and arrive at decisions. The design of the presentation is therefore critical. Sometimes it is not enough for leaders just to present an idea, they are then obliged to negotiate in order to reach a decision

The issue of design in managerial decision making

It is argued that the design of decisions is a process that in many ways is shaped by social factors such as identities, values, and influences. To be able to understand how these factors impact organizational decisions, the focus must be set on the management level. It is the management that shoulders the chief responsibility for designing collective actions, such as decisions. Our propositions indicate that the following measures must be taken in order to improve the quality of organizational decisions: 1. The identity of the people, involved in organizational decision making, affects the quality of decisions and should be taken into account in the design of decisions. 2. The decision maker or designer of decisions should engage the members of an organization to create a shared vision. 3. Getting the members of an organization to express and share common values should improve the decision making process. 4. Being able to socially influence the members of an organization, or other stakeholders involved, as well as letting them participate in the process, should improve the quality of decisions

Participation and organizational commitment during change: From utopist to realist perspectives

Trust has a great potential for furthering our understanding of organizational change and learning. This potential however remains largely untapped. It is argued that two reasons as for why this potential remains unrealized are: (i) A narrow conceptualization of change as implementation and (ii) an emphasis on direct and aggregated effects of individual trust to the exclusion of other effects. It is further suggested that our understanding of the effects of trust on organizational change, should benefit from including effects of trust on the formulation stage. It should also benefit from exploring the structuring effects of trust in organizations. Throughout this chapter, ways to extend current research on trust in organizations are suggested. The chapter also provides examples of relevant contributions where available. In order to capture organizational effects of trust, it is suggested that trust should be studied over longer time intervals, and include several referents of trust, spanning both horizontal and vertical relationships in the organizatio

How betrayal affects emotions and subsequent trust

This article investigates the impact of different emotions on trust decisions taking into account the experience of betrayal. Thus, an experiment was created that included one betrayal group and one control group. Participants in the betrayal group experienced more intense feelings governed by negative emotions than participants in the control group did. Moreover, participants in the betrayal group significantly lowered their trust of another stranger. On the other hand, we found some evidence that neuroticism exaggerated the relationship between experienced betrayal and subsequent trust

Developing as a leader and decision maker

This chapter makes it clear that a significant element of both leadership and decision making is the development aspect. Leaders develop in their decision making by being confronted with difficult decision situations. However, they also develop through various forms of systemized training and education. Different leaders tend to develop in different directions. For this reason, one can identify a number of key leadership styles based on different ways of leading. These different styles are appropriate for various types of organization. Some organizations require a strict and authoritative style, while others are in greater need of a more democratic style. Senior leaders often have the capacity to switch between different leadership styles depending on how the situation develops. In addition, there are a number of key decision-making roles that leaders are expected to manage. These include the role of entrepreneur, problem-solver, resource-allocator and negotiator. Leaders must also learn to work with clarity, conviction, courage, and communication in order to facilitate their decisions. Research shows that leaders who face severe adversity in their careers often are forced to make many difficult decisions. As a result they develop. Being forced to make difficult decisions actually leads to reflection, self-awareness and self-knowledge of one’s own values. Leaders also develop by communicating their problems in a structured way with more experienced colleagues. The fact that leaders develop by making difficult decisions leads to various forms of action having a central role. It is by putting decisions into action that leaders develop, as well as by reflecting on what alternative decisions could have been made. An action perspective on leadership decisions is closely linked to the concept of sense-making. This phenomenon implies observation, action, revision and communication in the aftermath of a decision. There is research indicating that reflection, critical thinking, intuition, ethics and communication are important dimensions of leaders and decision makers who are generally perceived as wise

Developing as a leader and decison maker

This chapter makes it clear that a significant element of both leadership and decision making is the development aspect. Leaders develop in their decision making by being confronted with difficult decision situations. However, they also develop through various forms of systemized training and education. Different leaders tend to develop in different directions. For this reason, one can identify a number of key leadership styles based on different ways of leading. These different styles are appropriate for various types of organization. Some organizations require a strict and authoritative style, while others are in greater need of a more democratic style. Senior leaders often have the capacity to switch between different leadership styles depending on how the situation develops. In addition, there are a number of key decision-making roles that leaders are expected to manage. These include the role of entrepreneur, problem-solver, resource-allocator and negotiator. Leaders must also learn to work with clarity, conviction, courage, and communication in order to facilitate their decisions. Research shows that leaders who face severe adversity in their careers often are forced to make many difficult decisions. As a result they develop. Being forced to make difficult decisions actually leads to reflection, self-awareness and self-knowledge of one’s own values. Leaders also develop by communicating their problems in a structured way with more experienced colleagues. The fact that leaders develop by making difficult decisions leads to various forms of action having a central role. It is by putting decisions into action that leaders develop, as well as by reflecting on what alternative decisions could have been made. An action perspective on leadership decisions is closely linked to the concept of sense-making. This phenomenon implies observation, action, revision and communication in the aftermath of a decision. There is research indicating that reflection, critical thinking, intuition, ethics and communication are important dimensions of leaders and decision makers who are generally perceived as wise

Effects of mental accounting on intertemporal choice

Two experiments with undergraduates as subjects were carried out with the aim of replicating and extending previous results showing that the implication of the behavioral life-cycle hypothesis (H. M. Shefrin & R. H. Thaler, 1988) that people classify assets in different mental accounts (current income, current assets, and future income) may explain how consumption choices are influenced by temporary income changes. In both experiments subjects made fictitious choices between paying for a good in cash or according to a more expensive installment plan after they had received an income which was either less, the same, or larger than usual. In Experiment 1 subjects were supposed to have savings so that the total assets were equal, whereas in Experiment 2 the total assets varied. The results of both experiments supported the role of mental accounts in demonstrating that subjects were unwilling to pay in cash after an income decrease even though they had access to saved money. Thus, in effect they chose to pay more for the good than they had to. Indicating a need for further refinement of the concept of mental account, choices to pay in cash after an income decrease tended to be more frequent when the consumption and savings motives were compatible than when they were incompatible. Furthermore, increasing the total assets made subjects more willing to pay in cash after an income decrease

When emotional intelligence affects peoples' perception of trustworthiness

By adopting social exchange theory and the affect-infusion-model, the hypothesis is made that emotional intelligence (EI) will have an impact on three perceptions of trustworthiness – ability, integrity and benevolence – at the beginning of a relationship. It was also hypothesized that additional information would gradually displace EI in forming the above perceptions. The results reveal that EI initially does not contribute to any of the perceptions of trustworthiness. As more information is revealed EI has an impact on the perception of benevolence, but not on the perceptions of ability and integrity. This impact was observed to be negative when the nature of the information was negative. On the other hand, information alone was shown to have a significant impact on the perceptions of ability and integrity, but not on the perception of benevolence. Theoretical and practical implications of the findings are addressed