Background Information: Decision-making in groups

Decision-making is one of the central activities of management and is a huge part of any process of implementation. The quality of these decisions can have a profound effect on your implementation success. Many decisions that have to be made during the process of implementing innovation and technical change will need to be made by groups. Group decision-making is very different from making decisions on your own.

 

In an effort to increase our group decision-making effectiveness, information on four important issues is presented below:

• programmed versus non-programmed decisions
• individual versus group decision-making
• perceptual and judgemental factors affecting decision-making
• techniques for improving decision-making

[See related information on decision-making]

[Please note: Some of the material in these sections has been adapted from Organisational Behaviour (2nd. edition) by Robert Vecchio, Greg Hearn & Greg Southey published in 1996 by Harcourt Brace in Sydney. This is a good source for more information on these and many related topics.]

Programmed versus non-programmed decisions
One way of distinguishing among decisions is in terms of whether they are fairly routine and well-structured, or novel and poorly structured. Well-structured decisions can be understood, measured and actually programmed. For example, when a clerk checks the on-hand inventory against a pre-established minimum standard this well-structured decision can be analysed, easily measured in terms of success or failure and pre-programmed. If inventory falls below the standard, the clerk knows it is time to order more stock.

Poorly structured decisions, on the other hand, are more ambiguous and frequently more difficult to make. With decisions that are unique and non-routine, taking a programmed approach is usually impossible. These non-programmed decisions frequently pertain to rare and unique situations that have a potentially significant effect on the organisation. For example, major planning issues and problems are often the topic of such decision-making. How to acquire capital, whether to sell off unprofitable corporate divisions and whether to launch a new product line, are examples of organisational non-programmed decision issues. These types of decisions afford the greatest opportunities for creativity. They are more difficult to make, frequently have significant impact on the firm and are most likely to be made during the course of the implementation of innovation and technical change. They are the focus of this Background Information.

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 Individual versus group decision-making
Most decisions have both individual and group components. It is, however, sometimes difficult to know when to involve others in the decision-making process and to what degree. By and large, research that has pitted individuals against groups has shown that groups will outperform individuals working in isolation. That is, the groups' solutions to problems are typically of higher quality than the average of the individuals' solutions. One interesting additional finding is that the best solitary worker may often outperform the group. In general, however, and for a variety of tasks, groups can be expected to outperform the vast majority of individuals who work alone.

Precisely why groups have an advantage over individuals has also been the subject of much research. One self-evident explanation is that groups can pool information and abilities. By pooling these resources, the group gains access to a collection of knowledge that is greater than that of any single individual. This knowledge enables the group to reject obviously incorrect approaches and provides a check on the possibility of committing errors.  Being in a group also tends to motivate and inspire group members. The stimulation of being in a social setting can enhance an individual's level of contribution. In addition, there are social rewards for making a significant contribution to a group's efforts. For example, praise, admiration, and feeling valuable to the group can be strong incentives for an individual to exert greater effort in accessing valid information and evaluating decision options.  Finally, depending on the situation, it may be possible to divide a group's general assignment into smaller, more manageable tasks that can then be delegated to individual group members.

There are also several potential disadvantages to group decision-making. For example, highly cohesive groups sometimes encourage a restricted view of alternatives. This is sometimes referred to as groupthink. In this case, the group is too cohesive and will not let in any new information or perspectives that disagree with the group's line of thinking.  Groups may also polarise toward extreme points of view if an appreciable element of risk is involved. in other words, group members tend to feed off of each other's fears or enthusiasm, and can make what researchers refer to as risky shifts and cautious shifts.  Another potential problem is that group decision-making tends to be much more costly than individual decision-making. Given the time and energy that meetings can consume, it is usually best to reserve group decision-making for more important decisions that require high-quality solutions. Group discussions can also give rise to hostility and conflict. This is especially likely when group members have divergent and strongly held opinions on alternative courses of action. In addition, decision-making in groups tends to be influenced by the relative status of group members. Thus, when a group member who possesses relatively little status offers an objectively good suggestion, it may be rejected. But if the same suggestion is offered by a group member with high status, the likelihood of its being adopted is greatly increased.

Decisions within decisions: The Vroom-Yetton decision-making method can be used to help you to choose between individual and group decision-making.

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Perceptual and judgemental factors affecting decision-making
We now turn to potential biases and problems of which we must become aware, in order to increase our decision-making effectiveness as individuals or in groups. Human beings are fallible information processors. It is not possible for us to completely objectively perceive and process information. This is not a matter of opinion, it is psycho-physiological fact. For example, we all have a physical blind spot caused by the optic nerve entering our retina. In our every-day perceptions, however, this blind-spot does not show-up as our brain filters it out for us. There are a number of perceptual factors that affect decision-making and judgement of which we are also usually unaware.

1. Limited information processing capability. We can not handle excessive inputs (e.g., characteristics of events or objects and situations). We have a limited information processing capability. When we look at a room or out of our windows, we do not "see" everything that is there. We attend to certain things and we "ignore" others. Most people can read only a few hundred words per minute. There is a limit to the amount of information we can perceive via our hearing as well. There are times, therefore, that we may think we heard what some one said, but we misheard or misinterpreted it. There are times when we think we have all the information we need, but we merely have all the information we are willing and able to handle for the moment. This can have a significant negative impact on our ability to make successful decisions.
   
   
2. Perceptual filters and biases. We have many filters and biases, and we frequently rely on ineffective decision-making heuristics. A decision-making heuristic is a guide or "rule-of-thumb". For example, we may use the "rule" that our first choice is always best, or always wrong. Either way, this can not possibly be a successful bases for decision-making. When interviewing a potential new employee, we frequently see our perceptual filters and biases in action. Many of us dislike certain "types" of people or expect that other "types" do well in certain jobs. This can also have a significant negative impact on our ability to make successful decisions.
   
   
3. Changing perceptions. Our filters and perceptions change, via learning, experience, attitude change and belief change. For example, the "anchoring effect" is a consistent and powerful psycho-perceptual phenomena. Here is how it works. If I am trying to sell you a car for $35,000, I get you to talk about and think about the price of a new home. That anchors you into thinking about hundreds-of-thousands of dollars. Now, when you think about the price of the car, it seems less than it would seem if I had anchored you to a lower dollar amount related to the price of a new suit, for example. When we process information, therefore, we are frequently affected by the information we collect and by how and when it is presented to us. This also can have a negative affect on our decision-making success.
   
   
4. Inaccurate perceptions. Our perceptions are subject to factors of attention, stress and many perceptual phenomena. When we are tired or stressed, our judgement and perceptions can be impaired. If we are focusing on one part of a picture, we may not be able to see another part. Many of us have seen examples of perceptual illusions. Once again, this illustrates how we need to remember that we are fallible information processors and must, therefore, take steps to minimise these potential biases.

As a result of these, and many other perceptual factors, our ability to judge accurately and objectively is sometimes affected.  The following issues illustrate how our decision-making judgements may be negatively impacted by our perceptual inadequacies and inconsistencies.

1. First impressions. Research shows that they are frequently not accurate, and frequently long lasting. It is well established that we tend to remember best what we hear and see first and last. These are referred to as the primacy and recency effects. If a vital piece of information is presented in the middle of a series of useless facts, we may be likely to forget it. In job interviews, research shows that first impressions are more important than factual information in determining an interviewer's judgements.
   
   
2. Stereotyping and categorisation. Our brains favour order. They are excellent at compartmentalising, organising, and associating information. This helps us to survive, adapt and to handle heavy inputs. Unfortunately, this is consistently related to biases in performance ratings, attitudes and prejudices about people of different races and nationalities. Research shows that interviewers possess stereotypes of idealised successful candidates against which real applicants are judged. In general, both males and females are more likely to be recommended for traditionally role-congruent jobs, for example, woman are more likely to be recommended for secretarial and support roles. Research also shows that attitudinal, racial and gender similarity can affect evaluations. It has long been recognised that people tend to like those who are similar to themselves and like less those who are different. Over thirty years of research has illustrated this powerful and consistent phenomena. Studies consistently show that people like those who had attitudes similar to themselves. The greater the similarity, the greater the attraction. In other words, you must be OK, you are just like me. Cross-cultural comparisons illustrate that this similarity-attraction principle is universal. Respondents from India, Japan and Mexico, all showed the same patterns as Western respondents.
   
   
3. Halo effect. This is the tendency to over-generalise from one or two points of information. For example, if we think person X just made an excellent point or suggestion, we then may draw a halo around everything that person does or says in relation to that topic and give it more weight and credibility than it deserves.
   
   
4. Contrast effects. Contrast effects have to do with the contrast or differences between pieces of information. For example, in a job interview or performance appraisal, the person before and after you has an effect on the rater's judgement. If you are a really strong candidate for a job, objectively number 2 or 3 in line, and you follow the number 1 candidate, you would make a less favourable impression on the interviewer than if you followed the worst of the available candidates.
   
   
5. Attributions. People tend to attribute causes to actions and events. Generally, we attribute causes to either personal or situational factors. For example, "I did terribly on that test because I am stupid" (internal/personal attribution of the cause) or "I did terribly on that test because I did not have time to study" (external/situational cause of the failure). Research shows that we tend to over-estimate personal causes; that is, we tend to attribute the causes of success or failure more to people and tend to down-play the contribution of the situation and factors well beyond our control.
   
   
6. General biases and effects. Generally, we find that non-verbal sources of information are overly important during interviews; for example, attractive-looking candidates are typically preferred, regardless of gender. Another general bias has to do with the weighting of positive and negative information. People tend to weigh negative information more heavily than positive information - in other words, it takes only one bit of bad news to wipe out the effects of ten bits of good news.

It is vital that we are aware of these perceptual inadequacies and inconsistencies. Awareness is the first step on the road to minimising their effects.

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Techniques for improving decision-making
Although it is true that there are a great many factors that can negatively affect our ability to make decisions successfully, there are also many things that can be done to help increase our decision-making effectiveness. In this section, we will look at three specific techniques for improving decision-making in groups: (1) the Nominal Group Technique, (2) the Delphi Technique, and (3) the Stepladder Technique.

The Nominal Group Technique.  One approach that attempts to capitalise on the positive features of group decision-making, while avoiding many of the potential pitfalls, is the Nominal Group Technique (NGT). The NGT is designed to help all team members participate and express opinions while still building team consensus. In this technique, seven to ten individuals are brought together to participate in a structured exercise that includes the following steps:

1. Team members are presented with a problem, challenge or issue. Individual team members silently and independently write down their ideas about how to tackle the problem. This is the nominal (non-interacting) phase.
   
   
2. Each team member (one at a time, in round-robin fashion) presents an idea to the group. As each idea is offered, it is summarised and recorded on a whiteboard or wall chart, without discussion of its merits.
   
   
3. A discussion is held in which all ideas are clarified and evaluated. The merits of the ideas are considered. Ideas are merged, eliminated, expanded and modified.
   
   
4. Individuals silently and independently vote on each idea. This voting may involve a rating of the proposals, a rank ordering, the selection of the top two or three ideas, or the division of 10 points among alternatives. The group's decision is then derived by pooling the votes or rankings into a single preferred alternative.
   
   
5. A revised list of the best ideas is presented to team members for discussion. If a consensus emerges, the team is finished. If not, the procedure returns to Step 2 and continues through more rounds until the best ideas are identified and agreement is reached.

The nominal group technique is a quite popular means of reaching a group decision because it avoids many of the potential problems of group decision-making. For example, a decision can be reached in a reasonable amount of time without being greatly influenced by the leader's preferred position. Perhaps the strongest drawback of NGT is its high degree of structure. As a result, the group may tend to limit its discussion to a single and often highly focused issue.

See related information on a specific application of the NGT that we used as part of the cultural analysis section.

The Delphi Technique.  Another technique for capitalising on a group's resources, while avoiding several possible disadvantages of relying on group decision-making processes, was developed by the Rand Corporation. This approach, called the Delphi Technique, is similar to NGT in several respects, but also differs significantly in that the decision-makers never actually meet. The steps in the Delphi technique are:

1. Select a group of individuals who possess expertise in a given problem area; for example, forecasting social trends or technical breakthroughs.
   
   
2. Survey the experts for their opinions via a mailed questionnaire.
   
   
3. Analyse and distil the experts' responses.
   
   
4. Mail the summarised results of the survey to the experts and request that they respond once again to a questionnaire. If one expert's opinion sharply differs from the rest, he or she may be asked to provide a rationale. This rationale could then be forwarded to the other participants.
   
   
5. After this process is repeated several times, the experts usually achieve a consensus. If not, the responses can be pooled to determine a most preferred view.

The Delphi technique has a number of advantages and disadvantages. Its greatest advantage is that it avoids many of the biases and obstacles associated with interacting groups (that is, groups where the members meet face-to-face). It has also been shown to generate fairly useful information and high-quality solutions. A strong disadvantage stems from the amount of time it takes to complete the entire Delphi process. It rarely takes less than several weeks, and often as long as five months. Clearly, urgent problems cannot be solved in this manner. Finally, like NGT, the Delphi Technique follows a highly structured format. As a result, it does not offer much flexibility if conditions change. And, obviously, since respondents never meet face-to-face, social interaction and free dialogue are lost.

The Stepladder Technique.  A problem-solving structure recently proposed as a solution to the problem of unequal participation in groups is termed the Stepladder Technique. The technique is intended to improve group decision-making by structuring the entry of group members into a core group. Initially a small core group of two members, for example, work on a problem. Then the third member joins the core group and presents his or her preliminary suggestions for solving the same problem. Next the member's presentation is followed by a three-person discussion. Each additional member, fourth, fifth and so on joins the expanding core group and presents his or her preliminary solutions; at each step there is a discussion.

The technique has four requirements. First, each member is given sufficient time to think about the task before entering the core group. Second, the new member must make a preliminary solution presentation before hearing the core group's ideas. Third, sufficient time is allocated to discuss the problem as each person is added. Fourth, the final decision occurs only after the entire group is formed. These steps make it difficult for a member to "hide" in the group. Research on the effectiveness of the stepladder technique has shown that stepladder groups produce higher-quality decisions than conventional groups.

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