Slide title

ORGANISATIONS,
PEOPLE &
PERFORMANCE

Strategy & Leadership

Supplementary Slides
Decision making
Organisations, People and
Performance (ES981)
Objectives
 Understand how to make good decisions and
better understand others’ decisions.
 Appreciate different models of decision
making
 Understand evidence based decision making
 Appreciate the role of AI in decision making.
 “Decision making is the process of
making a choice from among a
number of alternatives.
(Huczynski and Buchanan,2013)

4
Source- Garfield cartoon strip
Decision Making – another perspective

DECISIONS – Choices made from among two

alternatives
(Robbins, et.al, 2017)

PROBLEM – A discrepancy between the current

state of affairs and some desired state. Decision
making occurs as a response to a problem
(Sanders, 1999)
Why study decision making?
 Making good decisions is central to the success of any
individual or organisation. (CIPD Research Insight, 2014)
 From an organisational perspective, these decisions can
vary in scope from daily decisions about what to do next
to decisions about strategy that will unfold over several
years and affect many people. (CIPD Research Insight, 2014)
 Both managers and non-managers make them;
Management theory should be based on the question of
choice, and decision making is at the core of it. (Herbert
Simon, 1947)
 It is the most common and crucial work task of managers.
(Henry Mintzberg, 1989) 6
Decision Making Models

7
 How do we make decisions

Rational Bounded Intuition and

decision rationality Emotion
making
Rational model of decision making
Recognition and definition of a
problem or opportunity
Search for alternative courses
of action
Rational – characterized by making consistent,
value-maximizing choices within specified
constraints.
Rational decision making model describes how
individuals should behave in order to maximize
some outcome

Gathering and analysis of data

about alternatives

Evaluation of alternatives

Selection and implementation

of preferred alternative

Source: Bazerman and Moore (2008)

Bounded rationality
A process of making decisions by
constructing simplified models that extract
the essential features from problems
without capturing all their complexity.
Satisficing is a decision making approach
where the first solution that is ‘ judged to
be ‘good enough’(ie. satisfactory and
sufficient) is selected, and the search is
then ended. Source: Simon (1947)
Errors and Biases in Decision Making
Decision makers engaged in bounded rationality allow systematic errors
and biases to creep into their judgements. Some of them are:

 Overconfidence bias – tendency to be confident about our abilities

and that of others whilst not being aware of it. (Ludwig & Nafziger, 2011)
 Anchoring bias – tendency to fixate on initial information, from
which one then fails to adequately adjust for subsequent
information. (Tversky and Kahneman, 1974)
 Confirmation bias –tendency to seek out information that reaffirms
past choices and to discount information that contradicts the past
(Nickerson, 1998)
 Availability bias – tendency for people to base their judgements on
information that is readily available to them. (Pachur et.al., 2012)
 Decision heuristics
 Recency effect – causes people to put more weight on information
they have collected recently and to undervalue things they may
have learned in the past.
 Fast and frugal heuristics – Bounded rationality in its purest form;
these are rules for limiting the search for information and options,
and for making choices, that employ a minimum amount of time,
knowledge and computation.
 Recognition heuristic- eg. When a person has to decide
between two objects, which has the higher value based on a
particular criterion, ‘If one of the two objects is recognized
and the other is not, then the recognized object is inferred as
the one with higher value. (Gigerenzer, et al., 1999)

Hogarth (1980)
Daniel Kahneman’s
System (i) and System (ii) thinking

Kahneman, D (2011). Thinking Fast and Slow,

London:Allen Lane.
 Intuition
Intuitive decision making is a nonconscious process created
from distilled experience.
Characteristics: Further discussion:
 It relies on holistic associations  It does not always contradict
 Links between disparate pieces rational analysis; the two may
of information complement each other.
 It is fast  It is complex and based on
 It usually engages the years of experience and
emotions learning.
Intuition can be very useful as a way of setting up a
hypothesis but is unacceptable as “proof”.
Source: Dane and Pratt (2007)
Evidence based decision making

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 Evidence based decision making
 Evidence based decision making is a situation in which
a decision is made that follows directly from the
evidence. (Tingling,P. and Brydon,M. 2010)
 It is based on a combination of using critical thinking and
the best available evidence.
 It makes decision makers less reliant on anecdotes,
received wisdom and personal experience – sources
that are not trustworthy on their own.
 Managers have an obligation to find the best evidence
when making important decisions to strengthen the
well-being of their workers as well as ensuring their
organisation’s success.
Source: Young, J(2019),CIPD Factsheet based on Barends , E. et al. (2014),CEBMa
What are valid sources of evidence and how does one
combine them?

Adapted by Young, J(2019) Evidence based practice

for
effective decision-making, CIPD Factsheet
from
Barends,E et al.(2014)
Role of AI in decision making

18
AI in decision making
AI in decision making
 AI and other smart technologies are at the epicentre of an
unprecedented wave of automation. They are seen as the
drivers for the transformation of decision making as a
cognitive and information-centric process.
(Kelly, 2012; MacCrory et al., 2014)
 AI can play a crucial role to address the three challenges
that plague decision making in organisations:
 Uncertainty
 Complexity
 Equivocality
(Choo, 1991)
20
Complementarity of humans and AI
in decision making situations

Source- Jarrahi,M.H., (2018)

Tencent, Pearson Among Backers of $100 Million
U.K. AI Startup, Prowler.io (Bloomberg, 2019)
Prowler.io is an artificial intelligence company based in Cambridge, England & has
been valued at $100 million following a funding round involving a group of investors
that includes Chinese technology giant Tencent Holdings Ltd. and Pearson Plc.
The company uses AI to help businesses make decisions about everything from
rebalancing financial portfolios to managing supply chains and logistics
Ling Ge, Tencent’s chief European representative, said in a statement that the Chinese
company is “looking forward to Prowler.io applying its AI decision platform to a
broadening range of customers, potentially including some of Tencent’s affiliate
companies.” Ge said that Prowler’s focus on data-efficient learning methods and
“human-machine teaming” set it apart from other AI companies.
The company’s AI decision-making platform, which it calls VUKU, has been used by
other Nordic asset managers to do risk modelling and portfolio optimization and also
by Barcelona-based delivery startup, Paack to plan optimal routes for its drivers.
Unlike many AI companies that use supervised machine-learning techniques that rely
on vast amounts of data, Prowler’s software uses unsupervised methods based on a
field of mathematics that deals with probabilities and doesn’t require massive data
sets. Its decision-making software also relies on reinforcement learning –- in which
software learns from experience rather than data –- as well as game theory.
 References
Butler,M and Rose, E. (2011) Introduction to Organisational Behaviour, CIPD
Barends , E., Rousseau, D.M., & Briner, R.B. (2014). Evidence-based Management:
The Basic Principles. Amsterdam: Centre for Evidence-Based Management.
Bazerman,M.H. and Moore, D.A. (2008) Judgement in Managerial Decision Making,
7th edition, Hoboken, New Jersey: Wiley.
Bloomberg report (2019) Available at
https://www.bloomberg.com/news/articles/2019-05-20/tencent-pearson-among-
backers-of-100-million-u-k-ai-startup
CIPD Research Insight. (Feb 2014). Fresh thinking in learning and development (Part
2 of 3)- Cognition, decision and expertise
Choo, C.W. (1991). Towards an information model of organisations. The Canadian
Journal of Information Science, 16(3), 32-62
Dane, E. and Pratt, M.G., (2007). Exploring intuition and its role in managerial
decision making. Academy of management review, 32(1), pp.33-54.
23
 References
Gigerenzer, G., Todd, P. and the ABC Research Group. (1999) ‘Simple heuristics that
make us smart’, Oxford: Oxford University Press
Huczynski, A. and Buchanan, D. (2013). Organizational behaviour. Harlow: Pearson
Education Limited.
Hogarth, R. (1980). Judgement and Choice, New York: John Wiley & Sons
Jarrahi, M.H. (2018) Artificial intelligence and the future of work: Human-AI
symbiosis in organisational decision making. Business Horizons, Vol 61, Issue 4, pgs
577-586.
Kahneman, D (2011). Thinking Fast and Slow, London: Allen Lane.
Kelly, K. (2012, Dec 24). Better than human: Why robots will- and must - take our
jobs. Wired. Available at https://www.wired.com/2012/12/ff-robots-will-take-our-
jobs/
Ludwig,S. & Nafziger, J. (2011), ‘Beliefs about Overconfidence’, Theory and Decision,
April 2011, pp. 475-500

24
 References
MacCrory, F., Westerman, G., Alhammadi, Y., & Brynjolfsson, E. (2014). Racing
with and against the machine: Changes in occupational skill composition in an
era ofrapid technological advance. In Proceedings of the 35th International
Conference on Information Systems (pp. 295—311). Red Hook, NY: Curran
Associates Inc.
Mintzberg, H., Raisinghani, D., & Theoret, A. (1976). The structure of
"unstructured" decision processes. Administrative Science Quarterly, 21, 246-
275.
Mintzberg,H. (1989) Mintzberg on Management : Inside our strange world
Organisations, New York: Free Press.
Nickerson,R.S. (1998) ‘Confirmation bias: a ubiquitous phenomenon in many
guises’, Review of General Psychology, June 1998, pp.175-220.
Pachur,T. , Hertwig, R.& Steinmann,F. (2012). ‘How do people judge risks:
availability heuristic, affect heuristic, or both?’, Journal of Experimental
Psychology: Applied, 18(2012), pp.314-30 25
 References
Robbins, S.P, Judge, T., Campbell, T.T. (2017) ‘Organisational Behaviour’ 2 nd
edition, Pearson
Sanders, R.(1999). The Executive decision making process: Identifying problems
and assessing outcomes. Westport, CT: Quorum.
Simon, H.A. (1947), Administrative Behaviour, The Macmillan Company, New
York, NY (2nd ed. published in 1957).
Tversky,A and Kahneman, D. (1974). ‘Judgement under uncertainty: heuristics and
biases’, Science, September 1974, pp.1124-31.
Young, J(2019) Evidence based practice for effective decision-making, CIPD
Factsheet

26
EXECUTION AND CHANGE
MANAGEMENT
Objectives

 Understand different dimensions of organisational change

 Appreciate the change context
 Understand change readiness statements
 Understand and distinguish between systems and
organisational development approaches to managing
change
 Understand and critique rational models of change
Execution & Change Management –
A McKinsey View
Introduction
Executing strategy is rarely straight forward;
Implementing strategy is fraught with difficulty and potential
obstacles;
The most well thought out of strategies will not be successful
unless they are successfully managed, implemented and
embedded in organisations;
Even the most respected and experienced leaders and
managers face difficulty implementing change;
Vested interests and those resistant to change may impede
execution.
Dimensions of Organisational Change
Change can be:

 planned or unplanned
 small-scale or large-scale
 sudden or slow
 radical or incremental
 episodic or continuous

Large-scale or sudden, episodic, dramatic change is usually thought

of as transforming the situation way beyond tinkering with the
details, and may be referred to as transformation.
The Change Context
Managing change will be different in different contexts e.g. a
small family business, major multinational corporation etc.

If change is to be effective, the approach, will be different

depending upon the organisational context in which it
happens.

The “Change Kaleidoscope” (Balogun and Hope Hailey, 2008)

provides a useful framework in order to identify the
contextual features to take into consideration in the design of
change management programmes.
The Change Kaleidoscope
 Change readiness assessment
This is assessment of the organisation’s readiness to accept the
proposed change(s)

“…the extent to which an individual or group feels receptive to and willing to

support the change effort.” (Jabri, 2012: 120)

Typically carried out by:

 Direct observation
 Interviews (usually semi-structured)
 Focus groups
 Questionnaires
 Change readiness assessment

 Identify the critical success factors (CSFs) for the change

initiative: “what do we have to get right for it to succeed?”

 Identify where the organisation is currently with regard to

the CSFs
– what factors are in place which can be leveraged in making the
introduction successful
– what are the current barriers which must be addressed to ensure
successful implementation
 Systems Theory and Organisational
Development

Fundamentally different assumptions about how organizations

work and change:

Systems theory and OD examine relationships between components of

organization (Patton & McCalman, 2008):
– Systems theory uses ‘hard methods’ – planning, evaluating –
organisation as “machine”

– OD uses ‘soft methods’ – involving people – organisation as “social

organism”
 Organisation Development (OD)
OD: a specific methodology or technique to effect change in the
target organisation or unit, to improve organisational effectiveness

OD packages differ, using any of McKinsey’s 7 Ss: systems, structure,

style, strategy, skills, staff, and superordinate goals………… but can
include .......

– process consultation
– survey feedback
– team-building
– inter-group development
– role negotiation
– sensitivity training
 Values, Assumptions, Beliefs of OD
Participation
– Involvement, leadership style

Groups and teams

– Value of teams; let teams flourish

Growth, development, and learning

– People, groups, and organizations are “in process”
– Fulfill human potential

Whole person
Dialogue and collaboration
– Create cooperative rather than competitive systems
– Traditional hierarchy is obsolete
– Win-win is possible

Authenticity, openness, trust

Anderson & Ackerman-Anderson (2001)
– Keys to healthy collaboration
 OD Approach - critique
Elements & techniques - reliance on packages

Use of experiential groupwork

Putting the individual before the organisation

Emphasising the informal organisation over the formal

organisation (c.f. systems theory)

Being “top-down”

Underestimates knowledge workers who recognise manipulation

Needs to show early success to sustain momentum

Greiner & Cummings (2004)

 Systems Theory models of change

E.G.:

Nadler-Tushman

Beer
Nadler-Tushman Congruence Model (1983)
Beer (1980)
Six stage process:

1. Mobilise commitment to change through joint analysis and

diagnosis of problems;
2. Develop a shared vision of how to organise and manage the change;
3. Foster consensus, competence and commitment to a new shared
vision;
4. Spread the word about the change;
5. Institutionalise the change through formal policies, systems and
structures;
6. Monitor and adjust strategies and policies as appropriate.
 Hayes (2014)
Hayes suggests seven core activities:
1. Recognising the need for change and
starting the change process
2. Diagnosing what need to be changed and
formulating a vision of the preferred future
state

3. Planning

4. Implementing the change and

reviewing progress

5. Sustaining the change

6. Leading and managing the

7. Learning
people issues
Other “step based” models also
exist e.g:
Judson (1991) - Five step model
Kanter et al (1992) – Ten commandments
of change
Kotter (1996) – Eight Step model
Hait (2006) –ADKAR model (Four stages)
 Critique of “rational” change theories
So-called ‘n’ step guides (guides to sequencing and ‘best practice’)
although useful frameworks:
tend to have considerable overlap;
can underestimate the complexity and uniqueness of organisations;
underplay the untidy and iterative [repetition] of change;
do not necessarily encourage a critical perspective about what is
being changed and why;
lack scientific evidence – are largely based on retrospective
accounts of ‘what went well’ or “expert views” (see Stouten et al,
2018).
Evidence based steps in the management of
planned organisational change
Stouten et al (2018) reviewed and synthesised empirical literature and
identified ten evidence based principles of change management:

• Obtain the key facts regarding the nature of the problem;

• Assess and address the organisations change readiness;
• Implement evidence based change interventions;
• Develop effective change leadership throughout the organisation;
• Develop and communicate a compelling change vision;
• Work with social networks in order to tap their influence;
• Use enabling practices to support implementation;
• Promote micro processes and experimentation;
• Assess change processes and outcomes over time;
• Institutionalise the change to sustain its effectiveness
 References

Anderson, D. and Ackerman-Anderson, L. (2001). Beyond Change Management:

Advanced strategies for today’s transformational leaders. New York: John Wiley.
Balogun, J. and Hope Hailey, V. (2008). Exploring Strategic Change. Harlow: Pearson
Education
Beer, M. (1980). Organisation Change and Development: A systems view. Santa
Monica, CA: Goodyear.
Greiner, L. and Cummings, T.G. (2004). ‘Wanted: OD more alive than dead?’ Journal of
Applied Behavioral Science, Vol. 40. No.4.
Hayes, J. (2014). The Theory and Practice of Change Management. Basingstoke:
Palgrave Macmillan.
Hiatt, J. (2016). ADKAR: A model for change in business, government and our
community. Loveland, CO: Prosci.
 References
Hughes, M. (2010). Managing Change: A critical perspective. London: CIPD
Jabri, M. (2012). Managing Organizational Change: Process, social
construction and dialogue. Basingstoke: Palgrave Macmillan
Judson, A. (1991). Changing Behaviour in Organisations. Cambridge, MA:
Blackwell.
Kanter, R., Stein, B. and Jick, T. (1992). The challenge of organisational change.
New York: Free Press.
Kotter, J. (1996). Leading Change. Cambridge, MA: Harvard Business Press.
 References
Moss Kanter, R. (2012). Ten Reasons why People resist change. Harvard Business
Review. September.
Osland, J. (2008). Leading global change. In Mendenhall, M., Osland, J., Bird, A., Oddou,
G. and Maznevski, M. Global Leadership: Research, Practice and Development.
Abingdon: Routledge.
Paton, R. and McCalman J. (2008). Change Management: A Guide to Effective
Implementation. London: Sage Publications.
Pettinger, R. (2010). Organizational Behaviour: Performance Management in Practice.
Abingdon: Routledge.
Stouten, J., Rousseau, D. and Cremer, D. (2018). Successful Organisational Change:
Integrating the Management Practice and Scholarly literatures. Academy of
Management Annals. Vol. 12. No. 2.