Manage Under Uncertainty
University of Newcastle October 2012 [Yellow Auto Case Study] [GSBS6001 Individual Assignment] [By: Shih Yun Lin (3172398)] Executive Summery Managers are constantly faced with critical decisions that will heavily impact on the company’s competitive ability and profitability. This report will analyse the critical decisions made in the case study The Change Story of Yellow Auto Company from a sociologic decision making perspective.
The case study presents four main decisions which are: increase of market share, change in decision management style, clarify job description and invest greater time and money in human resources.
The analysis of these decisions centres on the relationships between employees and managers and the positive and negative attributes of group decision making. The case study demonstrates that the decisions made by Yellow Auto have been successful in achieving the organisational objective of an increase in market share and an improved human resources quality.
Recommendations have then been made in order to improve the company’s future decision making process including: a more consultative decision making process for high risk decisions, a hybrid management style, a different set up for job descriptions and quality management for human resources activities. Table of Contents Executive Summery2 Introduction3 Critical Decisions4 Increase of Market Share4 Change in Management Style5 Clarify Job Descriptions6 Invest Greater Time and Money in Human Resources6
Recommendations7 Conclusion9 Reference List10 Introduction Companies must constantly make critical decisions in order to choose strategies in order to gain a competitive advantage or keep up in the rapidly evolving market. The factors influencing decisions and the relative advantages and disadvantages can be viewed from multiple perspectives. This report will analyse the decisions made in the case study The Change Story of Yellow Auto Company from a sociologic decision making perspective.
The sociological perspective focuses on the patterns of social relationships, interaction and culture and how this impacts on the company’s decision making process. Various critical decisions have been made in this case study including: Increase of market share, change in decision management style, clarify job description and invest greater time and money in human resources. These decisions have all strongly impacted the company and will continue to impact it in the future.
These decisions will be explored with a sociological focus, discussing positive and negative attributes of each decision. Recommendations will then be explored in regards to how the company can improve their decision making in the future. This case study report is based on credible research retrieved from published books and accredited journals obtained from the internet. Critical Decisions Increase of Market Share
The first critical decision in the case study is the goal set in 2001, to increase Yellow Auto’s market share to 50%. This goal has been derived by the top managers alone and without any input for from the middle managers or front line staff. The managers believe the only way to achieve this goal is through an improvement in the human resource quality. There are many sociological factors in this decision including autocratic management style and small group decision making.
Firstly Yellow Auto’s management style is comparable with that of McGregor’s Theory X management style in which top management makes all the decisions and maintain a strict control over the business (Mathis, 2010). This decision making and enforcing style can be effective due to the nature of small group decision making, in which smaller groups are able to reach consensus more easily. This is due to it being a more timely approach as lower number of people correlates to a reduced number of differing opinions and an increase in the participation of all members.
The group is then able to work out the differences in points of view and come to an agreement. The communication flow from this point is then one way as determined by the autocratic style and the decision can be implemented throughout the rest of the organisation. There are also many negative attributes with the style of decision making however as the subordinates of Yellow Auto have not been included in the decision making process they may not be as motivated to implement the decisions made by the top managers.
This is exacerbated in the case study as this decision to increase the market share of the company is risky due to the economic situation in Turkey. Turkey had experienced a financial crisis in both 2000 and 2001 the latter being ‘particularly far reaching in terms of its impact, resulting in a major collapse of output and employment’ (Onis, 2006). Accepting this level of risk without the consult of other employees can increase uncertainty within the company and cause employees to feel segregated from the company.
Furthermore the use of a small group in this decision making process has the potential of experiencing the Abilene paradox (Harvey in Teale, 2003:290) in which some top managers may not voice their concerns to avoid being discredited or appear to lose faith in the organisation. In order to identify and address these potential issues management of Yellow Auto decided to work with academics in the implementation of this decision. Change in Management Style Following an audit from the external consultants they proposed that the utocratic management style currently in use is a barrier preventing the company from achieving their goal of an increase in market share. Accepting this advice, the top management of Yellow Auto change to a more democratic management style opening systems of communication and the development of trust in employees throughout the organisation. This changes the group structure of Yellow Auto as where previously employees could be considered part of Scott’s out status, they have now have the opportunity to move up to the fringe status or actively participate as a primary set member (Scott in Harrison 1999:222).
This leads to increased motivation with employees and gives them a greater connection to the company. By increasing the amount of people participating in decision making, Yellow Auto are able to utilize the diverse human resources that they have in order to generate more creative ideas and solutions to issues the company has. There are downsides into an increased group size however as reaching a consensus with more people is much more difficult. There is also an increase in the time it takes to make a decision and leads to unproductively and can create divisions within the company.
Clarify Job Descriptions Another critical decision made in the case study is to interview all employees in order to analyse their jobs and clarify their job descriptions. This was completed due to employees stating that their responsibilities were not clear and authority and relationships were not clearly defined. Upon completing the analysis it was observed that some of the tasks between managers and employees were overlapping and steps were introduced in order to distinguish between tasks and develop more comprehensible job descriptions.
By distinguishing and identifying employee’s roles, the relationships between the employees are explained and can lead to better understanding of authority and improve communication throughout the organisation (Mathis, 2010). It also prevents particular roles from overlapping and can ensure that the right employee is completing the necessary job. While ensuring that job descriptions are up to date and clearly defined this can also have some negative implications for the company. Firstly in order to complete this is very costly and time consuming.
It can then freeze the job, preventing it from evolving and result in a lack of flexibility and remove initiative from the employee. By describing the responsibilities of the employees it reinforces the boundaries of responsibility and can lead to the ‘it’s not my job’ (Mathis, 2010) reflex. Invest Greater Time and Money in Human Resources The final critical decision made in the case study was to invest greater time and money into human resources. This decision has a heavy focus on sociology with the relationship between employees and an emphasis on communication.
Yellow Auto hired new staff to fit the right jobs and invested heavily in their training. Training included individual aspects such as interpersonal skills, time and stress management as well as group sessions which increase coordination and communication and team spirit. These training methods and exercises focus on building the characteristics of effective groups including: cohesion, group roles, norms, conformity and interaction (Ayson, 2012). Cohesion is created through the team building activities and the job descriptions which also lead to an understanding of the roles and norms of the group.
This allows for group activities to be conducted in an acceptable manner with each member of the group knowing how to act and what duties they must perform. This creates an environment in which the employees can work together easily without confusion and make decisions as well as perform their individual tasks to an acceptable standard. These characteristics also have negative attributes and can encourage groupthink, where ‘independent critical thinking and objective moral judgment will be suspended in deference to group norms and in observance of group consensus’ (Harrison, 1999:184).
Setting particular roles may also create a reliance on particular group members and if they are not present or leave, then the group suffers and is not able to operate without the person carrying out their tasks. A similar issue that is present with these three characteristics is the reduction in innovation as the group has set standards of behaviour and expectations the need or ability to generate innovative responses is reduced. Lack of innovation and individual thinking is also an issue with conformity.
In order to demonstrate that the group is performing well and in order to reduce conflicts, individuals conform to the group’s suggestions and decisions (Popova, 2012). While this may be beneficial in the sense of reaching decisions and working cooperatively in order to achieve goals, it limits the effectiveness of the group and the results of the group could be the same as that of an individual. Another positive aspect of Yellow Autos investment in human resources is the group interaction achieved through this program.
As the employees train and work together communication and teamwork skills are improved which results in a greater ability of the group to work together in order to achieve organisational goals. It also allows employees to understand how to use each individual’s skills and abilities in order to improve the decision making process and produce superior outcomes. Recommendations The decisions made and the decision making process in the case study are open to criticism.
The result of these decisions however demonstrates that the correct steps were taken in order to achieve and exceed the organisations goal of an increase in market share to 50%. In light of the success of Yellow Autos decisions there are still various recommendations that can be made including: a more consultative decision making process for high risk decisions, a hybrid management style, a different set up for job descriptions and quality management for human resources activities.. Firstly the decision to increase market share to 50% was a high risk decision which had potential to highly negatively impact the company.
Due to the nature of this decision as high risk and potential impact to the majority of employees Yellow Autos managers should have not made this decision alone. Instead this should have been a consultative process with employees and academics to discuss the potential impacts and rewards of the decision. This will lead to motivation for the employees as they have been a part of this decision as well as increase in commitment to the company as the employees can feel valued by the organisation as they are playing an active role in its future (Teale, 2003).
Secondly, the company’s management style began as autocratic and then changed to democratic at the request of the academics. Yellow Auto should not just use one management style, but a hybrid of the two in order to effectively make and enforce decisions. By using a hybrid management style the top managers can decide the level of employee consultancy depending on the nature of the decision and its affect on the company and employees.
This will ensure that the right amount of employee contribution and new ideas are gathered as well as coming to a timely and efficient solution. Another recommendation is how the job descriptions are set. While ensuring tasks are not overlapping and there is an understanding of employee’s roles and responsibilities are necessary, the job descriptions should not be written in a way that restricts the employee’s activities or discourages flexibility and initiative.
Finally with the heavy investment in human resources Yellow Auto needs to ensure that these activities are quality controlled and that the group interactions and decision making activities are effective. For example this means that issues such as conformity need to be addressed and such as demonstrated in the Asch Paradigm in which managers can encourage individuals to speak up, which then in turn enables other employees to snap out of conformity (Popova, 2012). Conclusion
A number of critical decisions have been raised in the case study including the decision to increase market share, change in management style, clarify job description and invest greater time and money in human resources. The decision making process involved in reaching these decisions and the potential positive and negative outcomes have been analysed from a sociological perspective. The case study has demonstrated that these decisions have yielded the desired result of an increase in market share and had many other benefits towards the company.
Even so various recommendations have been made in order to improve Yellow Autos decision making process and improve the successfulness of the company. Reference List Ayson, S. (2012). Managing Under Uncertainty: Sociology of Decision Making, Lecture Slides. Harrison, F. (1999). The Managerial Decision-Making Process. 5th Ed. Houghton Mifflin Mathis, R. (2010). Human Resource Management 13th Edition. South-Western Cengage Learning Onis, Z. (2006).
Beyond the 2001 Financial Crisis: The Political Economy of the new Phase of Neo-Liberal Restructuring in Turkey. Retrieved October 19, 2012, from http://www. cesran. org/Dosyalar/MAKALELER/ZIYA_ONIS_Beyond_the_2001_financial_crisis. pdf Popova, M. (2012). Elevator Groupthink: A Psychology Experiment in Conformity, 1962. Retrieved October 19, 2012, from http://www. brainpickings. org/index. php/2012/01/13/asch-elevator-experiment/ Teale, M. (2003). Management Decision-Making: Towards an Integrated Approach. Pearson