Chapter 4

Individual and organisational

values in decision making and risk
management
UGC NET QUALIFIED (HRM/LAW/OB) , HR Analytics (IIM Rohtak)MBA (HR & FINANCE ) ,
BCOM (COMPUTER APPLICATION) ,PGDCA .
Prof . Priyanka Punjabi
Team composition
• Team composition refers to the overall mix of characteristics among
people in a team, which is a unit of two or more individuals who
interact interdependently to achieve a common objective. It is based
on the attributes among individuals that comprise the team, in addition
to their main objective.
• Team Composition is the configuration of a team. Normally it is
based on attributes of the team members as well as the task of the
team.
Of course, the way a team is configured has a strong influence on the
processes in the team processes and the outcomes or results it
achieves.
Team
• A team is composed of a group who work together to achieve a
common goal. In every organisation projects programmes tasks
campaigns are ultimately designed and implemented by a specific
group of individuals who together form a team.
Factors to be considered for team composition
1) Individual attributes – when composing teams various individual
characteristics such as knowledge ,skill , expertise , attitude
behaviour are important consideration.
2) Individuals tendency to fit in the team – even if an individual
possesses great talent it is to be ensured that he fits well in the team ,
which implies that his attitude and behaviour can help him to
cooperate and get well with the team .individuals overall personality
is an important consideration in this context.
3) Diversity – diversity in team composition (in terms of functions
demography expertise) leads to better performance and help team to
come up with more creative and effective solutions. A diverse team
even has the ability to come up with more creative and effective
solutions .a diverse team even has the ability to avoid the problems
of groupthink.
4) Complimentary skills – team having members with complementary
knowledge and skills are often more successful because members
can see each others blind spots.one team members strengths can
compensate for another’s weakness.
5) Tasks of the team – a team is allotted a certain project or a group of
tasks . the individuals role is to be determined as to which task will
be assigned to him and how well he can perform that task and add
value to the tasks performed by the team.
Importance of team composition
1. Team composition has a strong influence on team processes
2. Team composition affects the very outcome of the projects
3. The effectiveness of the team is determined by team composition
4. Diversity in team composition leads to conglomeration of different
viewpoints
5. Team composition usually looks for individuals with complimentary
skill-sets who help each other to create a complete picture of the
project
6. Members can selected who have optimal fit other team members to
maximize co-operation between the team members.
Understanding one’s own value system and its
influence on choices
• It is important for an individual to understand his own value system, as it has a
direct beaning on the choices that an individual makes and it is the choices that
determine the outcome of an individual's life, or an organization 's success and
even of the direction of the human race as a whole.
• Values refer to principles, standards or qualities that an individual or a group hold
in high regard. These values influences the way of living of an individual as well
as his decisions and judgements. Also an individual's goals as well as his actions
are inspired from his values set. Values are what an entity stands for.
• An individual usually derives his values from family, educational institutes.
workplace, peers, culture, media and significant events in his life. Definition of
Values
•
• According to Milton Rokeach, Values are defined as enduring belief
that a pecific mode of conduct or end state of existence is personally
or socially preferable to an opposite or converse mode of conduct or
end state of existence". An individual who lives and works with his
values experiences more satisfaction and fulfilment. An individual's
response to a particular situation is dictated by the values he adores.
Some of the dominant values are listed below.
1. Integrity
2. Performing assigned duties to perfection
3. Honesty
4. Empathy
5. Money
6. Individuality
7. Loyalty
8. Intelligence
9. Accountability
10. Fairness
11. Gratitude
12. Confirming to group
13. Responsibility
14. Respect
15. Trust
• Super's stages of career development are organized in stages 1-5: growth,
exploration, establishment, maintenance, and decline.
• Stage 1: Growth
• Super's theory begins with growth as the initial life and career development stage.
Super theorized that people begin to develop certain traits from a young age to
help them better understand the world around them. Traits like attitude, self-
concept, and understanding the needs and the general world of work are developed
during the growth state. Within the growth stage are sub-stages to better
breakdown lifespan development and what takes place during a person's formative
years:
• Fantasy (4-10 years old) - Building an understanding of how the world works
through observations of events and people.
• Interest (11-12 years old) - Developing personalities and certain interests in life
that could lead to a career field.
• Capacity (13-14 years old) - Learning and experiencing skills or taking in
knowledge of certain activities that can be used in a future career.
• Stage 2: Exploration
• The second stage in Super's career theory model is exploration.
Exploration is the stage of life that is "trying out" roles through
different life experiences like classes, work experience, and hobbies.
The exploration stage is part of life's experimental stage.
Career decision making
• Career does not mean jobs or vacation .it is a life journey. Which includes paid
and unpaid experience and individuals role in a society as a student, citizens
,worker , spouse , parent and so on.
• Career decision making involves a systematic process to choose a particular career
path. It is about solving a career problem to bridge the gap between where you are
and where you want to be.
• Whether applying for graduation course , or selecting a specialization , or
searching for a job, career decision making is of most importance.
• A proactive approach to career-decision making enables one to achieve the goals
of career fulfilment and life satisfaction.
• Career decision making requires an individual to carefully think about his interest
capabilities values and talent.
• Career decision making requires an individual to carefully think about his interest
,capabilities values and talent.
• Career decision making is eventually related to the aspect of career development.
Definition of career development
• Career development is a continuous lifelong process of
development experiences that focuses on seeking obtaining
and processing information about self , occupational and
educational alternatives, life styles and role options.
Steps to career decision making
1) Knowing self (what motivate me)
2) Exploring opportunities
3) Making a career decision
4) Taking action
5) Evaluating career decision.
Factors influencing career choices
• Skills and competencies
• Family
• Values
• Goals
• Income
• status
• Money
• peers
Resolving organisational conflicts
• Organisational conflicts if not handled properly in a transparent
manner , least to increased risk for the projects in an organisation
.hence resolving conflicts at their initial stage itself , or whenever they
are identified should be the top most priority of the project manager.
Resolving conflicts in project will automatically leads to reduction in
risk.
Different conflicts handling techniques
1) Withdrawing
2) Smoothing
3) Compromising
4) Forcing
5) Problem solving
1. Withdrawing- It implies avoiding or ignoring the conflict to the extent possible
Here, the manager assumes that the conflict situation will be resolved by itself.
However, withdrawing does not result in escape from the problems. There exists a
high probability that these issues will surface later in the project and are likely to
cause more damage than if addressed early.
2. Smoothing - Here, managers stress on the areas of agreement. However, the
differences of opinion are not address.
3. Compromising - An attempt is made to search for solutions where the
stakeholders will compromise. It is a mid-way solution typically used in situations
where the conflicting parties are relatively equal in power and have mutually
independent goals.
4. Forcing – project managers are given the authority and power to lay
down the rules. These rules are to be forcibly complied by all the
stakeholders in the project.
5. Problem solving – this is the best techniques to conflict handling
difference in options is turned into a problem to be solved mutually by
the stakeholders vigilant examination of the alternatives.
Risk analysis dealing with organisational risks
• Definition of risk “ risk is defined as the exposure to , or the
possibility of loss, injury or other advers or circumstance a chance or
situation involving such a possibility.
• Risk denotes the possibility of an unfavourable or undesired outcome.
• Risk is present in almost any venture or undertaking . the risk remairs
is that the tasks required might not materialize , or yield unexpected
results.
• Right business decisions determines the balance between risk and
reward.
Risk analysis
• Quantitative risk (numeric estimate of risk)-
1. Identification of risks.
2. Measuring the likelihood (probability) of the occurrence of “specific risk
event during the project life cycle.
3. Its impact on the project schedule, if it occurs , so as to determine its
severity . the impact of a risk is defined in terms of a discreate scale such
as 1 = very low,2=low , 3= medium , 4=high and 5= very high.
4. Recording of these results in a risk assessment matrix in form of a
graphical report so as to effectively communicate outstanding hazards to
stakeholders.
5. One can also categorize risks either by source or effect
Qualitative risk (subjective)

• According to PMBOK guide “qualitative assessment is defined as the

process of identifying and prioritizing risks for further assessment.
• Widely used qualitative risk analysis techniques are-
1. Brainstorming
2. Delphi technique
3. SWIFT analysis(structured what-if techniques)
4. Bow- tie analysis
5. Prabability and impact matrix (risk matrix)
Delphi technique
• the Delphi method or Delphi technique is a structured
communication technique or method, originally developed as a
systematic, interactive forecasting method which relies on a
panel of experts. The technique can also be adapted for use in
face-to-face meetings, and is then called mini-Delphi.
• Probability (or Likelihood) on X-Axis
• The X-axis should be labeled appropriately to include the scale of values.
• Probability axis label: probability, likelihood, or likelihood of occurrence
• Probability axis scale intervals:
• low, medium, high
• unlikely, possible, likely
• highly improbable, improbable, unlikely, probable, highly probable
• Impact on Y-Axis Examples
• The Y-axis should be labeled to include the rating scale.
• Impact axis label: impact, consequence, possible consequence, or severity
• Impact axis value scales:
• low, medium, high
• minor, moderate, major
• insignificant, minor, moderate, major, significant
Bow tie analysis
• Bow tie analysis is a simple process for identifying where new
or enhanced controls may be worthwhile. It is a core part of risk
treatment planning, particularly where there is a high level of
risk or where control effectiveness is assessed as low.
Brainstorming
• Brainstorming is an important part of the opportunity and risk identification
process. Apply brainstorming best practices for a more effective
brainstorming effort.
• Project managers should consider opportunities and risks early on because
the cost of mitigating an issue increases exponentially as the project
matures. So project managers should front load their opportunity and risk
management efforts. The first step in opportunity and risk management is
the identification of both opportunities and risks. And the primary goal in
any opportunity and risk identification effort is a comprehensive risk
register.
• You want to have confidence that your risk register considers all potential
opportunities and risks. It is therefore most important that your opportunity
and risk identification research is complete. Brainstorming is the primary
opportunity and risk identification tool. Therefore it is too the project’s
advantage to implement well-thought brainstorming procedures to confirm
the capture of all project related opportunities and risks.
Dissonance decision leadership
Dissonant leaders tend to function more on the authoritative side of leadership. Just
like a commander, they expects employees to complete tasks quickly and without
questioning. Their decision making is logical and objective.
One can view dissonant leaders as pacesetters, who focus heavily or efficiency.
performance and adherence to deadlines and schedules.
They maintain a greater social and emotional distance from employees .Dissonant
leadership works well when orders must be delivered and executed urgently.
However, dissonant leaders can cause emotional frustration, stress, burnout and
disengagement among employees.
Moreover, it conflicts with tile objectives of employee empowerment and
involvement. Dissonant leaders are less influencing in times of stress.
• Pioneered by Psychologist Leon Festinger, Cognitive dissonance refers to a
situation when an individual is confronted with contradictory belie's, ideas, or
values at the same time.
• According to Cognitive dissonance theory (CDT), when individuals hold two or
more cognitions that are contradictory, they will feel an unpleasant state( referred
to as 'dissonance'), until they are able to resolve this state by altering their
cognitions. When individuals find themselves under the grip of dissonance, it
produces a feeling of discomfort leading to an alteration in one's attitudes, beliefs
or behaviors, so as to reduce the accompanying discomfort and restore balance. It
may happen that the individual gets introduced to a new piece of information
about a particular topic which is contradictory to his existing belief.
• If this new information which contradictict with the existing beliefs is
rejected ar rationalized, it can lead an individual to make poor decisions.
• For example: Smokers rejecting evidence that depicts detrimental health
effects of smoking. Cognitive dissonance leads individuals to analyze
information in a way that supports conclusions that are consistent with their
own belief's, thereby threatening the objective methodology.
• Generally, individuals respond to cognitive dissonance by rationalizing .
Cognitive dissonance thus results in mental conflict and the resulting
discomfort motivates individuals to choose between beliefs by justifying
and rationalizing one while rejecting or reducing the importance of the
others.
• It is quite probable that dissonance will occur when it comes to take
decisions.
Quantitative risk analysis
Quantitative risk analysis is a numeric evaluation of the general
effect of risk on the project intents such as budget and agenda
objectives. The outcomes offer an understanding of the probability of
project accomplishment and are used to advance contingency reserves.
The quantitative risk offers a numerical
1. Decision tree analysis
2. Sensitivity analysis
3. Expected monetary value
4. Monte Carlo simulation
1. Decision tree analysis- A decision tree analysis is a graph or map
that displays potential outcomes from a series of related choices.
It enables an organization or individual to compare various factors
and decisions against one another in order to achieve a desirable
outcome.
2. Sensitivity analysis - Sensitivity analysis is the study of how the
uncertainty in the output of a mathematical model or system
(numerical or otherwise) can be divided and allocated to
different sources of uncertainty in its inputs. A related practice is
uncertainty analysis, which has a greater focus on uncertainty.
3. Expected monetary value - Expected monetary value is a statistical
concept that calculates the normal consequence when the future
contains scenarios that may or may not transpire. An EMV analysis
is usually recorded using a decision tree to stand for making decisions
when facing multiple risks in events and their possible consequences on
scenarios.
4. Monte Carlo simulation - Monte Carlo Simulation is a mathematical
technique used to estimate all possible outcomes when you are dealing
with uncertainty in said outcomes. The idea is simple.the techniques is
used to calculate quantitative estimates of the overall project risk, taking
into account that several risks may occur together on the project.
The techniques runs may simulations of that project that produces
probabilistic distributions of particular results.in other words it specific
a probabilistic distribution for each risk and then considers the effects of
risks in combination.
Strategic decision-making models
• Making good decisions is one of the most important skills any leader can
possess. Strategic decision-making involves a complex process of
evaluating potential outcomes and developing plans for the future. With a
variety of decision-making models available, it can be difficult to know
which one is right for you and your organisation. In this blog post, we will
explore five of the most popular decision-making models in management.
We will look at each model in detail to help you ascertain which is best
suited to your needs and enable you to make better decisions with
confidence.
1. Rational decision making model
2. Mintzberg model
3. Bargaining model
4. Bounded rationality decision making model(please check unit 1 for this
model)
Rational Model
The rational model is the most traditional and well-known decision-
making model. It is based on the assumption that decision-makers think
rationally and will make decisions that maximise their utility. The steps
in the rational model are:
1.Define the problem
2.Identify objectives
3.Generate alternatives
4.Analyse alternatives
5.Select the best alternative
6.Implement the chosen alternative
Mintzberg Model
Mintzberg's decision making model proposes three stages to decision making viz.
Phase 1: Identification of problem(Recognition and diagnosis)
Phase 2: Development of alternatives/Search and design)
Phase 3: Selection (Judgement, Analysis, Bargaining and Authorisation
Phase 1 identification
Phase 2 Development
Phase 3 Selection
1. Recognition
2. . Diagnosis
3. Search
4. 2. Design
• Mintzberg Model Recognition of Need of Decision and Diagnosis The
recognition of the need for a decision after viewing the difference
instate and desired state of an organisation. Diagnosis will involve
screening the present information sources and possiblygathering some
new ones. Thus, the decision maker figures out the problem i. this
stage2. Developing Alternative This phase consists of searching for
alternative solutions through (a) organizational and/or personnel
knowledge passive "wait in employing "agents"
Bargaining Model
• The main application of this model is in the situations where two or more parties
engaging in the decision may have conflict of interest. The representatives of the
organizations should learn and know the principles of negotiation.
• Senior managers select this approach in the strategic decisions which involve
tradeoff between different organizations or between different parties within the
organization. In this model, the managers or negotiators seek the mutual benefits
or common interests to maximize the chance of reaching to the appropriate
decision. The resulting decision should be acceptable by all the involved sides.
• The bargaining model is highly used in politics mainly because in this context
many active parties are fed from the same financial and non-financial resources
and these resources are limited.
• However, some argue that using bargaining model in politics can lead to
distribute power equally that consequently decrease the effect of power which is
sometimes essential in the society, organization, and other communities. The
bargaining model is useful for getting multiple views before making decision; and
it can help managers make the more sustainable decision.
• The bargaining model gives each party involving in the decision a position
for reflecting their interests. Bargaining model pays a great deal of attention
to the competitors and their actions in decision making process. One of the
disadvantageous of this model is its time consuming feature in some cases
since parties try to resolve disagreements.
• Although the interests of all parties are relatively considered in the
negotiations, the wishes of the most powerful sides are more likely to be
met than needs and wishes of the least powerful parties.
• In practice, some managers exclude some parties from bargaining model for
getting agreements more quickly and saving time, but this approach
threatens the success of the resulted decision since some parties may not
support the actions pertaining to the decision.
• To sum it up, the larger pool of participants in bargaining decision making
model leads to better yet more time consuming decisions.
Decision making system (decision
support system)
• A decision support system (DSS) is an information system that aids a
business in decision-making activities that require judgment,
determination, and a sequence of actions.
• The information system assists the mid- and high-level management of
an organization by analyzing huge volumes of unstructured data and
accumulating information that can help to solve problems and help in
decision-making. A DSS is either human-powered, automated, or a
combination of both.
Purpose of a Decision Support System

• A decision support system produces detailed information reports by

gathering and analyzing data. Hence, a DSS is different from a normal
operations application, whose goal is to collect data and not analyze it.
• In an organization, a DSS is used by the planning departments – such as the
operations department – which collects data and creates a report that can be
used by managers for decision-making. Mainly, a DSS is used in sales
projection, operations-related data, and to present information to customers
in an easy-to-understand manner.
• Theoretically, a DSS can be employed in various knowledge domains from
an organization to forest management and the medical field. One of the
main applications of a DSS in an organization is real-time reporting