Unit 1 Managing Organizational Decision Making and training and

development

Content:
1.0. Introduction
1.1. Unit objective
1.2. Managing organizational decision making
1.2.1. Definition of decision making
1.2.2. Types of managerial decisions
1.2.2.1. Programmed Decisions
1.2.2.2. Non Programmed Decisions
1.2.3. Rational decision making process
1.2.4. Ttypes of Decisions and Decision Making Techniques
1.2.5. Decision-Making Conditions and Techniques
1.2.5.1. Decision Making under certainty
1.2.5.2. Decision Making under risk
1.2.5.3. Decision Making under uncertainty
1.2.5. Group Decision Making
1.2.5.1. Individual versus Group Decision-Making
1.2.5.2. Group Decision Making Techniques
1.3. Managing organizational training
1.3.1. Definition and scope of training
1.3.2. Need and Purposes of Training
1.3.3. Building training programs
1.3.3.1. Types of training
1.3.3.2. Training methods
1.4. Summary
1.5. Check your progress questions
1.6. Answers to check your progress questions

1.0. INTRODUCTION
1
Individuals Life is a result of the decisions they have made and of those made by others.
And decision making is a day to day activity of most people. However, the decision may
be more simple or difficult. That means, their decision is a result of habit or careful
research.

Decision-making is also a regular activity of managers at all levels in the organization.

Some claim decision making is at the very heart of management. A noted management
writer Peter Drucker stated ''the end products of Manager's work are decisions and
actions.'' Managers succeed or fail based on decisions they make. The decisions of
professional managers affect not only themselves but also others. However, decisions of
individuals affect mostly their own activity, since it is made for their own sake. As a
result, it is important for managers to develop decision making skills and use the
appropriate decision making techniques and tools.

The success of the organization is highly influenced by the effectiveness of decisions that
managers make. Managerial decision making is the means of integrating related
functions such as goal setting, strategy formulation, planning and control. Overall
organization strategy is the result of decisions about what to do (goals) and how to do
(tactics).

Training programs is a link in the process of converting employees (new & existing) in to
a productive one. The money spent on recruiting and selecting new employees may be
wasted if their hiring is not followed up with the proper training programs. Additionally
competent employees don’t remain competent forever. Skills deteriorate and can become
obsolete. New skills also need to be learned. That is why organizations spend millions of
dollars each year on formal training. Therefore, to increase productivity of employees and set the
desired outcome from the training activities, which costs a lot; organizations should mange the training
program.

Successful training programs consist of four phases: training assessment, program design,
reinforcement, and evaluation. These and other aspects of organizational training
programs are briefly explained in this unit.

2
 1.1. Objective
After reading this unit you should be able to:
- Define decision making and training
- Out line the steps in the decision making process.
- Explain the conditions under which managers make decision.
- Identify and discuss the decision-making techniques and tools that managers use
to improve the quality of decisions.
- Explain the purpose and importance of training
- Identify and discuss the types of training
- Discuss the various training methods

1.2. Managing Organizational decision making

Overview:
Decision making is the primary role of managers. For a person to be considered as a
manager, he/she has to make decision. The decisions also determine their success in their
life. Decisions of managers affect not only their individual right but also a various stake
holders such as owners of businesses, employees and the society at large. Therefore,
managers must develop the skill of making a good decision. In this section of the material
you will study the meaning of decision, types of decisions, and techniques of decision
making.

objective:
After reading this section you will be able to;
 Define decision making
 Describe the types of decisions
 Identify the steps of rational decision making
 Understand the types of decision making techniques

1.2.1. Definitions of decision making

Different management experts define decision making from their different point of view.
Plunkett and Attner define decision making as a rational choice among alternatives.
According to them, there have to be an option to choose from, otherwise there is no

3
decision. Similarly Koontz & Weihrich define it as the selection from among alternative
course of action; it is the core of planning. They argues that a plan can not exist unless a
decision has been made. Hitt, Middlemist and Mathis also state decision making- basic
to all actions, is the process of choosing one action over other possible actions.4 From
this we can understand that decision making is the heart of management.

However, Agrawal ( 1994:89) argues that choosing or selecting from among alternative
course of action is one of its several aspects. And he defines it as the process of locating
and defining the problem, developing alternative solutions to the problem, weighing the
various alternate solutions in terms of their possible consequences, choosing the optimum
solution from among them, and implementing the decision effectively.

1.2.2. TYPES OF MANAGERIAL DECISIONS

Many writers in the field of management classify decision in several ways differing
mainly in terminology. However, the most widely adopted classification is suggested in
this paper. According to Donnelly and others, decision can be classified in to two and it
is important to distinguish between these two types because different techniques are used
to deal with them.

1.2.2.1. Programmed Decisions

If a particular problem occurs often, managers will develop a routine procedure for
solving it. Decisions are programmed to the extent that they are repetitive and routine &
a definite procedure has been developed for handling them.

The managers of most organisations face a great number of programmed decisions in

their daily operations. Such decisions should be made with out expending unnecessary
time and effort on them.

1.2.2.2. Non programmed Decisions

When a problem has elements that are different from previous occurrences or is complex
or extremely important, it requires a different unique decision. Non programmed
decisions are solutions for unstructured and novel problems.

Such decisions have traditionally been handled by general problem solving process,
judgement, intuition and creativity.
4
 Modern management techniques have not made the same advances in improving
managerial performance in non programmed decision making as they have in
programmed decision making.

1.2.3. Rational Decision Making Process

Decision making is an important part of a manager’s job. So, we need to discover any
thing that can improve the quality of decision making. One of the most effective
measure is to follow a conscious, rational decision making process. Rational decision
making involves a serious of steps or activities that contribute to high quality decisions
and the process discussed below applies more to non-programmed decisions.

Although, some experts have disagreed about the numbers of specific steps that
should be involved in the process, according to Ivanceuich and others the
decision making process has seven steps. These are:

1. Determining Objectives

Many decision makers overlook or do not fully complete the first step in the decision
making process. Before making decisions the manager must determine organisational
objective(s). If goals and objectives are adequately established, they will dictate what
results must be achieved and measures that indicate whether or not they have been
achieved.

2. Identifying Problems
The second stage of decision making process is identifying the exact nature of the problem. It is
said that “a problem well defined is half solved.” It is easy to understand that a problem
exists when a gap occurs between the desired results and actual results. However,
certain factors often lead to difficulties in identifying exactly what the problem is.
These factors are:

Perceptual problems –our individual perception may protect or defend us from unpleasant
realities. Thus, negative information may be selectively perceived in order to distort its
true meaning or to ignore totally.

5
 - Defining problems in terms of solutions. This is really a form of jumping to
conclusion.
- Identifying symptoms as problems. For example, if the president of AAU states
“Our problem is employee turn over,” employee turn over is a symptom of the
real problem, but it is not a problem by itself.

To locate problems, managers rely on several different indicators, which include

deviation from the plans, deviation from past performance, and outside criticism.

3. Developing Alternatives
At this point, it is necessary to look for, develop and list as many possible alternatives-
Potential solutions to the problem-as you can. These alternatives should eliminate,
correct, or neutralise the problem. This is really a search process in which the relevant
internal and external environments of the organisation are investigated to provide
information that can be developed into possible alternatives.

4. Evaluating Alternatives
Once alternatives have been developed, they must be evaluated and compared. The
purpose of this step is to decide the relative advantages and disadvantages of each of the
alternatives. Here the manager can make a more thorough analysis by applying specific
decision making aids such as marginal analysis, cost effectiveness etc.

5. Choosing an alternative
The purpose in selecting alternative is to solve a problem in order to achieve a
predetermined objective. It is said that this step is the actual decision making process. In
managerial decision making, optimal solutions often are impossible. This is because the
decision maker can not know all of the available alternatives, the consequence of each
alternative and the probabilities of occurrence of these consequences. Thus, rather than
being an optimiser, the decision maker is a satisficer, selecting the alternative that meets
an acceptable (satisfactory) standard.
6. Implementing the decision
A decision that is not implemented is little more than an abstraction. Thus, it must be
effectively implemented to achieve the objective for which it is made. It is entirely

6
possible for a “good” decision to be hurt by poor implementation. In this sense,
implementation may be more important than the actual choice of the alternative.

In most situations, implementing decisions involve people. A manager’s job is not only to
choose good solutions but also to transform such solutions in to behaviour in the
organisation. This is done by effectively communicating with the appropriate individuals
and groups.

7. Control and Evaluation

Effective management involves periodic measurements of results. Actual results are
compared with planned results, and if deviations exist, changes must be made. The
important point is that once decisions are implemented, a manager can not assume that
the outcome will meet the organizational objective. Some systems of control and
evaluation is necessary to make sure that the actual results are consistent with the results
planned for when the decision is made.

1.2.4. Types of Decisions and Decision Making Techniques

Hundreds of decision is made every day in the operation activity. Even minor decisions
determine the company’s success or failure. It ranges form simple judgmental to complex
analysis which can also involve judgment (past experience & common sense). There are
different types of decision-making techniques to deal with the two types of decisions, i.e.
programmed and non-programmed decisions. Some of these are summarized in the table
below.

Decision-Making Technique
Types of decisions Traditional Modern

7
 1. Programmed  Habit Operations research
-Routine, repetitive clerical routine: Mathematical Analysis
decisions standard operating Models.
-Organization develops operating Procedure Computer solutions
specific process for Organization Structure: Electronics data
handling them. Common expectations processing
a system of sub goals
well defied information
channels

2. Non programmed Judgement, intuition, Heuristic problem

 one-shot, ill- and Creativity solution techniques
structured, Rules of thumb applied to:
novel, policy Selection and training a) training human decision
decisions of executives makers
 Handled by general b) Constructing heuristic
problem solving Computer programs.
process

: R Source : Robert Kreitner, Organisational Behaviour, 1992; pp:553

Modern decision makers involve a way of blending objective and subjective data to arrive at a
choice. However, the use of quantitative methods of decision making increases the objectivity of decisions.

1.2.5. DECISION-MAKING CONDITIONS AND TECHNIQUES

A manager need not to master all the decision making process to be successful in
decision making .The manager must be aware of the environment in which he/she makes
decisions. The circumstances that exist for the decision maker are conditions of certainty,
risk and uncertainty.

1.2.5.1. Decision Making under certainty

8
When the decision makers know with reasonable certainty what alternatives are available
and what conditions are associated with each alternative, a state of certainty exists. There
is little ambiguity and relatively low chance of making a bad decision. Few organisational
decisions are made under conditions of true certainty. The complexity and turbulence of
the contemporary business world makes such situation rare.

Different approaches to decision making are available to decision makers. The most
commonly /widely used decision making under the certainty situation are breakeven
analysis, cost-benefit analysis and mathematical programming (liner programming,
transportation and assignment models), algebra, calculus and soon. In the following
section one of these tools breakeven analyses is illustrated.

1. Breakeven Analysis is a widely used decision making tools. It provides

information/data that enable managers make the right decision pertaining to how much to
produce, which cost should be reduced, how to maximize profit, which product line
should be dropped out and so on. Breakeven point is a level of output at which profit is
zero or no loss or no gain. Production level below this point leads to a loss whereas level
of output above this point helps the company to enjoy some level of profit.

Example:
Fixed Cost (FC) = Br 100,000
Unit Price = Br. 40
Variable Cost/unit (VC)= Br 20
Find the break even point in terms of unit
BEP (units) = FC = FC
Price/unit –VC/unit CM

= 100,000 = 100,000
40 - 20 20
=5,000 units
BEP (In Birr) = 5,000X40
= 200,000 Br.
This can be depicted graphically as follows

9
 TR

A TC

200,000 BEP

5,000 Quantity
Where: Region A represents profit area
: Region B represents loss area
: BEP= break even point
: TR=total revenue
: TC = total cost
: CM = contribution margin

Interpretation The company, if it wants to be profitable, it should produce and sale

more than 5, 000 units of output. For example if the external and internal environment of
the company forces it to produce only 3,000 units of product, what will be your
decision?

1.2.5.2. Decision Making under risk

A more common decision making condition is a state of risk. The decision maker has
some probabilistic estimate of the availability of each alternative and its payoffs and costs
associated with them. These probabilities are determined either objectively or
subjectively. In an objective estimate, known values or facts are used. In a subjective
estimate, personal judgements are considered and incorporated in to calculation. The
decision process allows the decision-maker to evaluate alternative strategies prior to
making any decision. The process is as follows:

1. The problem is defined and all feasible alternatives are considered. The possible
outcomes for each alternative are evaluated.

10
 2. Outcomes are discussed based on their monetary payoffs or net gain in reference
to assets or time.

3. Various uncertainties are quantified in terms of probabilities.

4. The quality of the optimal strategy depends upon the quality of the judgments.
The decision-maker should identify and examine the sensitivity of the optimal
strategy with respect to the crucial factors.

The manager can use decision trees, Statistical analysis, Queuing theory, Simulation,
and Net Work analysis (PERT/CPM) to make decisions under such conditions.

Whenever the decision maker has some knowledge regarding the states of nature, he/she
may be able to assign subjective probability estimates for the occurrence of each state. In
such cases, the problem is classified as decision making under risk. The decision-maker
is able to assign probabilities based on the occurrence of the states of nature. The decision
making under risk process is as follows:

a. Use the information you have to assign your beliefs (called subjective
probabilities) regarding each state of the nature, p(s),

b. Each action has a payoff associated with each of the states of nature
X(a,s),

c. We compute the expected payoff, also called the return (R), for each
action R(a) = Sums of [X(a,s) p(s)],

d. We accept the principle that we should minimize (or maximize) the

expected payoff,

e. Execute the action which minimizes (or maximize) R(a).

Expected Payoff: What you get is not what you expect, i.e. the "Great Expectations!"

a) For each action, multiply the probability and payoff and then,
b) Add up the results by row,
c) Choose largest number and take that action.

11
 Example
XYZ engineering company has three alternatives to satisfy the increase in the demand
for construction requirements. The alternative course of actions are subcontracting,
overtime production and doing nothing.

The correct choice depends largely on future demand, which may be low, medium or
high. The company ranks the respective probabilities as 20%, 60% and 20% low, medium
and high product demand in the future. A cost analysis reveals that effect on profit of
each alternative under a given state is given in the table below

Pay off table

Probabilities

Alternatives Low (0.2 Medium (0.6) High (0.2)

Arrange for sub cont (A1) 100,000 100,000 200,000
Over time (A2) 70,000 120,000 120,000
Do nothing (A3) -40,000 200,000 160,000

Which alternative is the viable choice?

Solution:
We can use expected monetary value (EMV) approach and decision tree to answer this
question.

1. Expected monetary value (EMV)

EMV (A1) =100,000X0.2+0.6X 100,000+0.2 X200, 000
=20,000+60,000+40,000
=120,000 (highest best alternative)
EMV= (A2) = 70,000X0.2+120,000X0.6+120,000X0.2
= 14,000+72,000+24,000
= Br. 110,000
EMV= (A3) = -40,000X0.2+20,000X0.6+160,000X0.2
= -8,000+12,000+32,000
= Br.36, 000
The best alternative is to arrange for sub constructing.

12
2. Decision Tree Analysis

Decision tree is a schematic diagram used to determine expected value. Decision Trees
are excellent tools for helping you to choose between several courses of action. They
provide a highly effective structure within which you can lay out options and investigate
the possible outcomes of choosing those options. They also help you to form a balanced
picture of the risks and rewards associated with each possible course of action.

Drawing a Decision Tree

You start a Decision Tree with a decision that you need to make. Draw a small square to
represent this towards the left of a large piece of paper.

From this box draw out lines towards the right for each possible solution, and write that
solution along the line. Keep the lines apart as far as possible so that you can expand your
thoughts.

At the end of each line, consider the results. If the result of taking that decision is
uncertain, draw a small circle. If the result is another decision that you need to make,
draw another square. Squares represent decisions, and circles represent uncertain
outcomes. Write the decision or factor above the square or circle. If you have completed
the solution at the end of the line, just leave it blank.

Starting from the new decision squares on your diagram, draw out lines representing the
options that you could select. From the circles draw lines representing possible outcomes.
Again make a brief note on the line saying what it means. Keep on doing this until you
have drawn out as many of the possible outcomes and decisions as you can see leading on
from the original decisions. An example of the sort of thing you will end up with is
shown in Figure 1:

13
Once you have done this, review your tree diagram. Challenge each square and circle to
see if there are any solutions or outcomes you have not considered. If there are, draw
them in. If necessary, redraft your tree if parts of it are too congested or untidy. You
should now have a good understanding of the range of possible outcomes of your
decisions.
Evaluating Your Decision Tree
Now you are ready to evaluate the decision tree. This is where you can work out which
option has the greatest worth to you. Start by assigning a cash value or score to each
possible outcome. Estimate how much you think it would be worth to you if that outcome
came about.

14
Next look at each circle (representing an uncertainty point) and estimate the probability
of each outcome. If you use percentages, the total must come to 100% at each circle. If
you use fractions, these must add up to 1. If you have data on past events you may be
able to make rigorous estimates of the probabilities. Otherwise write down your best
guess. This will give you a tree like the one shown in Figure 2:

Calculating Tree Values

Once you have worked out the value of the outcomes, and have assessed the probability
of the outcomes of uncertainty, it is time to start calculating the values that will help you
make your decision.

Start on the right hand side of the decision tree, and work back towards the left. As you
15
complete a set of calculations on a node (decision square or uncertainty circle), all you
need to do is to record the result. You can ignore all the calculations that lead to that
result from then on.

Calculating the Value of Uncertain Outcome Nodes

Where you are calculating the value of uncertain outcomes (circles on the diagram), do
this by multiplying the value of the outcomes by their probability. The total for that node
of the tree is the total of these values.

In the example in Figure 2, the value for 'new product, thorough development' is:

0.4 (probability good outcome) x £500,000 (value) = £200,000

0.4 (probability moderate outcome) x £25,000 (value) = £10,000
0.2 (probability poor outcome) x £1,000 (value) = £200
+ £210,200

Figure 3 shows the calculation of uncertain outcome nodes:

16
Note that the values calculated for each node are shown in the boxes.

Calculating the Value of Decision Nodes

When you are evaluating a decision node, write down the cost of each option along each
decision line. Then subtract the cost from the outcome value that you have already
calculated. This will give you a value that represents the benefit of that decision.

Note that amounts already spent do not count for this analysis - these are 'sunk costs' and
(despite emotional counter-arguments) should not be factored into the decision.

When you have calculated these decision benefits, choose the option that has the largest
benefit, and take that as the decision made. This is the value of that decision node.

17
Figure 4 shows this calculation of decision nodes in our example

In this example, the benefit we previously calculated for 'new product, thorough
development' was £210,200. We estimate the future cost of this approach as £75,000.
This gives a net benefit of £135,200.

The net benefit of 'new product, rapid development' was £15,700. On this branch we
therefore choose the most valuable option, 'new product, thorough development', and
allocate this value to the decision node.

1.2.5.3. Decision Making under uncertainty

Most of the major decision making in contemporary organisation is done under the state
of uncertainty. The decision maker does not know all the alternatives the risk associated
with each alternative, or the likely consequences of each alternative. In other words, the

18
decision maker has absolutely no knowledge of the probability of the outcome of each
alternative.

At the opposite extreme is complete uncertainty: no information is available on how

likely the various states of nature are under theses condition, for possible e decision
criteria are:
A. Minimax regret – determine the worst regret for each alternatives , and choose e
the alternative with “ best worst”
B. Maximax – determine the best possible payoff and choose the alternative that
payoff.
C. Laplace – determine the average payoff, and choose the alternative with the best
strategy
D. Maximin- determine the worst possible pay off for each alternative, and then
choose the alternative that has the “ best worst”

Example: Based on the following payoff table used, determine which alternative would
be chosen under each of these strategies assuming that the probability value is not known.
a. Maximin
b. Maximax
c. Laplace
Pay off table
Alternatives Low (0.1) Medium (0.5) High (0.4)
Arrange for sub cont (A1) 10,000 50,000 50,000
Over time (A2) -20,000 60,000 100,000
New facilities (A3) -150,000 20,000 20,000

Solution:
a) Maximin criteria
The worst payoff for the alternatives is subcontracting 50,000, Overtime -
20,000 and new facilities –150,000. Hence 10,000 is the best, therefore the
decision is subcontract using the maiximin strategy.

b) Maximax:
19
 The best payoff for Sub contraction is 50,000, over time 100,000, and new
facilities 20,000. Therefore, the decision is to work overtime.
C. Laplace: 10,000+50,000+50,000/3=46,000.67
D. Minimax Regret
The worst pay off for the alternatives are 10,000 for subcontracting, -20,000
for overtime and -150,000 for new facilities and 10,000 is the best out of the
worst, hence, the decision is to choose subcontract using the maixmin criteria.

1.2.5. GROUP DECISION MAKING

In most organisations a great deal of decision making is achieved through committees,

teams, taskforces, and other kinds of groups. This is because managers frequently face
situations in which they must seek and combine judgements in group meetings. This is
especially true for non programmed problems, because these decisions are more complex
and few individuals have all knowledge and skills necessary to make the best decisions.
The use of groups allows a variety of inputs from those who have different skills.

Research indicates that group decision making is useful when the following conditions
exist.

The costs of being wrong are high, while substantial benefits are possible if sound
decision is made.
Uncertainty or inadequate information is available.
Only a limited number of alternatives are easily identified.
No single “best” decision may exist.
Knowledge of whether the decision succeeds or fails to reach the desired objective
will not be available for the extended period of time.

1.2.5.1. Individual versus Group Decision-Making

Many decisions are not made by individual managers but by group of individuals.
One of the most important decisions to be made is whether the decision is to be made by
an individual or group. This is because certain decisions appear to be better made by
groups, while others appear to be suited to individual decision making.

20
Group decision making have its own advantages and disadvantages as compared to
individual decision making. Many experts identify the following:

Advantages:
1. Greater pool of knowledge. A group can bring much more information and
experience to bear on decision or problem than can an individual activating
alone.
2. Different perspectives. Individuals with varied experience and interests help the
group see decision situations and problems from different angles.
3. Increased acceptance. Those who play an active role in the group decision
making and problem solving tend to view the outcomes as “ours” rather than
“theirs”.
4. Training ground. Less experienced participants in group action learn how to cope
with group dynamics by actually involved.
5. Greater comprehension. Those who personally experiences the give-and take of
group decision tend to understand the rational behind the final decision.
6. Better decisions generally emerge.

Disadvantages:
1. A group frequently takes more times to make a decision.
2. The cost of having several individuals participate in a decision may be quite
high.
3. Group decision making may create “group think”. “Group think” is a
phenomenon in which social pressure causes group decisions to be the product of
only one or few members.
4. Minority domination. Sometimes the quality of group action is reduced when the
group gives in to those who talk the loudest and longest.
5. Goal displacement. Sometimes secondary considerations such as wining an
argument, making a point, or getting back at arrival displace the primary task of
making a sound decision.
1.2.5.2. Group Decision Making Techniques

In many instances group decision making is preferable to individual decision making. As

a result, to increase the benefits from group decision making, decision-making experts

21
have developed a wide range of techniques that groups can make decisions. Knowledge
of these techniques can help present and future managers to more effectively use group-
aided decision making. Some of the techniques are better known than others, but all can
enhance group decision making skills. Some of the most prominent ones are:

1. Brainstorming.
One of the best-known techniques for facilitating creativity has been developed by Alex
F. Osborn, who has been called the “father of brainstorming”. The purpose of this
approach is to improve problem solving by finding new and unusual solution.

This technique includes a strict serious of rules. The purpose of the rule is to promote the
generation of ideas while, at the same time, avoiding the inhabitation of members that
usually are caused by face-to-face groups. The basic rules are:

 No idea can be ridiculous. Group members are encouraged to state any extreme
 Each idea presented belongs to the group, not to the person stating it. In this
way, it is hoped that group members will utilise and build on the ideas of
others.
 No idea can be criticised. The purpose of the session is to generate, not.
evaluate, ideas
 The quality of idea production is stressed. Managers should try to generate and
write down ideas as possible.
 Combination and improvement of ideas by others is encouraged.
Brainstorming is an effective for generating new ideas (alternatives). It is not
appropriate for evaluating alternatives or selecting solutions.

2. The Delphi Technique

The Delphi Technique is a group process that anonymously generates ideas or

judgements from physically dispersed experts. In this technique experts’ ideas are
obtained from questionnaires as opposed to face-to-face group discussion.

A manager begins the Delphi process by identifying the issue(s) he/she wants to
investigate. Next, participants are identified and a questionnaire is developed. The
questionnaire is sent to participants, and returned to the manager. The manager then

22
summarises the responses and send feed back to participants. Based on this feed back,
the respondents evaluate their earlier responses. This process (cycle) repeats until the
manager obtains the necessary information.

The Delphi technique is useful when face-to-face decision are impractical, when
disagreements and conflicts are likely to impair-communication, when certain
individuals might severely dominate the group decision and when “group think” is the
probable out come of the group process.

3. The Nominal Group Technique (NGT)

The nominal group technique helps group to generate ideas and evaluate and select
solutions. This technique primarily is used during the decision making stage of evaluating
and selecting solutions.

Basically, NGT is a structured group meeting that proceeds as follows:

A group of individuals sit around a table but do not speak to one another. Rather each
person writes ideas on a pad of paper. After this, a structured sharing of ideas takes place.
Each person around the table presents one idea. A person designate as recorder writes the
ideas on a flip chart in full view of the entire group. This continues until all of the
participants indicate they have no further ideas to share. There is still no discussion. The
out put of this phase is a list of ideas. The next phase involves structured discussion in
which each idea receives attention before a vote is taken.

This is achieved by asking for clarification or stating the degree of support for each idea
listed on the flip chart /chalk board/. The next stage involves independent voting in which
each participant selects priorities by ranking or voting.

Both the Delphi and NGT are relatively new, but each has an excellent record of success.
The basic differences between them according to Ivancevich are:

 Delphi participants typically are anonymous to one another, while NGT

participants become acquainted.
 NGT participants meet face-to-face around a table, while Delphi
participants are typically distant and never meet face-to-face.

23
  In the Delphi process, all communication between participants is by way
of written questionnaires and feedback from the monitoring staff. In NGT
communication is direct between participants.

4. Synectics
Synectics is a group technique that emphasizes role playing and fantasizing to generate
novel alternative. In this approach, the members of the Synectics team are carefully
selected for their suitability to deal with the problem .the leader of the group plays a vital
role in this approach. In fact, only the leader knows and carefully leads the discussion
with out revealing the actual problem itself. The main reason for this approach is to
prevent the group from reaching a premature solution to the problem.

Learning activity 1.1

1. What is decision making?
_____________________________________________________________________
_____________________________________________________________________
2. List the decision making steps.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. Match the decision making situations and the types of decision making techniques.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
4. What are the advantages and disadvantages of group decision making?
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
5. Which of the following not a decision making tool used under the certainty
situation?
A. Breakeven analysis,
B. Cost-benefit analysis
C. Mathematical programming

24
 D. Decision tree
E. None of the above
6. Non programmed decisions are solutions for unstructured and novel problems and
are the responsibilities of lower level managers.
A. True B. False

1.3. Managing organizational training

Overview:
Organizations are operating in a very dynamic and competitive environment that requires
perfection in their effort in producing and providing their services. This demands then to
spend millions of birr every year for training and development to up grade employees’
skills and knowledge so that they can cope up with the changes in the environment.
Generally, it plays a strategic role and should be designed properly.

Learning objectives:
After reading this section you should be able to:
 Differentiate training and development
 Understand the process of designing a good training program

1.3.1. Definition & scope of training

Training is a process to change employees’ behavior at work through the application of
learning principles. This behavioral change usually has a focus on knowledge or
information, skills or activities, and attitudes or belief and value systems.

Training is may be defined as the systematic development of the attitude, knowledge and
skill behavior pattern required by an individual in order to perform adequately a given
task or job.

Systematic methods ensure that randomness is reduced and that learning, or behavioral
change, occurs in a structured format.

25
Training is the process which tries to increase the knowledge and skill of the employee,
thereby making him better equipped to perform his/her job or take up greater amount of
responsibilities. According to E.E. Flippo, “Training is the act of increasing the know-
how and skill of an employee for doing a particular job.”

Training is a process of learning a sequence of programmed behavior. It is application of

knowledge. It gives people an awareness of the rules and procedures to guide their
behavior. It attempts to improve their performance on the current job or prepare them for
an intended job.

Development is a related process; it covers not only those activities which improve job
performance but also those which bring about growth of the personality. Help individuals
in the progress toward maturity and actualization of their potential capacities sot that they
become not only good employees but better men and women.

1.3.2. Distinction between Training and Development

Training is a short-term process utilizing a systematic and organized procedure by which

non-managerial personnel learn technical knowledge and skills for a definite purpose.

Development is a long-term educational process utilizing a systematic and organized

procedure by which managerial personnel learn conceptual skill and theoretical
knowledge for general purpose.

Training refers only to instruction in technical and mechanical operations, while

development refers to philosophical and theoretical educational concepts. Training is
designed for non managers, while development involves managerial personnel. In the
words of Campbell, “Training courses are typically designed for a short term stated set
purpose, such as the operation of some piece(s) of machinery, while development
involves a broader education for long terms purposes.” The following table summaries
the difference between training and development.

Learning Dimension Training Development

26
Who Non managerial personnel Managerial personal

What Technical and mechanical operations Theoretical, conceptual ideas

Why Specific job related purpose General knowledge

When Short-term Long-term

1.3.3. Need and Purposes of Training

The objective of training is to enable the trainee to adapt himself to the changing
environment and serve the organizational objectives in effective manner.

Normally, an organization can have one or more objectives of giving training to its
personnel. Some of these are:
 Better performance of the employees;
 Development of more economic working methods;
 Greater job satisfaction or moral;
 Harmonious team work
 Aspirations for higher positions;
 Appetite for self-development;
 Quicker adaptation to changing conditions, etc.

1.3.4. Building training programs

There are several types of training programs. The most comprehensive and longest is the
training program for newly recruited personnel. More intensive and shorter programs on
specialized topics, as well as periodic refresher courses (collectively known as
continuation training), are presented for experienced organizational personnel. Building a
training program require five major decisions.

The specific training aims must be defined, content decided, training methods selected,
arrangements made for execution and procedures set up to evaluate the resource. Some

27
training specialists refer to the decisions as the aim, content, methods, execution, and
evaluation.

Successful training programs consist four phases: training assessment, program design,
reinforcement and evaluation, which is summarized by the following figure.

Establish program objectives

Identify who should be trained

Training
Assessment
Identify training needs and specific goals

How much training is needed?

Who should do the training?

When should the training take place?

Program
Where training should be done? design

Content of training

Teaching methods used in training program

Reinforcement
Determining how training will be reinforced?

What outcomes will be evaluated?

Evaluation

What measures will be used?

28
Fig. phases of developing and conducting training

Step 1. Defining training aims/objectives: -

Regardless of the type of training program, define its specific aims/objectives is the first
step in planning. Defining the general aim is not sufficient. General aims are translated
into specific aims phrased in operational terms.

i) Specific aim definition begins with a review of general aims and the means
currently employed to attain them. The process cannot be completed until
management perceives the training needs from which specific training aims derive
directly. Training needs then must be identified.

Step 2. Training Need Assessment

A training need is really the appraisal of the gap between actual and expected
performance. This gap holds up the realization of optimum productivity; and a concern
feels fit worthwhile to bridge this gap through training. Training program should be
undertaken only where the need for training is apparent. If no need exists, there is no
point in training. This is because training is time taking and costly to organization.
Therefore, managers responsible for this task should get all the necessary information
which helps them identify clearly the skill/knowledge to do the job. The following are
the common sources of this information:

1. Job Description
One obvious source and sound information on training needs is to be found in the job
descriptions secured through job analysis. Job analysis reports clearly show what each
employee ought to know and what skills he should have. Therefore, by companioning
the job specifications of employees with the job description, managers can identify and
ascertain the needs for training.

2. Interviews and Questionnaires

29
Training needs may also be defined by reference to interviews and questionnaires
directed to executives, supervisors and employee. Its purpose is to discover what they
think they need to learn.

3. Comparative Performance of Employees

It is also possible to learn the need for training by comparing the performance of
employee’s overtime. If there is a decline in the performance of purchasing and other
personnel, one reason could be lack of the necessary skill, indicating the need for training

4. Using indicative variables

Frank Cushman has identified a number of indicators of the need for training. Some of
which are:
 Large number of accidents
 Carelessness on the part of the employees
 Absence of pride in job
 Ignorance of board objectives and policies of the firm and the department
or unit
 Defective quality of the products
 Excessive production cost
 Unsatisfactory promotions etc.

Therefore, to have employee who are effective and efficient in their job, managers should
conduct a survey of training need which will provide a sound basis for beginning a
training program.

Step 3. Deciding training content

The content of training program, whether an initial or continuing program, derives from
the specific aims that management, after analyzing its training needs, formulates. Initial
training program provide instructions covering all important aspect of performance of the
person’s job. Continuing program concentration on specific aspects of the job where
experienced person have deficiencies. Therefore, the following discussion relates to the
content of initial sales training programs.
30
For an initial training program to contribute maximally toward preparing new personnel,
it must cover all key aspects of the person’s job. Content varies from company to
company, because of the differences in products, markets, company policies, trainees
ability and experience, organizational size, and training philosophies.

No two programs are, or should be alike. However, different companies tend to cover the
same general topics despite that the fact that variations exist is exact content.

Step 4. Selecting training types and methods: -

The planners next select training methods. There is a wide variety of methods, but the
program content often limits those that are appropriate. If for example, the content is a
new policy on vacations and holidays, the training methods almost certainly will be the
lecture, supplemented, perhaps, with visual aids. In this instance, such methods as role-
playing and the demonstration would be ruled out. It is important to select these training
methods that most effectively convey the desired content.

1.3.5. Methods and Types of training

A. Types of training
Training can include everything from teaching employees basic reading skills to
advanced courses in executive leadership. The following summarizes three general skill
categories- technical, interpersonal, and problem solving.

1) Technical skills- most training is directed at upgrading and improving an employee’s

technical skills. Technical training has become increasingly important today for two
reasons- new technology and new structural designs. Jobs change as a result of new
technologies and improved methods. For instance many auto repair personnel have had to
undergo extensive training to fix and maintain recent models with computer monitored
engines; electronic stabilizing systems and other innovations.

In addition, technical training has become increasingly important because of changes

organizations design. As organizations flatten their structures, expand their use of teams
and break down traditional departmental barriers, employees need to learn a wide variety
of tasks and need an increased knowledge of how their organization operates.
31
2) Interpersonal skills- almost all employees belonging to as work unit. to some degree,
their work performance depends on their ability to effectively interact with their co-
workers and their boss. Some employees have excellent interpersonal skills, but other
requires training to improve theirs. This includes learning how to be a better listener,
how to communicate ideas more clearly, and how to be a more effective team player.

3) Problem solving skills- mangers as well as many employees who perform non routine
tasks, have to solve problems on their jobs. When people require these skills but are
deficient in them, they can participate in the problem solving training. This would
include activities to sharpen their logic, reasoning and problem solving training, as well
as their abilities to assess causation, develop alternatives, analyze alternatives, and select
solutions. Problem-solving training has become a basic part of almost every
organizational effort to introduce self-managed teams or implement quality
management programs.

B. Training methods
Training methods are most readily classified as formal or informal and on-the –job or off-
the –job. Historically, training meant formal training. It is planned in advance and has a
structured format. However, recent evidence indicates that 70% of workplace learning is
made up of informal training- unstructured, unplanned, and easily adapted to situations
and individuals- for teaching skills and keeping employees current. In reality, most
informal training is nothing other than employees helping each other out. They share
information and solve work related problems with one another.

The forms and types of employee training methods are interrelated. It is difficult, if not
impossible to say which of the methods are multifaceted in scope and dimension and each
is suitable for a particular situation. The best technique for one situation may not be best
for different groups or tasks. Care must be used in adapting the techniques/method to the
learner and the job.

1. On - the- job training

Virtually every employee from the clerk to company president gets some “on-the-job-
training”, when he forms the firm. The most common, the most widely used and accepted
32
and the most necessary method of training employees is the skill essential for acceptable
for job performance. On – the – job training includes job rotation, apprenticeships,
understudy assignments, and formal mentioning programs.

Advantages:
1. The trainee learns on the actual equipment in the use and in true environment of
his job.
2. He feels the actual production conditions and requirements.
3. Highly economical since no additional personnel or facilities are required for
training.
4. The trainee learns the rules, regulations and procedures by observing their day-to-
day applications.
5. It is most appropriate for teaching the knowledge and skills which can be acquired
in a relatively short period etc.

Disadvantages:

1. Instruction is often highly disorganized and haphazard and not properly

supervised.
2. Disrupt the workplace
3. Learners are often subjected to distraction of a noisy shop or office.
4. Low productivity, especially when the employee is unable to fully develop his
skills.

However, this training is generally given in a large number of organizations and is

suitable for all levels of operatives, supervisors and executives for it needs no schools and
the employee’s contribution adds to the total output of the enterprise.

2. Off -the –job training

i. Vestibule training (training-centre training)
This method attempts to duplicate on the job situation in company classroom. It is a
classroom training which is often imparted with the help of the equipment and machines
which are identical with those in use in the place of work. This technique enables the
trainee to concentrate on learning the new skills rather than on performing an actual job.
Theoretical training is given in the classroom while the practical work is conducted on

33
the production line. It is most useful when philosophic concepts, attitudes, theories and
problem-solving abilities have to be learnt.

Off the job training simply means that training is not a part of everyday job activity. The
actual location may be in the company classroom or in places which are owned by the
company classroom or in places which are owned by the company or in universities or
association which have no connection with the company. These methods consist of: -

1. Lectures 5. Role playing

2. Conference 6. Program instruction
3. Group Discussions 7. T-Group training
4. Case studies

a. Lectures (Or Classroom Instruction)

Lectures are regarded as one of the simplest ways of imparting knowledge to the trainees,
especially when facts, concepts, or principles, attitudes, theories and problem solving
abilities are to be taught. In training the most important uses of lectures include:
a) Reducing anxiety about upcoming training programs or organizational
changes by explaining their purposes.
b) Introducing a subject and presenting an overview of its scope.
c) Presenting basic material that will provide a common background for
subsequent activities.
d) Illustrating the application of rules, principles, reviewing, clarifying and
summarizing. However, the lecture system suffers from some limitation:
i) The learners are passive instead of active participants;
ii) The lack of time by the management personnel to prepare the vigorous verbal
presentation; and
iii) Difficult to stimulate discussion following a lecture, particularly if the listener
uninformed by the lecture.

b. The Conference Method

In this method, the participating individuals “confer” to discuss points of common
interest to each other. A conference is basic to most participative group centered methods
of development. It is a formal meeting, conducted in accordance with an organized plan,
in which the leader seeks to develop knowledge and understanding by obtaining a

34
considerable amount of oral participation of the trainees. It lays emphasis on small group
discussions on organized subject matter and on the active participation of the members
involved. Learning is facilitated by building up on the ideas contributed by the conferees.
There are three types of conference. They are:
i. Direct discussion;
ii. Training conference; and
iii. Seminar conference.
In direct conference, the trainer guides the discussion in such a way that the facts,
principles or concepts are explained. In the training conference, the instructor gets the
group to pool its knowledge and past experience and brings different points of view to
bear on the problem.

In the seminar conference, answer is bound to question or a solution to a problem. For

this, the instructor defines the problem, encourages and ensures full participation in the
discussion.

c. Case Studies (Or Learning by Doing)

The case study is based upon the belief that managerial competence can best be attained
through the study, contemplation and discussion of concrete cases. The case is a set of
data (real or fictional), written or oral miniature description and summary of such data
that present issues and problem calling for solutions or action on the part of the trainee.
In case study method, the trainee is expected to:
i) Master the facts; become acquainted with the content of the case.
ii) Define the objectives sought in dealing with the issues in the case.
iii) Identify the problems in case uncover their probable causes.
iv) Develop alternative courses of actions

d. Role Playing
As Norman Mayor has pointed out, a role-playing experience soon demonstrates the gap
between “thinking and doing”. The idea of role-playing involves action, doing and
practice.

Role playing primarily involves employee-employer relationships-Hiring, firing,

discussing a grievance procedure conducting a post appraisal interview or disciplining a
35
subordinates or a salesman making a representation to a customer. The merits of the role
playing method are: -
A. Learning by doing is emphasized.
B. Human sensitivity and interactions are stressed.
C. The knowledge of results is immediate.
D. Trainee interest and involvement tend to be high.

e. Programmed Instruction (Or Teaching by Machine Method)

Programmed instruction involves a sequence of steps, which are often set up through the
central panel of an electronic computer as guides in the performance of a desired
operation or series of operations. In such a program, knowledge is imparted with the use
of a textbook or a teaching machine. The program involves: presenting questions, facts or
problems to the trainee to utilize the information given and the trainee instantly receives a
feedback (and sometimes rewards or penalties) on the basis of the accuracy of his
answers.

ii. Demonstration and examples (or learning by seeing)

In the demonstration method, the trainer describes and displays something as when he
teaches an employee how to do something by actually performing the activity himself
and by going through a step by step explanation of “Why” and “What” he is doing.

Demonstrations are very effective in teaching because it is much easier to show a person
how to do a job than to tell him or ask him to gather instructions from the reading
material. Demonstrations are often used in combination with lectures, pictures, text
materials, discussions etc.

Demonstrations are particularly effective in the training for the acquisition of skills. But
their usefulness is limited when it is a question of training management personnel. In a
demonstration, the emphasis is primarily on know-how, the principles and theory of a job
must, therefore, be taught by other method.

iii. Simulation
Simulation is a technique which duplicates as nearly as possible the actual conditions
encountered on a job. The vestibule training method or the business-game method are
examples of business simulation.

36
Trainee interest and employee motivation are both high in simulation exercise because
the actions of a trainee closely duplicate real job conditions. This training is essential in
cases in which actual on the job practice might result in a serious inquiry, a costly error,
or the destruction of valuable materials or resources. It is for this reason that the
technique is a very expensive one.

iv. Apprenticeship

For training in crafts, trades and in technical areas apprenticeship training is the oldest
and most commonly used methods, especially when proficiency in a job is the result of a
relatively long training period of two years to three years for persons of superior ability
and from four years to five years for others. The field in which apprenticeship training is
offered are numerous and range from the job of a draughtsman, a machinist, a tool-
maker, a pattern designer, a mechanic, carpenter, weavers, fitters, jewelers, die-sinkers,
engrave-ness and electricians. A major part of training time is spending on the job
productive work. Each apprentice is given a program of assignment according to a pre-
determined schedule which provides for efficient training in trade skills. The merit of this
method is: -
1. A skilled work force is maintained
2. Immediate returns can be expected from training
3. The workmanship is good.
4. The hiring cost is lower because of reduced turnover and lower production cost.
5. The loyalty of employees is increased and opportunities for growth and frequent.

Step 5. Training Evaluation

Objectives of training evaluation is to determine the ability of the participants in the

training programs to perform jobs for which they were trained, the specific nature of
training deficiencies, whether the trainees required any additional on the job training, and
the extent of training not needed for the participants to meet job requirements. Why
training fails? The following factors have been regarded as the main reasons for failure of
training program.
 The benefits of training are not clear to the top management.
 The top management hardly rewards supervisors for carrying out effective
training.
37
  The top management rarely plans and budgets systematically for training.
 Trainers provide limited counseling and consulting services to
the rest of the organization.
 Timely information about external programs may be difficult to obtain etc.

Therefore, to make the whole effort fruitful, managers must assess the effectiveness of
their training programs. Evaluation is necessary to determine the value of the training and
to improve the design of future programs. In evaluation, executives must decide what
outcomes will be evaluated and how these outcomes will be measured. The outcomes
must be measured against then objectives for which the training was designed.

Learning activity- 1.2

1. What is training?
_____________________________________________________________________
_____________________________________________________________________
2. List the steps of training program.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
3. Differentiate off-the –job and on-the-job training.
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
4. In case of on the job training the employee is not a part of his/her normal day to
day activity.
A. True B. False
5. Which of the following is true about the training and development?

A. Training is long term oriented but development is short term

B. Development is given to lower level employees
C. Training is job oriented but development is general knowledge oriented
D. A and B
E. All of the above
38
1.4. Checklist
Dear student: below are some of the important points extracted from the unit you
have been reading. Please put a tick mark in front of the points for those you have
understand well and if there are pints you have not understand yet, go back and
read the unit till you understand it well.

I can
 Define decision making and training
 Discuss the types of decisions
 List the steps of decision making
 Identify and discuss quantitative and qualitative decision making
techniques
 Differentiate training and development
 Identify the steps of designing a training program

1.5. SUMMARY
1. Decisions are an integral part of all managerial activities. Decision making is
the act of choosing one alternative from among a set of alternatives. A manager
performs all his tasks and functions through making decisions. The quality of
the decisions that managers make determines their effectiveness and the success
of failure of their organization. Decisions are organizational response to
problems and they are means not an end.
2. Decisions may be classified as programmed or non- programmed depending on
the type of problems. Most programmed decisions should be made at the first
level in the organization, while non programmed decisions be made mostly by
top management.
3. The rational and logical decision making process includes the following primary
steps; (1) Determining objectives, (2) Identifying problems, (3) developing
alternatives,(4) evaluating alternatives,(5) choosing an alternative , (6)
Implementing the decision, and (7) control and evaluation.
4. Decision may be made under the state of certainty, risk of uncertainty.
5. In most organization a great deal of decision making is achieved through
groups. This is especially true for non programmed problems. Managers can use
39
 a wide range of techniques to improve group decision making. Some of this
includes brain storming, Delphi technique, nominal group
technique (NGT) and synectics.
6. Managers can also use decision making aids which include the pay-off
matrix, breakeven, and decision trees. Other quantitative decision making tools
include inventory models, queuing models, distribution models, game theory,
artificial intelligence, linear programming and simulation.
7. A successful program consist of five phases: defining training objectives,
deciding on training content, training assessment, program design, and
evaluation. A good program begins by establishing objectives and then
determining the content of the training and then who should be trained. The
company must then identify individuals’ training needs. This is the key to how
much training will be needed.
8. There are several alternative training methods. They are most readily classified
as formal or informal and on-the –job or off-the –job. On – the – job training is
the most common training method and includes job rotation, apprenticeships,
understudy assignments, and formal mentioning programs.
9. Off the job training simply means that training is given out side of the work
area either. The actual location may be in the company classroom or in places
which are owned by the company classroom or in places which are owned by
the company or in universities or association which have no connection with the
company. These methods consist of: - lectures, conference, group discussions,
case studies, role playing, program instruction and T-group training.
10. The forms and types of employee training methods are interrelated. It is
difficult, if not impossible to say which of the methods are multifaceted in scope
and dimension and each is suitable for a particular situation. The best technique
for one situation may not be best for different groups or tasks. Care must be
used in adapting the techniques/method to the learner and the job.

1.6. Check your progress questions

1. ABC Co. is manufacturing firm which starts operation n the year 1996 E.C to
produce and sale soft drink it incurs a set up cost of Br. 500,000 for the acquisition
of machines and other necessary equipments. The marketing manager and finance

40
 department has estimated the cost and set price of the soft dirk. Thus price/unit is
Br. 3 and variable cost per bottle of drink is Br 1.75 per bottle of drink.

Required:
A. Determine the break-even quantity
B. Determine the break-even sales, if the company wants to generate a profit of
Br.100,000 what will be the sales level in birr?
2. Outline the steps of decision making processes.
3. Identify and discuss the situations in which group decision making is
advantageous.
4. Which of the following is /are the indicator of the need for training to employees
of an organization?
A. Number of accidents D. A and B
B. Defective quality of products E. A, B and C
C. Unsatisfactory supplier evaluation
5. Which of the following is not the advantage of on-the –job training?
A. The trainee learns on real environment
B. It is cost effective
C. It increases the productivity of employees
D. It is appropriate for teaching skills in the short period of time
E. All of the above
6. Why training?
7. “There is one best training method” Do you agree why or why not?

1.7. Answers to check your progress questions

1. A. 400,000 units
B. 480,000 units @ 3 birr = Birr 1, 440,000
2. The following are the steps of rational decision making
i. Determining Objectives
ii. Identifying Problems
iii. Developing Alternatives
iv. Evaluating Alternatives
v. Choosing an alternative
vi. Implementing the decision
41
 vii. Control and Evaluation

3. Research indicates that group decision making is useful when the following
conditions exist.
 The costs of being wrong are high, while substantial benefits are
possible if sound decision is made.
 Uncertainty or inadequate information is available.
 Only a limited number of alternatives are easily identified.
 No single “best” decision may exist.
 Knowledge of whether the decision succeeds or fails to reach the
desired objective will not be available for the extended period of time.
4. E
5. C
6. Organizations give training to their employees for one or more of the following
reasons:
i. Better performance of the employees;
ii. Development of more economic working methods;
iii. Greater job satisfaction or moral;
iv. Harmonious team work
v. Aspirations for higher positions;
vi. Appetite for self-development;
vii. Quicker adaptation to changing conditions, etc.
7. There is non one best training method the best depends on the situation.

42