MANAGEMENT EFFECTIVENESS: LEADERSHIP, PSYCHOLOGY AND DECISION MAKING

MANAGEMENT EFFECTIVENESS: LEADERSHIP, PSYCHOLOGY AND DECISION MAKING

Management Effectiveness: Leadership, Psychology and Decision Making

Leadership is the key to organizational success. Thus every company should recruit leaders with adequate knowledge, attitude and skills to ensure good relationships among workers, boost morality and productivity of staff to achieve its mission and vision. Organizations face daily challenges that require leaders’ decisions. However, some fail as a result of poor choices. Therefore, the study attempts to discuss issues of leadership and decision making in organizations. Precisely, the researcher will come up with an organization scenario that required leaders’ critical decisions. Further, the researcher will review the given article on leadership to summaries factors that influence leadership styles and decision-making, such as principles, theories as well as biases, and how well leaders can use them to arrive at the best decision to improve or save a company from collapsing.

Nonetheless, every person can be a leader in different ways, but the leadership skills and knowledge differ, which determines who is a good leader and who is not. Perhaps, leaders are entitled to influence and motivate the junior staff toward the achievements of the set targets. Subsequently, an organization can recruit or identify and nurture junior employees with leadership qualities to take a leadership role in the future. However, some people say leaders are born while others say they are developed, which sometimes brings a mixed reaction when an organization is looking for leaders. Besides, the main task of leaders is making policies, decisions, and model followers towards the achievement of the organization’s mission and vision. This paper explores the factors that contribute to better leadership and decision making. Additionally, the paper will identify and analyze an organization’s situation that needed critical decision making, how leaders made the decision, and how it should be done in the future to improve the company’s performance.

The article at hand has given an overview of how people perceive leadership roles and leading in various organizations. Further, it revealed different factors that contribute to the leadership style and decision-making process, which creates performance differences in various organizations. Perhaps, it is crucial to understand what leadership and leading are, as well as decision-making since our paper will mainly focus on these terms. Leadership is the process of influencing and directing followers towards the achievement of a common goal, while a leader is a person who is influential and has followers. On the other hand, decision making is the process of identifying and selecting a logical alternative form many options that can best fit the situation of interest. Precisely, a leader is mandated to handle and make critical decisions to ensure the company realizes its goals as well as take responsibility for the outcomes of their choices. However, if one makes the wrong decision, it may harm the organization, which can lead to the failure of achieving the objectives. As claimed by Vugt and Ronay (2014, pp 75), a good leader should have sober minds and involve or buy some ideas from colleagues either on the high level, the same level, or juniors to arrive at the best decision.

Organization Leadership/ Decision making Scenario

Nevertheless, I happened to work in a well-structured organization attached to the operations department as an assistant operations manager. Besides, every employee deems to know his/her role. The flow of directives is as well defined, as shown below.

Organization Chart.

The charts show how directives flow from the chief executive officer (CEO) to departmental heads then to juniors. However, each department should corporate with others for a better result of the entire organization.

The organization has branches all over the country, which had dominated the market over several years. However, in recent years the company faced many challenges due to the shake of the country’s economy, which failed the company to maintain the minimum revenue limit. Consequently, the company had to decide on how to raise/maintain its revenue to sustain its operation. Some of the decision contexts that the company revolved around were. 1. Company values: it was vital to consider the values of the company to ensure the decision arrived at do not go against such values, which could later drive the organization in the wrong direction. 2. Regulations and policies: decision-makers observed both company and industrial/government regulations to ensure both the organization, leaders and the victims were not unlawfully affected. 3. Community and stakeholders: society contributes highly to the success of an organization. Thus it is essential to observe and maintain a good relationship with the community, which decision-makers should consider before arriving at the final decision. 4. Shareholders: every shareholder invest in an organization which makes profit apart from non-profit making organizations, so policymaker should arrive at the conclusion that ensures the shareholders will benefit or else they will leave the company to invest elsewhere. Therefore, the team had to make a decision that takes into accounts all such factors and ensure no unfair victimization of people as well as consider the consequences of the final action (Rezaei 2015, pp. 49-51). Perhaps, as an assistant operations manager, I was tasked with researching and provide ideas that can save the company from the current situation and also for future progress. Further, I was among the decision committee that means taking responsibility for the decision outcome; thus, my presence and contribution counted. On that account, to restore the company’s financial position, the debate related to reducing possible expenditure, where the highly proposed cost was the wage bill. On that note, committee members proposed several strategies such as laying off employees, issuance of mandatory leaves, voluntary retirement, working in shifts, or slicing the salary.

Mazutis and Eckardt (2017, p.74) reveal that some leaders arrive at the wrong judgments because of the assumption of the possible repercussion, which affects various organizations to date. Perhaps, after a while, the team voted and later settled on laying off the staff as the best solution. Consequently, that decision affected both the organization and the employee. Firstly, employees were adversely affected since the company was the only source of income for many of them. Additionally, the victims were not only breadwinners of their families but also brought development within the community, which could no longer continue as the victims join the jobless group.

On the other hand, the company lost trust, as well as damaged its reputation within the society/consumers. Consequently, many customers shifted to its competitors. On top of that, some employee who remained in the company doubted their job security and started looking for green pastures, a situation that the company lost the most productive employees and only left with those who had little experience and could not find better jobs. Besides, many suppliers opted for other organizations in fear that the company might collapse and fail to pay them. Further, the organization suffered a blow of damaged reputation as the competitors took advantage of the situation to win the market share.

Further, the company had difficulties securing loans because many leading banks feared it might close down, perhaps, that was a signal that the company is ending in the wrong direction. Subsequently, the decision deemed to stir the problem other than solving the existing one. Hence the team that arrived at such a decision was disbudded, and some individuals lost their jobs and other demoted; fortunately, I was lucky to retain the position.

Factors that Influence Leaders Decisions

Notably, the committee involved people of different with different experiences and powers. Possibly, in one way, it contributed much to the final decision. According to Pohling et al. (2016, p. 449), some people use powers they have over the other to facilitate and direct the process of decision making towards their anticipated results. Oppong (2019, pp. 18-28) suggest that leaders should consider ethic factors when deciding since they are the role model of their juniors, especially, when engaging with people of different levels in terms of experience as in this case. Inversely, sitting in the same meeting with senior members, affected the opinions of the junior members who had little powers to push and defend their views, which may have changed the final decision. Concurrently, as an assistant operation manager raising opinions, such as slicing the salary of employees and retain them other than laying them off, could not easily pass. Bearing in mind that the financial department representative was also present in the meeting, who deemed to understand better the wage bill financial position at that moment; hence, the majority members favoured their proposals. Murata, Nakamura, and Karwowski (2015, p. 46) claim that conformity consideration influenced the final decision as every member tried to relate his opinion to that of others to avoid being solely responsible for any negative impact in case the resolution failed to work in favour of the company. Perhaps, the decision arrived at did not fully cover every person’s opinion, since such factors profoundly influenced it. Eventually, the groupthink cognitive bias structured the entire judgment as all members preferred shared accountability and responsibility (Murata, Nakamura and Karwowski 2015, p. 48).

Concurrently, as revealed in the article at hand, several unconscious factors contributed to such decisions, such as personality, cognitive bias, and emotional. 1. Emotional is a situation where feelings, such as mood, apathy, or anxiety, influences leaders’ decisions. According to Lerner, Li, Valdesolo, and Kassam (2015, p.780), a leader who is more anxious about the potential consequences of the decision will always be keen on safer judgments rather than the usual remunerating decision. Perhaps, members were emotionally focused on reducing the wage bill, which influenced the final decision, but failed to foresee the negative impact that such a decision could have on the shareholders and stakeholders. 2. Cognitive bias factors are the traits that limit a leader to interpret information correctly and take the right judgment (Mazutis and Eckardt 2017, p. 75). As a result, leaders assume to be well equipped with the necessary knowledge to make the right decision, thus fail to realize their mistakes, which can have a significant impact on their final decisions. For example, stereotyping biases, where leaders use previous information and experiences to analyze and make judgments without further consultations quickly. Perhaps, in this case, the more experienced members applied such a mechanism to come up with their opinions. 3. Personality bias is the preferences and influence that a leader has over others, which they use to shape up the decision making process. On that note, the influential or experience leaders influence less experienced in arriving at their desired final decision (Male and Palaiologou 2017, p. 733).

Leadership Theories

As claimed by Making (2015), leaders act as drivers of the entire organization, and the decision they make has a significant impact on the company and to the employee. Leaders should, therefore, incorporate all available theories to decide on what matches the situation of concern. More so, collection and analysis of information is key to ethical decision making. Making (2015) reveals that leaders who insufficiently motivates their followers are likely to make the right decision since they interact well with junior employees. Perhaps, learning much of employees’ expectation which can be related to the organization’s value and as a result, model workers values to match that of organization.

Additionally, such a leader can identify leadership theory, mainly relationship theory that matches the organization, thereby avoiding most of the biases, such as cognitive biases when making decisions.  According to Oppong (2019, p. 20), ethics plays a critical role in leadership and decision making; hence without observing ethical issues, a leader can not apply leadership theories appropriately. An organization comprises people from social, cultural, and economic diversity, which leads a leader to be careful when interacting with such a population to ensure they treat every person accordingly. Therefore, biases like stereotyping are likely to emerge in judgments if leaders fail to realize the role of ethics. For example, what is ethical in a group of employees may be unethical in another group.

Eventually, Amanchukwu et al. (2015, pp.7-12) reveal that individual leadership characters differential leaders, which has enhanced the researcher to move with time. Therefore, researchers have moved from traditional trait theories to personality and now to situational theories since leaders tend to apply different mechanisms in a different situation. On that note, scholars categorize leadership theories into three groups. 1. Relationship, where leaders interact with followers and make decisions as a team, which is mostly related to charismatic leadership style. It is the most preferred because it makes junior staff feel like part of the organization and, as a result, boosts their morale and eventually increases their productivity, which is also an advantage to the company. 2. The combination of traits theory, which considers the leadership characteristics that a person possesses, which are inherent. However, it has attracted some critiques since some people possess such traits, yet they are not leaders. Hence, the explanation was rule insufficient to settle on and open a door for scholars to do more researcher. Third, skills theory, which states that leaders who learn, developed, and acquired skills are the best, and for that reason, policymakers should facilitate leadership training programs to develop more such leaders. Concurrently, several leadership principles go hand in hand with leadership theories which leaders should observe. Perhaps, Amanchukwu et al. (2015, pp.7-12) reveal that good leaders should be an example to their followers, keep workers informed, make a timely decision, and take responsibility. Additionally, they should consider the well-being of workers and, more importantly, know themselves and always seek improvement. Vugt and Ronay (2014, p.76) suggests that leadership theories guide good leaders; however, not every approach is the best to be applied all the time. Thus, each one serves better when used in the right situations.

Therefore, such theories reflect the ways leaders arrive at their decision, such as 1. Behavioural and skills theories: The participants in the article suggested some characters a leader should have, which relate to the behavioural and skills approach. Amanchukwu, Stanley, and Ololube (2015, pp. 5-8) reveal that leaders should be evaluated according to their actions and not on intellectual capacity since every person can study leadership via tutorial and observations. For that matter, leaders should invest adequately in the development and training of leaders. 2. Contingent theory: as the article given revealed, there is no perfect decision since perfection differs according to the situation in which the decision is applied. Therefore, the theory suggests that the leadership qualities and style determine effective leadership in conjunction with the particular case (Anderson, Baur, Griffith and Buckley 2017, p. 245). 3. Relationship theory: Leadership is the act of influencing followers towards the achievement of a common goal, as defined in the article. Perhaps, relationship theory’s primary center of attention is the correspondence between leaders and their followers. Hence, a leader who engages his followers in decision making is likely to make a sound decision (Chiu, Balkundi, and Weinberg 2017, p. 335). Notably, the theories discussed have a significant impact on the decision-making process, and if they are applied can lead to a well-informed final decision. For example, involving followers in the decision-making process equips the leaders with more vital information which he/she may not be aware of, which may change the judgment and the outcome.

Subsequently, attributing such theories in the decision process will change the final judgment if they. For example, the application of contingency theory will encourage the experienced members to hold their past experiences and allow all decision-makers to center their opinions primarily on the current issue of discussion. Additionally, behavioural or skills theory will incorporate all members’ views without discriminating against others in terms of intellectual capacity since actions are what matters. Nevertheless, the decision to lay off employees was not the most appropriate. Perhaps, if members considered or they were aware of unconscious influences, such as stereotyping, emotion, and personality influence, they could have created a favourable environment where every member could feel free to raise his or her opinion and defend it. As a result, every opinion could have counted and possibly change the final judgment for the better one. According to the situation, a pay cut was the best alternative. Employees are part of an organization, and when a company is not doing well, it affects not only the shareholders but also the staff. Besides, the junior team can tell when a company is not generating revenue, as usual. Thus the majority of workers could take pay cut positively as they strive to revive the organization bearing in mind that if it gets back to its normal position, they will as well get their regular salaries rather than being fired. Similarly, the company could have maintained its reputation, Perhaps, suppliers, as well as lending institutions, could not have pulled down their services and support. Further, customers could not shift to its competitors since the pay cut impact could not profoundly affect consumer preferences and loyalty.

Implications

Nonetheless, the experience is the best teacher. Eventually, the situation was so educative and preparing on how to tackle such situations in for future. Concerning the case of discussion, the decision to fire employees had adverse consequences, which was a result of unconscious biases—for example, stereotyping and emotions directed the entire leaders’ committee towards sacking employees to save that cost without considering the possible outcome. Conversely, if such a situation happens, it will be essential to gather information, engage junior staff and handle the situation as it is without carrying forward previous decisions since every judgment works better if applied to its relevant circumstance. On that note, in many cases, leaders tend to relate occurrences and end up using the same mechanism which may not always work. Therefore, different ideas are vital since life keeps on changing, and also the employees one dealt with previously may not be the same in the present situation (Ghasabeh, Soosay and Reaiche 2015, p. 460).

Further, the outcome revealed that it is suitable for a leader to be anxious and fore-think of the possible outcome after the decision so that one does not rush to making decisions that may not be sustainable. Lastly, personal traits that hinder others from thinking independently and make a rational decision should be discouraged among leaders for the benefit of the entire company. Therefore, after analyzing the situation, it sharpened my leadership skills and discovered it is essential to create an enabling environment where every opinion will count and eliminate bad personal traits by understanding, not every experience fits in every situation. According to Amanchukwu et al. (2015, pp. 6-10), relationship leadership theory is vital in arriving at the best decisions since it engages all employees in the decision-making process. Concurrently, emotions play a crucial role in leadership; therefore, as a leader, it is vital to understand and controls emotions when making judgments.  Lastly, people should tackle every situation as it is, which calls for fresh data collection and analysis even though past information or experience matter, not all should be applied. Notably, leadership is a process, and leaders should have an open mind to keep on learning new things; otherwise, their knowledge and skills might be outdated. Additionally, a leader should be ready and responsible for accepting mistakes and learning from such occurrences. Furthermore, it is good to keep researching new ideas and alternatives to make decisions according to the specific situation.

Conclusion

Every organization strives to recruit or develop good leaders since the success of an organization is highly influenced by leadership. Leaders should consider all factors that influence decisions, such as bias, to avoid misleading judgments. On that account, the article given revealed several factors that contribute to good or bad leadership and resolutions, such as conscious and unconscious biases. Nonetheless, working in a reputable organization facing severe financial challenges as a leader interacting with more experience leaders shapes individual leadership skills. Precisely, many leaders make the wrong decision as a result of conscious biases such as conformity and groupthink, which hinders some better alternatives putting the company at higher risk. Additionally, some unconscious biases, such as personality, stereotyping, and emotion, are more influential. Which in this case, if considered, could have saved the company by making alternative judgments such as pay cut.

Furthermore, leaders should consider integrating leadership theories and principles to sharpen their skills in leading and decision making, Perhaps, approaches such as contingent, relationship, behavioural and skills theories if considered can change the ideas or strategies of decision making. On that note, leadership theory, such as, relationship theory which is related to the charismatic leadership style that involves all staff in decision making, is among the best that leaders can adopt for better leading. Nonetheless, the situation was a wakeup call that prepared and sharpened some leadership skills; hence in the future, leaders should consider such issues to allow all leaders to defend their opinions as well as engage junior staff to arrive at a sound decision. More importantly, leaders should realize that every view counts regardless of the experience or position an individual holds. Besides, leadership and decision making is a process that calls leaders to have open minds to accommodate future studies.

R