Manager s receive feedback information, analyze relative to goals, make decisions, then communicate decisions to agents as control info.

Transcription

1 ARTICLES MANAGERIAL DECISION-MAKING & CONTROL COMMUNICATION Manager s receive feedback information, analyze relative to goals, make decisions, then communicate decisions to agents as control info. Information systems can support these activities. Inputs Manager Decides Control Info. Agents and activities for which responsible Feedback Info. Outputs 1

2 Agency Theory Firm is nexus of contracts among self interested parties, (i.e. agents) requiring managerial supervision Agency(managerial control) costs rise as firms take on more employees. IS s enable firms to economize on managers through better coordination and control communication (increasing span of control). This allows firms to grow revenues while maintaining the same size. IS s can also replace some managers decision making or move it closer to workers (empowerment). Two way IS s are theorized to flatten organizations Decision-making A Decision is: A commitment to a choice of action That often must be communicated to others. Which is the Result of a Process/Processing called Decision-making which Requires Processing Power (Intelligence) and Knowledge. By an Individual or Group, possibly a Computer or Group of Computers 2

3 STRUCTURED <- VS -> UNSTRUCTURED DECISIONS Structured decisions are Programmed repetitive and routine, shorter-term, engage fewer resources, and follow a definite procedure/decision model. Operational decisions are good examples and include next week s production schedules, individual sales and customer service decisions, daily human resource decisions like overtime authorization, etc. Programmed decisions are potentially programmable into an IS. STRUCTURED <- VS -> UNSTRUCTURED DECISIONS (CONTINUED) Unstructured decisions are Unprogrammed Novel and non-routine Longer-term More resource intensive No well-understood procedure/decision model Have increased/uncertain risk Often more external/environmental variables Require more of the decision-maker s knowledge and judgment Strategic decisions are good examples, new markets, new products, LT Capital Planning, M&A, etc. 3

4 STRUCTURED <- VS -> UNSTRUCTURED DECISIONS Tactical decisions include both and are somewhere in the middle and represent the role of middle management/knowledge workers Represent designs, policies, plans, procedures and budgets to Implement strategic decisions in the intermediate term Forecast operational needs in the intermediate term Not Completely Programmable but IS Supportable (Decision Support Systems) FOUR STAGES OF RATIONAL DECISION-MAKING Intelligence Design Choice Implementation 4

5 FOUR STAGES OF RATIONAL DECISION MAKING 1. Intelligence: Process of Identifying PROBLEMS and/or OPPORTUNITIES Requires attention and/or someone/thing bringing it to attention (the problem of information overload) Environmental scanning Internal Monitoring Requires cognitive processing (intelligence) whereby identification occurs via pattern/gap recognition versus mental models/knowledge ISs can help via improved information flows and programmed pattern/gap recognition (Artificial Intelligence) FOUR STAGES OF RATIONAL DECISION-MAKING 2. Design (Analysis) Identifying and exploring alternative courses of action (Solutions) Costly (search costs) and time consuming Solutions are framed and compared using mental decision models (Knowledge) Selection of measurable criteria often drives request for information Information meaningfulness here is derived from your problem recognition and the decision model you use to frame it. Managers have biases, personal/dept agendas in their choice of modeling and measuring 5

6 MENTAL AND DATA-DRIVEN DECISION MODELS Mental Decision Models: Concepts and the relationships between them in your mind. (= Knowledge) Example: If you raise prices, demand goes down Data-driven Decision Models: Abstract representations of mental models using Measured and Mathematically related quantities Example: Price elasticity calculations P Q LIMITS TO RATIONAL DECISION MAKING Bounded rational decision making: time and cost limits lead to satisficing : choosing the first solution that meets priority criteria. Intuitive decision-making: fitting knowledgebased solution patterns to the problem pattern. 89% of managers admit to using intuition Based on experience, training and judgment Expert opinion: taking someone else s recommendation who you trust. Creative decision making: applying existing knowledge in new domains or new combinations 6

7 FOUR STAGES OF RATIONAL DECISION MAKING 3. Choice (Commitment to action) Choosing among solution alternatives Often a socio-political process not directly tied to your decision model Data-driven decisions and models may help politicking 4. Implementation (Action) Communicating control information to responsible agents - often via information systems ( s, plans, schedules, etc.) Making chosen alternative work and continuing to monitor how well solution is working IN-CLASS ACTIVITY Describe your decision to enroll in the UK-TEI combined MBA program. What were the major factors influencing your decision. How much data did you use? Was it an individual or group process? 7

8 MANAGERIAL HIERARCHY & INFORMATION SYSTEM TYPES Value Chain Primary Value adding Activities 1.Transaction Processing Systems Operational Management 2.Management Information (Reporting) Systems Middle Management Knowledge Workers Senior Management 3.Decision Support Systems 4.Executive Support Systems BUSINESS INTELLIGENCE SYSTEMS Data quantity decreases Data driven Decision Models of Managers/ Executives/ Knowledge Workers Data Meaningfulness Increases but Narrows in Scope Most IS costs are associated w/ data capture and storage Data Transformed/Analyzed/Formatted into Information for Decision Models Data Stored, Managed and Retrieved Data Entry/Capture Definitions and Structure (measurements) Data are a Limited Abstraction of an Infinite Actual Event Information System(s) 8

9 Information systems across managerial levels: 4 Historic Types 1. Transaction Processing Systems (TPSs) Record basic activities of the firm (sales, inventory movement, payroll) Data captured electronically or entered by clerks, operational personnel Used by operational management to monitor and account for activities 2. Management Information Systems (MISs) Extract and transform data from TPSs Create regularly recurring and formatted reports for management to monitor performance. A Payroll TPS A TPS for payroll processing captures employee payment transaction data (such as a time card). System outputs include online and hardcopy reports for management and employee paychecks. 9

10 Sample MIS Report Information systems across managerial levels: 4 Historic Types 3. Decision Support Systems (DSSs) Include data from TPSs, MISs and environment and data management tools. Include modeling and visualization tools for middle management and knowledge workers to make decisions and design products/processes Spreadsheets are basic DSSs 4. Executive Support Systems (ESSs) Aggregated, High-level data for executives Simple, easy to use interface Likely to include external data from environment (benchmarks) May allow drill down 10

11 Voyage-Estimating Decision Support System This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts. Model of an Executive Support System This system pools data from diverse internal and external sources and makes them available to executives in easy-to-use form. 11

12 Relationship of systems to one another TPS: Major source of data for other systems ESS: Recipient of data from lower-level systems Data may be exchanged between systems In reality, many businesses systems are only loosely integrated, often systems do not communicate with one another easily. Microsoft excel and a middle-manager up late at night become the integration system for reporting MANAGERIAL COMMUNICATION 12

13 50-90% of a manager s time is spent communicating Frequent communication is related to better job performance ratings and organizational performance Who managers spend time communicating with at work COMMUNICATION W/ MANAGERS MATTERS Correlations observed at teaching hospitals between riskadjusted morbidity and the percentage of surgical care providers reporting positive communication and collaboration with specific clinical roles (data from 52 hospitals, 6083 surveys) Positive Communication and Collaboration with: Correlation with Risk-Adjusted Morbidity (p-value) Attending MDs (<0.01*) Resident MDs (0.08*) Nurses (0.32) Others 0.05 (0.73) Davenport DL, Henderson WG, Mosca CL, Khuri SF, and Mentzer RM Jr, Risk-Adjusted Morbidity in Teaching Hospitals Correlates with Reported Levels of Communication and Collaboration on Surgical Teams But Not With Scale Measures of Teamwork Climate, Safety Climate, or Working Conditions, J Am Coll Surg, 2007 Dec; 205(6):

14 The Process Model of Communication Noise is anything that interferes with or distorts the Message being transmitted. Includes system/technology distortion, but may also include: Workplace Gossip or Grapevine Differences in Meaning, Context, Semantics and Jargon Filtering, Selective Perception Information Overload Motivational or Emotional Disconnects Lack of Source Familiarity or Credibility 14

15 IN-CLASS ACTIVITY Describe a recent communications failure of which you are aware. What was the setting, timing, location of parties and medium of communication? What were the factors that you believe caused the communications failure? What were the results of the failure? RICHNESS/REDUNDANCY IN COMMUNICATION Visual cues are very important. In person is best (if you look good and speak well) but expensive. A picture is worth a thousand words These days a video clip is worth two thousand words Web pages have changed from HTML links to Video links. Remember clear, concise and convincing Remember your audience and contextualize appropriately Remember transmission failure so repeat and clarify. Follow up! On a side note, is easy to send, too easy! Pause before you hit that send button. 15

16 REMEMBER! Bring your laptop if you have one to class tomorrow with MS Access and Excel loaded on it. Case 1 Due 24:00 16