Theoretical and Organizational Premises of the Decision-Making Process - Assignment Example

LEEDS METROPOLITAN LEEDS BUSINESS SCHOOL Business Decision Making LEEDS METROPOLITAN LEEDS BUSINESS SCHOOL Business Decision Making:Reassessment Assignment PART A: The Decision Document Introduction 1. I have been asked to advise in my capacity as a consultant preparing a bid to build a hospital for the Mid Southern Hospitals NHS Trust. In this regard I have been asked to produce a decision document with regard to the number of and location of hospitals it is desirable to build in this district along with a brief indication of the function and services provided by each hospital recommended by me, an indication of likely costs. This will also involve a brief perusal of the theoretical and organisational premises of my decisions and the special considerations in this regard. Summary of Advice 2. The summary of my advice pertaining to the location of and type of hospital to be built for the Mid Southern Hospitals NHS Trust is that there should be three hospitals which should be built at or around Site C with reasonable distance. This is based upon a number of ethical considerations and leadership and "business scorecard" approaches to decision making which have taken into account all the exogenous and internal factors present here which should ultimately affect the bidding contract and the willingness of the stakeholders to participate in an activity which is profitable and ethical. 3. In my advice I have taken into account the special consideration of being able to foresee arrangements under the Private Finance Initiative (PFI) where the Hospital will be subsequently leased to the public sector/NHS.I have been made aware of the strong preference of our investment partners as to the presence of a single hospital serving the entire district in the interests of attracting specialists and for better economies of scale. However it has to be understood that the transport links across the district are not good with very poor bus services particular from and to the east side of the district. Overall it will be a better decision to have to more than one hospital. In the absence of that initiative then it is better to decide upon a site that has better access to transport and fewer access problems. The decision document and its relevant considerations 4. Poor transport linking is the obvious problem with Site A (Old Colliery) which is a disused mining site situated in the east of the district. This is because it has been stated that the transport links are poor. This may be an economical site due to the low quality environment and the availability of cheap labour however this may not be worth the ethical issues which would arise due to the doubts as to health issues here. I have been made aware of the unconfirmed rumours that part of the site was used at one time as a hazardous chemical dump and the unhealthy environment around the site which lacks greenery for the safety of the patients. 5. Coming to Site B (Dams Nature Reserve) I have been made aware that the site has the advantage of being accessible and acceptable for the residence of the professional staff. However I have also been made aware of the fact that the nature reserve itself has been declared a Site of Special Scientific Interest (SSSI) due to the presence of Great Crested Newts in some of the ponds and wetlands. I have also been told about the "Newts" and the financial strategy being offered to rid of these "Newts" with the involvement of the local area authority. However based on my personal ethics and professional values I would strongly oppose such a measure and although I would have chosen this site for what it offers I cannot approve of the means of procuring it. 6. The third site is the Site C: (Derelict Woolen Mill Complex) which is my primary choice for this hospital(s)l. This is primarily due its good motorway access here and the reasonable accommodation rates so the place does not become unaffordable for the poor patients converted into apartments. The only problem should be parking and further planning here due to the increase and traffic and congestion problems. 7. Since Site C is my chosen option it should be pointed out at the outset that this site could benefit from at least three hospitals built at a reasonable distance from each other which can be accessed easily. It is imperative to have specialised units in this area so they can be easily accessed without causing traffic congestion in the area as well as parking areas. For this purpose these three hospitals will be situated at such a distance from the each other at Site C that the patients from the eastern side of the District can commute here through national transport as it has been noted that car ownership is very sparse there. 8. Site C is particularly useful for the Children's hospital since there has been a relative increase in population in the west of the district as families with children locate in those areas most accessible to new employment opportunities. This may seem unfair to the aging population of the East District which may need more accessible hospital facilities but since Site A which is in the East suffers from toxic hazards it is much better to keep the children and other patients at a safe distance from such an unhealthy environment. 9. Of course the problem may be finding skilled local labour here as it has been stated that the site suffers from a lack of an over all lack of a qualified workforce. The fact that there is a significant cluster of local government wards with relatively high proportions of the population dependent on means tested benefits around Site C makes it necessary to build the Hospital in this area where the population is growing and things look better for the future. 10. I would also strongly recommend that one of these three hospitals should be specifically dedicated to Cardiovascular and Cancer diseases whereas Health deprivation has become a major issue in the district and my suggestion is based upon the high Index of Multiple Deprivation (IMD).Again Site C would be an excellent location to have a specialist hospital for children as the whole district suffers from the a high incidence of low birth weight in babies and this could help counter the distribution of low birth weight in deprived areas which should contribute to the over all policy measure of the Government as it is an important instrument in tackling poverty. 11. This decision can be justified taking into account several other extraneous factors which have been communicated to me. Building the hospitals at Site C is essentially the safe and ethical way out and will invite less trouble with the shareholders and financers where as the reduced risk of building in the absence of large scale redevelopment and health hazards like in Site A and B will not only meet the target of the real return of 15% - 20% a year on shareholder investment but have fewer issues with refinancing. 12. Furthermore the aim would be to secure a scheme that would take into account the predicted growth in the population in the district for at least two further decades and also the amount of the aging population. Based on the population statistics and indicators provided to me I would adopt a PFI scheme which allows for a throughput of bed at the rate 56 - 57 patients per bed per year. 13. Site C would seem to present lesser delays based on political and environmental protests and this would allow the builders to provide high quality work with the desired amount of Rate of return on their investment. Other ancillary issues will be dealt with by providing new and improved uniform contract based services for the hospital employees and the outsourcing the contract for services like laundry, equipment and catering to specialised service providers whose contracts can be strictly vetted for quality and price efficiency. This is because the hospital has to cut down costs to be better able to serve the marginalised portions of the economy. All employment disputes will be mediated through the relevant trade unions of the employees. It is not very wise at this stage to charge a 25 clamping fee or to go for parking revenues at this stage as if there is an effort to resell this to the NHS there should be less draconian fee structures here. However Additional facilities like televisions and internet facilities should be charged for. Charging for parking etc may even have detrimental effects for the public support for this contract and it is best to find other more subtle sources of profit maximisation .Charging patients a rental fee for the use of a television. Last but not the least we are looking towards less political trouble and thus building in the West side of the district will gain political support and thus help us secure more enthusiastic financers for the project. Produce an evaluation of the decision making process throughout the process of constructing the "Decision Document". In this section the aim is to reflect upon some of the theoretical premises upon which I have been able to base my advice. It has long been recognised by the academia that decision theory does not lie entirely within any one discipline and draws upon a number disciplines like psychology, economics, mathematics, statistics and social sciences. Much of decision theory therefore does not sit comfortably within any one discipline. Furthermore it embraces work from philosophy in the form of work relating to ethics (Bacharach and Hurley, 1991) mathematics of decisions (French, S., 1986) economics and rational choice behaviour (Bacharach and Hurley, 1991) and politics and ethics (Sutherland, 1992).In this vein my decision is firmly based on ethics as I have refused to let the low cost of the toxic site e and "the bribery" being offered in the case of Site A and B. The link between leadership, corporate social responsibility and business ethics becomes a pivotal concern here. Nisberg (1988:43) has defined business ethics as "a set of principles that guides business practices to reflect a concern for society as a whole while pursuing profits". He further refers to ethics as what is right, good or consistent with virtue. Corporate Social Responsibility by the leadership is the degree of moral obligation that may be put upon corporations apart from the normal laws of the state. The leadership in the corporation has to realise that the corporation is an individual and is amenable to treatment as an individual under the law (Nisberg, 1988, p. 74).Academics have applied a number of different philosophies to business and leadership ethics as (e.g., Ferrell and Gresham, 1985). Social psychologists have also considered moral philosophies to play a pivotal role in the shaping of leadership decisions. Forsyth (1980) has argued that ethical decisions can be explained in terms of idealism and relativism and defined (1980, p. 175) relativism as "the extent to which an individual rejects universal moral rules" when making ethical judgments and idealism as the degree to which the individuals "assume that desirable consequences can, with the 'right' action, always be obtained" (Forsyth, 1980, p. 176). According to (Vitell et al. 1993) these two philosophies as determinants of Leadership have done differently in practical life.(Vitel et al 1993) has observed that corporate leaders who stressed on idealism tended to exhibit a higher level of honesty and deemed it essential for effective organisation to be based on ethics and social responsibility. Relativists on the other hand were reportedly exhibiting lower trends of integrity. Hunt et al. (1989, p. 79) have defined corporate ethical values as "a composite of the individual ethical values of managers and both the formal and informal policies on ethics of the organization." Based on this it would seem that corporate values influence many aspects of an organisations decision making and this is how my decision followed the ethical route. The next basis of my decision was to explore an approach which would take into account all the intrinsic technical and financial hurdles present in the decision making process. This necessitated the use of the PESTEL and Business scorecard approach. My aim was to arrive at a balanced Business Score Card approach to reach a decision for the hospital location and facilities. The balanced scorecard was the Brainchild of Kaplan and Norton and has been endorsed academically as means of measuring sound business performance which will be represented by what Kaplan has termed as "a balanced presentation of both financial and operational measures". The background to this approach is the author's quest in setting up a range of measures which will give the top managers a fast yet coherent view of the business. The balanced scorecard approach allowed me to judge whether the results if the company's operations are financially and politically feasible , which are the "operational measures that are the drivers of future financial performance". Kaplan and Norton define this approach as allowing managers to form a fourfold view to approaching their business that is how the customers perceive you as a company(Customer Perspective),what your company excels at ( Internal Perspective),whether the present setup allows you to continue to improve and create value(Innovation and Learning Perspective) and last but not the least how you look at shareholders.(Financial Perspective).This fourfold view then not only minimises the information overload but also allows the decision making manager to put everything on a paper. The method is popular with all the big corporate entities like Rock water (part of Brown and Root), Intel and Apple computers, BP Chemicals, Milliken, Nat West Bank, Abbey National and Leeds Permanent and public sector organisations like the NHS. There will be a number of decisions here which has been based on a number of considerations like the PESTEL factors which are beyond the control of the companies or their board and management and have to be accepted for whatever they stand for.(PESTEL stands for political, economical, socio-cultural, technological, environmental and legal issues facing the managers and employees).In this vein the business scorecard analysis helped me to understand the external compulsions and to devise internal regulations to manage these problems for example in the issue of trade unions and employment contracts etc. The business scorecard approach thus relies heavily on its precision and relevance and will ideally be a success where it is possible to deliver information which is the backbone of the strategy, and can function as the cornerstone of both the Consortium's current and future success by balancing short-term, essentially financial performance, with long-term growth opportunities; balance internal and external perspectives by ensuring that comparison against current competitors is undertaken, in addition to comparison with the organization's own past performance; highlight performance by adopting a broad perspective: financial, business processes, customer/market interfaces and employee motivation; act as an integrating tool, both horizontally (across functionality) and vertically (through levels of management), by communicating the business strategy and the organization's priorities; serve as a dynamic, continuous process used to evaluate performance and redefine strategy and measures based on results.(Kaplan and Norton 1993). It is also quickly worth mentioning that the Business card approach is aimed at good governance and is seen as a firm's results that emanated from a series of contracts between several types of stakeholders. This means that the sole aim is not to maximise profit or reduce costs. There should be an effort to evaluate the costs of the deprived and marginalised patients. Therefore this scorecard allowed me to assess with in a single report how approaches can be adopted in the last post merger corporate entity to make the company more customer orientated and how to improve its product development and management. When all these perspectives are viewed together it is possible to see whether the development of any one perspective is damaging the development of another. The diagram below adopted from Kaplan and Norton shows how these perspectives can be brought together onto a single table for a comprehensive perspective.(Kaplan and Norton) However this approach cannot be relied upon solely to bring about business stability and a good business score card will not always reflect the guaranteed quality results particularly if there is a lack of proper analysis dialogue, commitment and action which are all the success factors in the development of a sound scorecard. As a decision maker I do not have perfect information or the perfect skills and thus it has often been said that the balanced scorecard approach has the dangers of ignoring the uniquely cultural and individual needs of the organisation and this cannot be a one size fits all scenario. Therefore based upon the above organisational theories I have produced a decision document for the Midlands Hospital project. References 1. 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