Mangement Under Uncertainty: of RBS Skals - Case Study Example

Running Head: Маnagеmеnt under Unсеrtinity: Саsе Study Аnаlysis Case Study Report ‘Managing Under Uncertainty’ (Insert Name) (Institution Affiliation) Table of Contents Executive Summary 2 INTRODUCTION 3 Decision making at RBS SKals 3 A Psychological Perspective 4 The Individuals 4 The Company 6 Decision Making Process at RBS SKals 6 Maris Saukan’s Decisions 7 Conclusion 7 Recommendation 8 References 10 Executive Summary The report will employ a psychological perspective to analyse how decisions are made in RBS Skals, a construction company in Latvia. At RBS Skals, decisions were usually made by an individual Maris Saukans the managing director. His decisions were normally final and no employee was expected to oppose them or think otherwise. He decision to convince the board of directors to bid for big project that looked risky was a positive indication of the Company prosperity in future. Decision making by a person in a company can be affected by a number of psychological processes. Normally individuals will view situations differently. These decisions are mostly shaped by people’s insight due to previous experience, people’s needs and current motivations. Decision making process seems to improve in RBS Skals after the company thought of preparing for a bid of a big project. All the departments are involved in the preparation for the bid. It is therefore very important that the problem of decision making process in RBS Skals be addressed. This can only be done if the company management is willing and ready to take a descriptive action oriented model of decision making. A consensus approach is encouraged when making very important decisions that will affect the company by the management. INTRODUCTION RBS Skals is a Construction Company in Latvia; the company has grown from a team of three entrepreneurs to a large construction firm. The firm deals Constructions services like renovations, repairs as well as big projects. RBS Skals is a major employer in Latvia; it employs hundreds of people if not thousands. In this report I intend to make analysis on the decision made by management under uncertainty. Being a small Company, RBS Skals faces many challenges in the construction industry, these are; normal Latvian traditional challenges, political influence and the target market is very small. All these challenges lead up to uncertainty and the Company must be managed under uncertainty. A number of factors shape the decision of RBS Skals MD and chairman to the Board, and they can well be elucidated by a few of psychological theories. I will use a number of these theories in order for us to understand why RBS Skals MD made some decisions (Mayo, 2012) Decision making at RBS SKals The quality of a major decision in any organization is affected by the structure of the decision making. The decision body can be either individual or group according to Cooke and Slack (Teale et al, 2003). In many cases it is normally assumed that decisions in big organizations are dominantly made by managers (Teale et al, 2003). In RBS Skals, all decisions were usually made by the chairman to the board who was also the managing director. Although he co-owned the company with two other directors, Maris Saukans, the MD could still influence major decisions on his way. This was the reality during board meetings that the MD had the ability to influence other board members and those decisions could be made the way he anticipated. It can be stated that Maris Saukans use authorization style of leadership, whereby he keeps the full control over all processes in the company. It is usually said when an individual is in charge and they control decision making in a certain manner, then the quality of the decision is limited (Fitzgerald & Ayson, 2011). And this can be summarised as information and broad options available to a person are limited. Maris Saukans is motivated in making these decisions by the feeling of wanting to succeed and a healthy financial situation. It is well seen that he decides to equip his office with high tech equipment’s that demonstrates his status like, leather furniture and expensive cognac that when someone else enters his office feels like they are entering a private area of a very strong personality (Mayo, 2012) A Psychological Perspective I would discuss on individual decisions made by board members of RBS Skals from a psychological perspective and will be able to understand how they arrive to these decisions. Decision making refers to a situation whereby choices are made from different alternatives in order an objective is achieved. These more so on decisions made by the managing director Maris Saukans. The Individuals Maris Saukans was a former sportsman; to be precise he was a professional and successful hockey player. To be a successful sports person, one must be physically and psychologically strong and the same in needed in in managing under uncertainty (Fitzgerald & Ayson, 2011). Although he is not very educated with formal management or engineering degree, he has that urge to succeed in business the way he did in sports. That is why naturally he has will-power, determination, speed, efficiency and ‘word of a man’. We see him motive his family and employees by arranging a skiing trip to the Alps as Christmas present. All these decisions on spending are made by him individually. Maris Saukans can as well be termed as a dominator; this is an individual who likes to be the main person in any event. He needed the psychological strength as the MD in making some decision. This is clearly explained in the case study whereby the other entire department that include Marketing department, Technical department and the finance department consulted him. Maris Saukans authorization style of leadership can also be demonstrated by an event that involves the Marketing Director Janis Milzarajas who was receiving post delivered containing invitation to participate in closed tender for a major construction (Fitzgerald & Ayson, 2011). Although he is an experienced man he is astonished and left speechless. The next thing he does is enter Maris Saukans office without hesitation to consult. This clearly shows that Maris Saukans is the main man in this Company and no decision can be made without his authority. Like any other individual that would like to succeed, Maris Saukans the MD make decisions that are a little bit more risky. Maris Saukans the managing director of RBS Skals is psychologically strong, we see him as a risk taker and he makes crucial decisions for the Company. In case we find that he has the most difficult role to play as the managing director because he has to ensure that all the processes in the company happen smoothly. If the company has won any tender, the company is able to deliver high quality work timely, the work done is accepted by community, the work done is done in accordance with the international and Latvian standards. He must also make sure that the employees are safe and very happy at all times with their work, so that the excellent publicity of the company is demonstrated not only by the company’s deeds but also by satisfied customers by the word of mouth (Gerring, Zimbardo, Campbell, Cumming & Wilkes, 2012). The Company A Company is too susceptible to psychological factor the same way an individual is affected. RBS Skals to be psychologically mature. The Company has grown in lips and bounds from a small organization owned by three individuals to a very successful Company during the last couple of years, achieving fast growth. The Company has managed to acquire large scale projects that require psychologically stable companies to handle, these projects include; building and reconstruction of petrol stations, supermarkets, banks and prestigious office centres. It has also participated in network projects, like water treatment plants, multinational companies like, McDonald and shell. Decision Making Process at RBS SKals Different individuals view situations differently, this can be because of past experiences and they shape the perception (Teale et al., 2003). RBS Skals got an opportunity of making a major decision of placing a bid for a major construction project. The project required a lot of resources and time was limited and was very risky to undertaken by a small company that had never attempted such a project. This type of event could well be explained by the ‘Black Swan’ theory (Gerring, Zimbardo, Campbell, Cumming & Wilkes, 2012). Which states that an event that is totally unpredictable and has an extreme impact. The resulting uncertainty may influence the quality of the decision made, since it is normally very hard to find decisions that are perfect. Therefore the urge by Maris Saukans the MD to see RBS Skals prosper made him convince the Board of directors to agree with the decision of bidding for the major project. The other theory which can also explain Maris Saukans decisions is the ‘attribution’ theory; this theory tries to show that an individual behaviour can be affected by internal or external factors (Robbins & Judge, 2011). This can be applied in some assumptions that Maris Saukans made about employees within the Company. ‘Incrementalism’ (Teale, et al, 2003), refers to a situation whereby decisions are made based on an existing course of action. These decisions were made at departmental level then forwarded to the board of directors. During the preparation of bid by RBS Skals, it should be noted that all the departments were involved in the preparation of the bid and therefore each employee involved in the same felt part and parcel of the company (Akdere, & Altman, 2009). Maris Saukan’s Decisions It is very clear that a number of Maris Saukans decisions can be explained using the psychological theory that surrounds decision making. When Maris Saukans decides to use company’s resources for his personal uses, we don’t know if the reason behind that is caused by external or internal factors (Amason, 1996). Conclusion The report has demonstrated the changes in decision making process in RBS Skals immediately after the company had seen the potential to growth. Maris Saukans the managing director sow the need of involving the entire company’s department in the organization during the preparation of bid. The marketing department led by Janis was particularly active in bid preparation; the department had to prepare all legal requirements needed by the tender committee before making bids. It is important to note that all the new project that the company was planning to undertake was a little bit risky, as it needed a lot of resources, Maris Saukans took it as an opportunity to grow the company. He had so much confidence in himself and with the company and it is during the analysis of other competitors that he states the company’s strengths. He has so much believe in the organization that he is almost sure that RBS Skals will win the tender and work on the big project ever in its existence. Recommendation From the above report analysed, I highly recommend that the following should be implemented in RBS Skals in order to improve in decision making. Leadership style is a key in a Company running. Maris Saukans should receive training on how to effectively lead. He should be a team player the way he used to be as a hockey player. He needs to be people focused and try his level best and involve all necessary employees in decision making. Employees normally feel appreciated and it motivates them. Secondly, Maris Saukans needs to understand the decision making process. He should basically follow a bounded rationality model instead of a ‘garbage can’ model. By using the employee involvement model that encourages employees’ participation at the beginning of the assignment. The managing director Maris Saukans, should encourage the spirit of team work, employees should be encouraged to participate fully the process of decision making. Regular meetings should be encouraged and organized in the company and all employees should be encouraged to contribute during the meetings (Davenport & Prusak, 1998). Maris Saukans should also come with the best way of employee’s motivation. Proper salary structures should be put in place that will satisfy all the employees. A proper career guide should be established that employees will follow so as to move to the next level. This should be an organizational culture that should always be developed (Zheng, Yang & Mclean, 2010). References Mayo, A.(2012). Human Resources or Human Capital? Managing people as Assets, England Gower. Zheng, W., Yang, B., & McLean, G. N. (2010). Linking organizational culture, structure, strategy, and organizational effectiveness: Mediating role of knowledge management. Journal of Business Research, 63(7), 763-771. Davenport, T.H. and Prusak, L. 1998). Working knowledge: How organisations manage what they know. Boston, MA: Harvard Business School Press. Akdere, M., & Altman, B. A. (2009). An Organization Development Framework in Decision Making: Implications for Practice. Organization Development Journal, 27(4), 47-56. Amason, A. C. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: resolving a paradox for top management teams. Academy Of Management Journal, 39(1), 123-148. Fitzgerald, M. & Ayson, S. (Eds.) (2011). Managing under uncertainty: a qualitative approach to decision making. Frenchs Forest, Sydney, NSW: Pearson. Gerring, R., Zimbardo, P., Campbell, A., Cumming S. & Wilkes, F. (2012). Social Psychology. In M. Fitzgerald & S. Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 449-496). Frenchs Forest, Sydney, NSW: Pearson. Robbins, S. & Judge, T. (2011). Perception and Individual Decision Making. In. Organizational Behaviour. 14th ed. Upper Saddle River, NJ: Pearson education Inc. Prentice Hall. Teale, M., Dispenza,V., Flynn, J. & Currie, D. (2003). Management decision-making in context. In M. Fitzgerald & S.Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 7-25). 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