Communication and decision making
Managers communicate to coordinate and decide by choosing among alternatives. NET tests the communication process and barriers, and decision models, techniques and tools.
The communication process
Noise (Shannon and Weaver) can distort the message at any stage.
Types and networks of organisational communication
| Basis | Types | NET point |
|---|---|---|
| Direction | Downward, upward, horizontal (lateral), diagonal | Upward carries feedback, grievances and suggestions |
| Formality | Formal (official channels) and informal (grapevine) | Davis's grapevine chains: single strand, gossip, probability, cluster |
| Medium | Oral, written, non-verbal, electronic | Oral is fast with instant feedback; written leaves a lasting record |
| Small-group network | Chain, Y, wheel, circle, all-channel | Wheel is the most centralised; all-channel suits complex tasks and high satisfaction |
Barriers and remedies
| Barrier | Examples |
|---|---|
| Semantic | Jargon, ambiguous words, faulty translation |
| Physical | Noise, distance, faulty equipment |
| Psychological or perceptual | Filtering, selective perception, premature evaluation, emotions, distrust |
| Organisational | Too many levels, rigid rules, status gaps, information overload |
| Remedies | Simple language, two-way feedback, active listening, fewer levels, an open-door policy |
The rational decision-making process
- 1★Identify and define the problema wrong diagnosis spoils every later step
- 2Gather information and set decision criteria
- 3Develop alternatives
- 4Evaluate the alternatives
- 5★Choose the best alternative
- 6Implement the decision
- 7Follow up and evaluate the results
★ one-way, controls the pace
Decision types and conditions
| Basis | Types |
|---|---|
| Structure (Simon) | Programmed: routine and rule-based. Non-programmed: novel and unstructured, mostly at the top |
| Level | Strategic (top), tactical (middle), operational (lower) |
| Conditions | Certainty (outcome known), risk (probabilities known), uncertainty (probabilities unknown) |
| Models | Rational (economic man), bounded rationality (administrative man), intuitive, political |
Decision techniques and tools
| Tool | How it works |
|---|---|
| Brainstorming (Alex Osborn) | Many ideas quickly; no criticism during the session |
| Nominal group technique (Delbecq and Van de Ven) | Silent idea writing, round-robin sharing, discussion, independent ranking |
| Delphi (RAND Corporation) | Anonymous experts answer questionnaires over several rounds until views converge |
| Decision tree | Branches for choices and chance events; pick the highest expected value |
| Criteria under uncertainty | Maximax (optimist), maximin (Wald, pessimist), minimax regret (Savage), Hurwicz (realism), Laplace (equal chances) |
| Quantitative tools | Linear programming, simulation, queuing, game theory, break-even analysis |
| Group pitfall | Groupthink (Irving Janis), countered by devil's advocacy and dialectical inquiry |
Worked example: expected monetary value
A firm can launch Product X, with a 60% chance of ₹10 lakh profit and a 40% chance of a ₹4 lakh loss, or Product Y, with a certain profit of ₹3 lakh. Which should it choose by expected monetary value (EMV)?
- EMV of X = (0.6 × 10) + (0.4 × −4) = 6.0 − 1.6 = ₹4.4 lakh.
- Check: 0.6 × 10 = 6.0 and 0.4 × 4 = 1.6; 6.0 − 1.6 = 4.4.
- EMV of Y = 1.0 × 3 = ₹3 lakh.
- ₹4.4 lakh is more than ₹3 lakh.
Choose Product X (EMV ₹4.4 lakh). A cautious manager using maximin would pick Y instead, because its worst case is a ₹3 lakh profit, not a ₹4 lakh loss.
NET asks you to sequence the communication or decision process, name the barrier in a short case, match decision techniques (Delphi, NGT, brainstorming), and apply maximax, maximin or minimax regret to a small payoff table.
Typical MCQ: “Which criterion under uncertainty minimises the largest possible regret?” Savage's minimax regret criterion. Trap: Wald's maximin works on payoffs, not on regrets.
Typical MCQ: “A manager passes only good news up to the boss. Which barrier is this?” Filtering, a perceptual barrier. Trap: it is not semantic, because the words themselves are understood correctly.
Simon decides in I-D-C: Intelligence, Design, Choice, then review. Maximin is the pessimist's 'best of the worst'; maximax is the optimist's 'best of the best'.