Business - 3.2 - Section 2 -managers, leadership and decision-making

What is a manager?

They enact the plan, use their authority, manage risks, have subordinates

What is a leader?

They inspire people, build relationships, take risks, have followers

What is the autocratic (authoritarian) type of management/leadership?

Power, control and decision-making are retained at the top of an organisation and communication with the workforce tends to be limited

What are the advantages of an autocratic management and leadership style?

The decisions are made quickly and easily

What are the disadvantages of an autocratic management/leadership style?

- The communication with the workforce tends to be non-existent

- They do not consult the staff only give orders

What is a paternalistic type of management/leadership style?

When employees are consulted, but decision-making remains formula at the top. Leaders decide what is best for their employees

What are the advantages of a paternalistic management/leadership style?

- Decisions are in best interest of employees

- They explain their decisions

What are the disadvantages of a paternalistic management/leadership style?

- Employees have a say but decisions still lay heavily on the top

- Takes longer to make decisions

What is a Democratic type of management/leadership style?

It involves a two-way communication and considerable delegation

What are advantages of a democratic type of management/leadership style?

- They consult others about reviews, and give reasons

- There is a participation of workers in decision-making

What are the disadvantages of a democratic type of management/leadership style?

- decision-making processes may be slower because of the need to consult and discuss

What is a laissez-faire type of management/leadership style?

A style that abdicates responsibility and essentially takes a hand off approach

What is an advantage of the laissez-faire type of management/leadership style?

- If employees are highly skilled this method can be effective

What is a disadvantage of the laisser faire type of management/leadership style?

- May lack focus and coordination

- Can be less effective if staff are not skilled

What is the Tannenbaum Schmitz continuum?

It is a model of leadership that shows the relationship between the level of freedom in relation to decision-making.

What is at the left side of the model?

Boss centred leadership

What is on the right side of the model?

Area of freedom for subordinates

What is the first section on the left side of the model?

Tell- leader identifies problems, makes decisions and announces to subordinates, expects implementations

What is the second section on the left side of the model?

Sells- leader still makes decisions, but attempts to overcome resistance through decisions and persuasion

What is the third section in the middle of the model?

Consults- leader identifies problem and presents it to the group, listens to advice and suggestions before making a decision

What is the last section of the model on the right side?

Joins- leader identifies the problem and passes on the solving and decision-making to the group (which managers part of)

What is intuition decision making?

Decisions based on hunches

What is scientific decision making?

decision making based on data

Advantages of scientific decision making

Data driven so evidence based

Removes some subjective judgement from decisions

Disadvantages of scientific decision making

May still rely on assumptions

Doesn't guarantee the correct decision

Can ignore business experience people have

What is an opportunity cost?

The cost on missing out on the next best alternative.

How do you calculate the Expected Value (EV) on a decision tree?

Probability x Expected revenue

How do you calculate the Net gain on a decision tree?

EV - cost

Benefits of using a decision tree

- Analyses possible options and identifies opportunity cost

- Injects quantitative analysis into decision making process

- Useful when similar situations have been faced

Drawbacks of using decision trees

- The accuracy of estimations can be inaccurate

- Managerial bias (person who comes up with probabilities may want something to be picked)

- Can lead to qualitative factors being ignored

What are the main factors which influence decision making and what to they mean?

Mission- The business purpose and how it wants to be seen

Objectives- Help the business accomplish the mission

Ethics- How to keep people safe

The External Environment- Competitors, trends can force a business to make changes and decisions

Resource Constraints- Managers may not be able to do something based on amount of resources

What is stakeholder mapping?

A visual representation of how stakeholders are connected and their power and interests in the business.