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JWI 510: Leadership in the 21st Century Lecture Notes

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 1 of 3

Week 6: Leadership and Decision Making

Leaders are heavily relied upon for their ability to make decisions, especially during stressful times. As you develop your leadership skills, you may be wondering if there are models or techniques that can aid you during such times. Thankfully, there are. One such model is the Vroom-Yetton Contingency Model. Inasmuch as any single model can guide an organization as large and as diverse as GE, this framework does offer a compelling approach. The formula, which management theorists like Maier (1970) and Tannenbaum and Schmidt (1958) first used to great advantage, was the intellectual driver for the work Jack accomplished at GE. During 1981–1988, the first seven years that Jack served as CEO, he worked on activities such as downsizing, de-layering, and divestiture of unprofitable businesses. It was during this phase that Welch declared that GE’s businesses would be Number 1 or Number 2 in any market they were in, or he would "fix, sell, or close" them. By late 1988, Jack's efforts had dramatically improved the quality of GE’s systems and processes.

The Vroom-Yetton Contingency Model

The three main questions we will begin with are:

1. What is the Vroom-Yetton Contingency Model?

2. How do we use it?

3. To what extent should a leader involve employees in the decision making process?

The equation that underpins Vroom’s model is one of the most powerful tools in the leadership toolkit. The formula posits that the quality of any decision, when multiplied by its level of acceptance, will determine its effectiveness. Restated, the formula becomes:

Q x A = E The multiplication sign in the equation is not meant to be taken literally. Its main purpose is to serve as a reminder, as hard-charging business people all too often forget, that anything times zero is zero. A super- brilliant idea (high Q) that team members will hate, oppose, and subvert (low A) is a poor idea; a leader should think long and hard about how to modify the idea to get more employee (or customer) buy-in, even if some decision quality must be sacrificed. Conversely, the tendency to just do it if it feels good, without regard for the wisdom of an idea, will usually produce a high A / low Q outcome that is similarly disappointing.

JWI 510: Leadership in the 21st Century Lecture Notes

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 2 of 3

Since its inception, nearly 40 years ago, the Vroom-Yetton Model has been improved many times, but the centrality of the leader's analysis of a particular situation, with a focus on decision quality and acceptance, remains the same. A series of questions are asked to drive the analysis, such as:

• Quality Requirement How important is the technical quality of the decision? Is there an optimal solution to a problem, say, from a technical standpoint?

• Leader Information Does a leader have sufficient information to make a high-quality decision?

• Problem Structure Is the problem well structured? Is it clear and well defined? Does it lend itself to statistical tools and quantitative analysis?

• Commitment Requirement Is employee commitment to the decision critical for effective implementation?

• Commitment Probability If the leader makes the decision without employees' input, is it reasonably certain that people will not be committed to the decision?

• Goal Congruence Do employees share the organizational goals to be attained in solving the problem?

• Employee Conflict Is conflict among employees likely to occur in the preferred solutions?

Depending on how these questions are answered, the model directs leaders to:

A. Make the decision alone, either with or without obtaining relevant information from subordinates

B. Share the problem with your team and get their ideas, either one-on-one or in a group, before making the decision

C. Present the problem to the group, and inform them that, if they can agree on a solution, it will be accepted. The model reminds us that one of a leader’s key responsibilities is to determine, with each new decision, whether to go it alone or bring people into the process.

JWI 510: Leadership in the 21st Century Lecture Notes

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. JWI 510 – Lecture Notes (1194) Page 3 of 3

The model works best when the facts pertaining to the quality and acceptance of decisions are known and readily available. In many cases, the likely quality and acceptability of a decision cannot be known in advance. In these situations, even the most data-driven leaders should be comfortable relying on their own instincts. Vroom and Yetton’s model is yet another starting point on your journey of self- understanding. As you practice leadership, remember that how you make decisions has an undeniable impact on your effectiveness. Think – and plan – before you act.

Your Leadership Journey

• If you are new to leadership, review the hidden traps of decision-making, so you are prepared if you see them arise

• If you are a team leader, apply the Five Dysfunctions of a Team to your own team, and see where it has the potential to reinvent itself

• If you are a senior/veteran leader, consider the applicability of the Vroom-Yetton Contingency Model to your decision-making