Analysing Group and Individual Decision Making

THE MUDGE PAPER COMPANY CASE STUDY

The Mudge Paper Company Case Study

The case study revolves around Lauren Becall, the head of the sales team at Mudge Paper Company and the salesperson in charge of supporting the company’s largest customer, Bart’s Office Supplies. At one point, Lauren decides on the terms of Bart’s new contract without consulting her two colleagues to obtain their views. Lauren’s boss, the company’s CEO – John Crickett - advocates for group discussions and is concerned about Lauren’s choice to reach a decision alone.

Write two paragraphs explaining each of the parties’ point of view – Lauren’s as well as the CEO. Explain your final decision on whether or not to go through with the sale as well as why this is your decision.

From Lauren’s end, the decision needed to be made immediately as Bart’s had promised to consider a competitor’s (King Paper) offer if Mudge did not give their response the same day. The CEO wanted an immediate answer so that he had a clear mind going into his Memorial Day holiday. Thus, Lauren may argue that she did not have the time to call for a meeting with her colleagues as this would have caused delays and cost the organization the contract with Bart. In Lauren’s view, Bart was a significant customer and Mudge could not risk the business relationship. Moreover, Lauren did not trust her colleague Griffith to serve Mudge’s best interests given his close relationship with Bart’s CEO. Her other teammate, Ronnie, was indecisive and often wanted to please both parties so would be of little help in the situation. For these reasons, Lauren chose to make the decision to accept Bart’s new terms alone, guided by the company’s business interest. She understood that the new contract threatened the company’s cash flow position, particularly because it meant that Mudge would forego more interest on late payment and increase the credit limit by $0.5 million. However, the contract would bring about $2.5 million in sales, as compared to $1.75 million as initially agreed upon. In Lauren’s view, the increase in sales volume was enough to offset the lost interest.

Lauren mentions that she was sure the CEO would be disappointed with her decision to act alone because he preferred group decision making. The CEO was sceptical about the contract because it increased the credit limit from $0.75 million to $1 million and increased the invoice payment terms from 30 days to 45 days. Both of these terms threatened the company’s cash flow situation. Moreover, since Bart was still paying their invoices within 60 days as opposed to the 30 days in the agreement despite having no credit issues, the CEO believed that the company was only taking advantage of the existing business relationship. Despite the increased sales volume, the CEO is unlikely to have consented to Lauren’s decision to accept the new contractual terms set by Bart’s. In his view, the proposed plan would hurt the company and Lauren thus erred in deciding solo.

Generally, Lauren needed to consult with other team members before making any decisions to ensure that all members own the decision reached. The argument that Mudge would have lost the contract if they did not give a response the same day is not valid as Lauren reckons that this was unlikely and probably only a negotiation technique.

Discuss the Advantages and Disadvantages of using a group decision-making process versus an individual decision-making process by applying these concepts to the case study.

One of the primary advantages of individual decision making is that decisions are made faster and more cost-effectively (Griffin, 2021). Individual decision-making eliminates the time-consuming processes of organizing meetings, gathering people, and deliberating. On the other hand, group decision-making takes time as it involves gathering and obtaining the perspectives and approvals of more people (Griffin, 2021). Lauren alludes to the time-consuming nature of group decision-making. She mentions that the negotiation processes over the past months had been long and difficult and she found the thought of going through the same again mind-numbing.

Individual decision-making may also be more advantageous in terms of minimizing group think. Griffith (2021) defines groupthink as a situation where members of a group focus on building and maintaining team cohesiveness as opposed to reaching the most appropriate decision for the organization. Individual decision-making provides avenues for team members to reason and think for themselves about what is best for the organization. In the case study, Ronnie displays groupthink. Lauren mentions that Ronnie appears to want to please everyone and will often just agree with the group. A possible reason for Ronnie’s behaviour could be that she feels inferior to the other two members, perhaps because she is not competent enough and only got the job because she is related to the CEO. Unfortunately, group decision-making provides opportunities for groupthink, especially when some team members dominate over others, which increases the risk of wrong decision-making (Griffith, 2021). For instance, in this case, Ronnie could act as the tiebreaker if Griffith and Lauren hold different perspectives. However, her tendency to want to please all parties may cost the organization.

Group decision-making also has its share of advantages, which are also the disadvantages of individual decision-making. First, it provides more input and perspectives form diverse people, which increases the chances of making better decisions (Griffith, 2021). A group has a wider range of information, more experience, and is able to engage in knowledge-sharing to obtain a clearer understanding of the problem (Griffith, 2021). Further, it provides room for techniques like brainstorming, which increase the likelihood of obtaining new and creative ideas that may otherwise not have come up (Griffith, 2021). For instance, by consulting her team mates, Lauren may have obtained new ideas on the decision that would be most beneficial to both Mudge and Bart.

Group decision-making is also advantageous as it enhances the legitimacy of a decision (Band & Partridge, 2001). Individual decisions may be viewed as autocratic, and the rest of the team may want the decision-maker to assume individual accountability for any issues that could arise (Band & Partridge, 2001). On the other hand, when decisions are made by a group, the group members own the decision and no single person can be held individually accountable for the same (Band & Partridge, 2001). The group decision thus enjoys general legitimacy and even if some members do not agree with it, they are still considered a part of it because they took part in the decision-making process (Band & Partridge, 2001). In this case, for instance, if the contract with Bart hurts the organization, Griffith and Ronnie could distance themselves from it and force Lauren to take full responsibility for the decision.

Finally, group decision-making enhances team members’ motivation and morale that results from participating in the deciding process. This, in turn, increases employees’ self-esteem and job satisfaction better than when the management makes decisions for them (Band & Partridge, 2001). In the case study, Lauren’s decision to work alone is likely to affect team morale and worsen her relationship with Griffith. The CEO’s emphasis on team decision making is most likely geared at ensuring the team stays motivated and allowing diverse perspectives that would lead to the best possible decision for the organization.

Discuss Lauren’s bias in her decision-making process and how it may have affected her choice to make the decision alone

Pizam (2005) defines bias as a systematic error in thinking and decision-making that occurs as a result of interpreting and processing information a certain way. There are different types of biases in decision-making. Lauren exhibits two types of bias – anchoring bias and overconfidence bias. Anchoring bias occurs when a decision-maker fixes their decision on the initial information or judgment and refuses to adjust as they gather subsequent information (Robbins & Judge, 2009). Overconfidence bias, on the other hand, occurs when the decision-maker is overly optimistic about their abilities and the rightness of their actions and beliefs that they fail to consider others’ ideas (Robbins & Judge, 2009).

Lauren shows anchoring bias when she uses Griffith’s relationship with Bart’s CEO as the anchor for her beliefs. She believes that Griffith uses his personal friendship with Bart’s CEO to undermine her leadership. For this reason, whenever Griffins challenges her ideas, she interprets it as an attempt to undermine her. This bias drives Lauren to refuse to consult Griffith because she believes that he does not have Mudge’s interests at heart. At the same time, she is quick to dismiss Ronnie’s abilities and alludes to the fact that she only got the job for being related to the CEO. This leads her to believe that Ronnie is unlikely to make any significant contribution in the decision, yet the idea of charging interest on late invoices was hers. Lauren is also overconfident in her abilities, which drives her to take the views of other team members for granted. For instance, she believes that she is a better salesperson and that she could close a deal better than Griffith and consequently, fails to value the ideas and opinions he brings. All of these issues related to overconfidence and anchoring led Lauren to make the decision alone with no regard for her team members.

Identify the CEO’s bias that could have entered the decision-making process

Mudge’s CEO exhibits bias when he believes that Bart’s is too focused on its success at the expense of Mudge Company. He believes that Bart’s does not have credit challenges, but yet pays its credit line in 60 days rather than the 30 days agreed upon with Mudge. With this bias, the CEO is reluctant to accept the terms proposed by Bart’s regarding the time limit for settling invoices and the allowable credit limit. Consequently, he directs that the team rejects any proposals by Bart’s to increase their time limit for settling invoices to 60 days. The effect is that negotiations take longer as the sales team tries to stick to this requirement without ruining the long-term relationship with Bart’s given the benefits.

Discuss the business-related facts within this scenario to develop an argument in favor of a group decision versus an individual decision

The terms initially agreed upon by the entire team were that:

· Bart’s would purchase from Mudge paper products valued at $1.75 million

· The time limit for settling invoices would be 45 days, with late invoices attracting a 3 percent interest