Saturday, May 13, 2017

A632.3.3.RB-Framing complex decisions- Trey McNeil

Decision-making is not always easy or straightforward. Some decisions can be extremely difficult and involve multiple steps. Some decisions must include other elements to provide the greatest opportunity for success. Hoch, Kunreuther, & Gunther (2001) offered three methodologies of dealing with difficult or multi-step decisions including (a) navigating systemic complexity, (b) navigating multiple stakeholders, and (c) navigating environmental complexity. All three examples could be useful to incorporate in the decision-making processes of my organization.

Complex decisions are not something that we usually look forward to. Decisions can be complex because of the number of people affected. They could also be complex by the amount of data (either too much or too little) provided. According to Hoch, Kunreuther, & Gunther (2001) “Data is not the only factor driving complexity. Further complexity is created by interactions across multiple decision boundaries surrounding a particular decision context” (p. 122). I interpret this statement as ‘how can an organization evaluate and study data to create optional decisions’. One option in navigating systemic complexity is to utilize a computer model.  My organization takes advantage of computer models when making decisions.

According to Lewis and Otto (n.d.), a computer model helps assess large amounts of data to ease the decision-making process. One way the college utilizes computer models is in attempting to predict enrollment and more specifically how enrollment will affect the college budget. As a member of the Florida College System, Daytona State College (DSC) does receive state money, but a large portion of college revenue is based on enrollments. To estimate enrollment for the following academic year, the college will use the research they have gathered (number of students graduating from local high schools, enrollment from the previous, current retention, etc.) and enter it into a computer model to help predict enrollment. The calculation is used to help project revenue for the upcoming budget. A computer model allows for the data to be changed so the leadership of the college is able to strategize for many different enrollment scenarios. This data is useful in helping to predict enrollment but can create complexity when creating the budget. Depending on the chosen enrollment prediction, the college budget must be updated. If the model predicts a decrease in enrollment then expenses must also be cut. But where does the college cut? Should cost center managers be asked to travel less? Does the college create a hiring freeze? Should the purchase of capital assets (such as desks and computers) be ceased until final the enrollment numbers are in for the first semester? These are the types of complex decisions that must be considered each year.

We also use a computer model in the Finance department to help ease the decision-making process. Each accountant has a ‘dummy’ version of the accounting system that can be utilized to test processes and procedures. This version is not live so it will not affect the data in the system. This test system is often utilized by the department when considering an update of change to a process. A couple of years ago my supervisor and I were considering changing the process of encumbering expenses. We were able to utilize the test system to run several different scenarios and develop a strategy. The final outcome was that the system did not perform the way we wanted it to so we did not alter the procedure. But, the test system was a great resource in navigating the systemic complexity involved in decision-making.

One consequence of computer models at the college involves the data. If the data that is input into the models is incorrect in any way then the model could taint your decision. The computer model is only as good as the data that is input, so college leadership must be careful with the data. Hoch, Kunreuther, & Gunther (2001) stated that intuition should be paired with computer programs to increase the chances of a good decision and their information is useful in this scenario.

Like many organizations, Daytona State College has many different stakeholders and decisions become complex when trying to satisfy everyone involved. The stakeholders at the college include (a) the students, (b) the faculty, (c) the staff, (d) the community, and (e) the Board of Trustees. All of the decisions made by the college will not satisfy each group of stakeholders.  According to Rykrsmith (2010), going in many different directions and trying to please all stakeholders assures that you will not be moving forward, so you must decide who you need to please in order to make good decisions. Our number one goal at the college is the students. The college mission is hanging on a wall in every department on campus stating that our number one goal is student success.  In the pecking order of stakeholders at the college, unfortunately, the faculty and staff bring up the rear. Hoch, Kunreuther, & Gunther (2001) stated that companies should listen to their stakeholders and that is what DSC did when creating the new computer system.

When shopping for a new computer system, the college administrators made sure to put students first. In trying to please a large range of stakeholders, sacrifices must be endured.  I had the pleasure of attending several meetings in which a demonstration for a potential computer system took place. The leadership of the college always made sure to question how this process would affect the students. Would it be a large learning curve for students to access their online class or check their grades? There are modules that were purchased that caused more work for the faculty or staff to limit the student’s effort.

A consequence of having multiple stakeholders is not being able to make a decision that will please everyone simultaneously. In the example of the new computer system, a decision was made knowing that extra effort will be put forth by staff and faculty. But, ultimately, the students are the customers so the majority of decisions must incorporate the effect on students.

Environmental factors can also affect the decisions made at a company. Theme parks such as Disney World and Universal Studios must factor weather into their decisions. The traditional wet summers in Florida (although the last couple of summers have been anything but wet) can affect the decisions of an organization that relies on their customers being outdoors. Insurance companies must worry about factors such as weather to roadwork. Roadwork makes the roads more dangerous causing more wrecks and a greater number of insurance claims. DSC faces environmental factors in the form of the local economy and the weather in decision-making.  

According to Chen (2016), community colleges see enrollment soar in times of a bad economy. A bad economy (and increased enrollment) can play a major factor in decision making. Between 2010 and 2012, the central Florida economy had come to a standstill. Unemployment rates were on the rise as vacant jobs were nearly non-existent. During those years, the college saw an enrollment increase of nearly twenty-five percent. The college made the decision to expand programs and hire additional staff.

Environmental and economic factors can have a positive or negative effect on decision making, and as the saying goes, what goes up must come down. When the local economy began to strengthen, enrollment began to plummet leading to negative consequences for the college. The decision had to be made to decrease staff and cut some of the newly added programs.

In Florida, one environmental factor that can lead to complexity is the weather. Each year, Florida is threatened by multiple hurricanes. The leadership at the college must play a deadly game of chicken with the weather. The weather must be watched with intense focus to make decisions regarding the canceling of classes. The decision-making process involves productivity versus safety when weather threatens. The college has only closed twice in my nine-year tenure due to weather. In the fall of 2008, we had an unnamed storm heading directly to Daytona Beach. After what I can only imagine as much deliberation, the college decided to close on a Wednesday afternoon and reopen on Monday morning. After the decision was made, the storm did not do much damage and the college could have stayed open.

Last fall the college once again closed for weather and this time the decision was warranted. Hurricane Matthew was on a mission to hit the coast of central Florida head on. There was a chance that my small beach town would be devastated. The college decided to close and encouraged students and employees to leave the area. Luckily, Matthew swayed just enough a couple of hours before landfall to only sideswipe our area. The weather is an environmental factor that always has a chance to influence decisions at the college.

The three methodologies of navigating systemic complexity, managing multiple stakeholders, and navigating environmental complexity all play major roles in the decision-making process of the college. It would be amiss of me to try to determine which methodology is more important in the decision-making process of the college as they are all utilized in a different manner.

References

Chen, G. (2016). Why student enrollment rises as the economy falls. Retrieved from https://www.communitycollegereview.com/blog/why-student-enrollment-rises-as-the-economy-falls

Hoch, S., Kunreuther, H., & Gunther, R. (2001). Wharton on making decisions. John Wiley & Sons, Inc.

Lewis, B., & Otto, D. (n.d.). Using computer models to help make decisions. Retrieved from http://www.centurionconsultinglaw.com/arp47LAWOCT.html


Rykrsmith, E. (2010). Decision making with multiple stakeholders. Retrieved from http://www.quickbase.com/blog/decision-making-with-multiple-stakeholders

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