…competitive business, a combination of industry and finance, has been my profession since 1926. To me, business is simply decision making and calculated risk taking. Decisions are not always easy, and risk taking is real; I survive by virtue of my competitor’s mistakes – if they did not make about as many as I do, I would be an ex-businessman.
Albert J. Hettinger, JR., Director’s Comment
While carrying out their daily activities, including economic activities, people are constantly solving one task or another. Many of these tasks are handled with sufficient ease and, as a general rule, unerringly. Other problems, however, are solved by expending very substantial amounts of time and resources and, unfortunately, with varying degrees of success. Experience suggests that decision tasks (DT), that is to say, tasks requiring selection among alternative solutions, may be materially different in many of their characteristics from simpler tasks. Most often, and this approach is extremely widespread, the tasks facing people, including employees of various organizations, are classified according to function. For example, departments in organizations may be structured according to respective tasks, such as procurement, strategic planning, hiring and training of personnel, and so forth.
Such an approach is justified, since every functionally discrete task has its own particular sphere of knowledge and requires specialized skills. However, the functional method of allocating tasks is, in my view, by no means sufficient from the standpoint of effective management. In reality, it merely indicates that for handling various functionally specialized tasks, one needs functionally special knowledge and skills. Consequently, when training and placing personnel this must be taken into account; in fact, this is indeed being done in practice.
But functional characteristics are by no means the only ways in which tasks differ. It is not only the functional aspect of the task that is of great importance, but what is known and unknown about the task in general (its parameters and alternative solutions). In other words, every problem or task has a certain structure of its own, defined by these characteristics.
Research on task structures clearly demonstrates that functionally different tasks very often have similar structures, that is, their parameters and solutions.
In practice we see, for example, that two employees who know the functional aspects of their work equally well have different degrees of success in performing their duties at various stages of the work process. A great many explanations may be given for this fact. Most often the differences may be attributed to purely subjective causes, even to personal faults. But the true cause may lie deeper. It is not the employee who is to blame, but the structure of the task.
Contemporary research in psychology confirms that the very structure of a task, to a greater degree than many other major factors, determines a person’s behavior when approaching it. This means that people will behave in similar ways when solving a task of a specific type, no matter to what functional sphere a given task belongs. So, when organizing, one needs to apply the same methodology to structurally similar tasks, whether they are found in functionally different spheres or not. This means that for employees who deal with the same types of tasks in functionally different departments the following factors of their working environment should be adjusted in a similar way: the tools and norms of dealing with a task, the incentives, the psychological types of individuals, etc.
Painter: Victor Tikhomirov
Classification of the Structures of Tasks
It must be emphasized that in the creation or improvement of a management system, one can not dispense with an organizational structure based on functional departmentalization. But this is merely the first step. The second step is fashioning or improving the management processes or, in other words, the processes for solving DT (that is, Decision Tasks). In this case, a management approach relying only on functional divisions may prove fruitless. Effective management can only be based on analysis of the structures of the tasks.
We will examine an approach to the classification of tasks handled by an individual, and then we will attempt to supplement this classification with a few subtypes that have, in my opinion, important structural features and are deserving of attention. A manager’s awareness of the types of problems solved by employees enables him or her to orient the management system to work more efficiently.
The proposed approach to a classification of tasks is based on three characteristics of the external conditions in which a Person Solving the Task (PST) operates. In order to complete a task, a person needs to act within a certain external environment. The highly significant features of external environment are the factors that make selection of the best solution difficult. Such features of the environment include the uncertainty, dynamism, and complexity. To be precise, we mean here the degree of uncertainty, dynamism, and complexity measured on a scale from “0” to “+ ∞.”
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Uncertainty is the lack of knowledge about the objective factors on which the correct choice of a solution for solving a task depends.
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Dynamism refers to the velocity of change in the parameters of a task.
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Complexity is the number of elements that make up a task and their interconnection.
By using the three afore-mentioned characteristics of the environment, we can present the external environment now as a three-dimensional space formed by the intersection of these axes: õ—degree of uncertainty; y—degree of dynamism; z—degree of complexity. Using these coordinates, we will construct a cube with eight vertexes, each of which will correspond to a type of task (see Diagram 1).
The odd-numbered tasks (tasks numbered 1, 3, 5, 7 on the diagram) show no degree of uncertainty, that is, have no value on the x axis. Therefore, as a general rule, for these tasks a solution can be more objectively determined. In light of the limited scope of this article, I will confine my presentation to the opposite type of tasks, that is to those tasks that are performed in the highly uncertain external environment (tasks 2, 4, 6, 8). This is the type that includes the greatest number of tasks handled by managers at various levels and yields the greatest number of mistakes.
Characteristic of these even-numbered tasks is the fact that complete information needed to identify the optimal solution is not available. We may divide risky tasks into “open” and “closed” tasks, where we might define a closed task as one where all possible decision options are known. In my opinion, such a classification is not complete; it does not correspond to the diversity of circumstances of practical situations. For our purposes, it may be useful to supplement this classification with several subtypes of “closed” tasks, as follows:
- closed static tasks;
- closed dynamic tasks;
- closed dynamic tasks with constant set of variables;
- closed dynamic tasks with changing set of variables.
The overall classification of tasks, derived by analyzing a multitude of concrete management situations, is shown in Diagram 2.
By a task with a complete structure, we mean a task where the following information about it is known:
- Alternative solutions.
- External conditions.
- Possible outcomes.
- Assignment of probability values of occurrence of certain external events.
- Criteria for selecting among alternatives.
I. Closed high uncertainty tasks. The “closed” static high uncertainty task (Task 1 in Diagram 2) has a complete structure. The problem of its solution lies in the fact the probability value assigned a priori by a PST (Person Solving a Task) to the occurrence of an external event may not adequately predict the actual probability of the occurrence of such external event (which is a variable). But these types of tasks require the choice of a solution before the actual probability of occurrence of the variable in known by the PST. The essence of these types of tasks lies in the fact that they are prediction tasks. With these tasks, solutions depend upon the accuracy of assigning of an a priori probability value to the occurrence of some variables. It also depends on the selected criteria, which are determined by the PST or, with corporate tasks, are assigned to him/her.
“Closed” dynamic high uncertainty tasks (Task 2 in Diagram 2) have a different structure. The chief difference from the preceding type lies in the fact that the set of possible options for problem solving changes with the passage of time, although the means and the timing of its change is again an a priori probability calculation. But before the occurrence of changes in the external variables, which also generate new decision alternatives, it may be pointless to start solving the problem. At a specific point in time, a PST makes a decision to solve a problem in a particular way, based on a certain set of variables. But during the time that was required to comprehend the task and to identify and commence implementation of the decision, an intervening event may occur that would change the set of variables, which then should be taken into account when resolving the task. Such an event may render the former decision irrelevant or inefficient, because PST is solving a task based upon another set of variables. In this case the problem solving process must be stopped and a new task must be started.
It must be emphasized that if this process occurs within the same set of variables, i.e. the set of variables remains constant (Task 3 in Diagram 2), then one can determine the regularity with which they change or appear and construct models for behavior in a dynamic environment, with some degree of certainty. But if the set of variables itself changes (Task 4 in Diagram 2), then this methodology proves to be extremely difficult. In this case, we may see a positive benefit from a functional division of tasks where a constant set of variables is established for each functional area.
II. “Open” high uncertainty tasks. The variables of such tasks are determined by the PST only after PST identifies the objective to the task. Before the identification of an objective such a task lacks a structure. Obviously, “open” high uncertainty tasks before the identification of a goal do not have a solution. Precisely for this reason, a solution of an “open” task begins with the design of their structure by the PST. Such tasks should be seen as entrepreneurial in nature. In the end, an “open” task may be transformed into a static, “closed” task, but with the difference that the set of variables is established individually by each PST.
Alternative Lines of Behavior When Solving Tasks
The above-described differences in the variables and structures of tasks give an opportunity to a PST to choose different lines of behavior in the process of their resolution. For example, when a need arises for a solution of a “closed” static high uncertainty task (Task 1 in Diagram 2), there is a possible choice among the following lines of action:
- Ignoring the task. For example, when possible outcomes are assessed as being equally probable, the solution of the task is made extremely difficult. But failure to make a decision, as a general rule, does not make it possible to accomplish subsequent tasks. Things come to a standstill and stagnation sets in. Let’s give a simple example. Suppose a person who has bought a car doesn’t drive it, since he can’t decide whether to insure the car or not. It turns out that the task of buying a car has not been fully accomplished, since the PST’s purpose is not simply to purchase the car, but to drive it.
- Choosing any option. In this case the PST chooses randomly without deliberation. Such behavior is particularly destructive in the corporate sphere, if an employee controls the best resources available and is not motivated in any way to effectively deploy them.
- Unambiguous decision. In the corporate sphere goals are often imposed upon a PST without taking into account his/her limitations. These goals are frequently set under time pressure. The imposition of a goal in such a way will result in its successful implementation only if a PST has strong incentives to overcome the multitude of problems along the way, including unforeseen and unpredictable difficulties. With such tasks, so-called “outcome-based” incentives need to be used. The closer the actual result is to the planned objective, the higher the reward.
When solving a “closed” dynamic high uncertainty task with constant set of variables (Task 3 in Diagram 2), one can not know the decision beforehand, because the set of variables changes within an unknown timeframe. For a manager it is not possible to impose a goal in advance, because the set of variables that will actually emerge is not yet known. This circumstance gives the PST an opportunity to exhibit the following types of behavior:
- Ignoring the changes in the task. For example, a repair service is engaged in servicing equipment, i.e., it is performing a task of regular preventive maintenance (RPM). When unforeseen equipment breakdowns occur, such breakdowns may be ignored, or be serviced with great delays, leading to serious losses.
- Changing the criteria for making decisions. Suppose inquiries for repair services are received randomly, from different subdivisions within a company, each having different scope and requiring varying resources. Then it is essential for a manager to establish a uniform procedure to allocate priorities. If this is not done, then an inefficient mechanism of decision making is inadvertently encouraged. Going back to our previous example, when prioritizing orders, the service department will make decisions based upon arbitrary criteria. Among them, one can single out the following basic categories:
- “friendly” to a certain department;
- “non-friendly”;
- “self-interest for the own department”;
- “self-interest for the PST”;
- “advantageous for the group of repairmen”;
In tasks with the constant set of variables such an approach is extremely inefficient. The efficient way to deal with such tasks for a manager is to assign tools and criteria for solving tasks and to ensure that they are used in practice. An appropriate system of incentives has to be designed for that purpose.
Finally, when performing “open” high uncertainty tasks, the following alternatives of PST behavior are possible:
- Façade of activity. While dealing with the task, the PST displays activity: for example, he may be criticizing colleagues, proposing apparent but not actual solutions, participating in the course of discussions, and so forth. But inwardly he is not focused on achieving a result. He makes no effort of mind or will.
- Hidden efforts. The PST is focused on an original result. He makes an effort of mind and will. He listens attentively to other people’s suggestions, compares them with his own solutions, and asks questions to get more exact information, but in no way betrays his own ideas. After becoming convinced that his version is clearly preferable, he is in no rush to propose it, because he may have a personal separate agenda, which may include:
- demands for higher pay;
- demands for promotion;
- demands for job transfer.
- Open efforts. The person dealing with the task is focused on finding a truly effective solution for the organization. He does not conceal his own efforts in the search, shares his ideas, and uses all his knowledge and will to achieve the goal. This is an ideal version of behavior. The adequate system of incentives must integrate the following elements: mechanisms for creating a high level of aspirations in the PST for “open” tasks (creative, strategic tasks); organizational goals taking precedence in the value system of a PST; training and career growth; and, of course, high lump-sum monetary rewards for identification of solutions and finding the best ones.
Conclusion
In an organization, various types of tasks are handled in parallel and/or in sequence. This is an integrated and uninterrupted process. When creating or improving a management system, this must be kept in mind, based on the fact that the quality of solutions depends on the following main, determining groups of factors (see Diagram 3).
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Obviously, when solving one problem or another, the PST strives to select the best result. But the best result from the standpoint of a specific PST, as was pointed out above, does not mean that such a result will be the best one for the organization. That is precisely why managers must be concerned with systematization and improvement of the activity of the company, based primarily on the groups of factors indicated in the diagram above. Within the organization, the workforce must be correctly assigned; personnel must be trained; there must be an ability to identify types of tasks and create instruments and incentives for making effective decisions that correspond to those tasks; and there must be interdependence and a proper system that allows people to cooperate with one another. Designing a rational system of organizational management, in my opinion, is a systemic combination in practice of those groups of factors.
After analyzing the types of tasks handled by a company’s personnel, based on the classification of tasks presented in this article, it is necessary to describe the groups of factors indicated in Diagram 3 (but not described there in detail). Most important for effective management is the creation of formal instruments and a system for encouraging the solution of problems. The primary focus of such a system would not be on functional specialization, but rather on the specific features of managing the basic task—the one that is dominant in the system of tasks facing the organization.
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