Introduction
Organizational management is dependent on adequate information to increase efficiency in decision-making. However, uncertainty is a condition where circumstances in the operation environment inhibit confidence in decision-making despite the availability of information (Govindan et al., 2017). Pandemics such as the Corona Virus illustrate instances where many organizations endured uncertainty in making management decisions. Equally, changing customer needs or market globalization can arouse uncertainty in management. Decisions are crucial in resolving conflicts, mitigating further risks, and capitalizing on opportunities (Silverstov et al., 2017). Organizational management loses productivity when it fails to make clear and structured decisions amidst uncertainty. This essay will discuss how “management under uncertainty reduces organizational productivity .”It will analyze the issues which affect management during uncertainty, such as conflicting purposes among decision-makers, complexity in decision making and biases that lead to decision impairment. It will also suggest methods management can use to improve their operation strategies in these uncertain situations.
Argument
Market characteristics directly influence many companies’ productivity. For instance, the supply and demand characteristics determine an organization’s operation and production plan. Shortages are common in the organization’s operations as the market forces can be highly unpredictable. Due to these fluctuations, organizations strive to avoid producing unwanted goods. These occurrences have a significant financial cost which may demand uncertainty reduction efforts. Uncertainty may demand reduced employee compensation, organization downsizing and withdrawal from further investment efforts. All these downsizing options harm the overall organization’s performance. Reduced employee compensation directly influences their morale (Markovits et al., 2014). This move contradicts the administrative management theory that recommends competitive remuneration, which sustains employee productivity.
More so, uncertainty affects employee concentration. Researchers highlight that uncertainty causes fear among employees who anticipate layoffs. Fear is a major distractor that will affect employee creativity and productivity. Companies can encounter a dilemma in this uncertain period since they must depend on unmotivated and fear-stricken employees. Employees in such a state can hardly devise creative solutions which will maintain and improve a company’s productivity (Markovits et al., 2014). Similarly, this workplace fear and reduced concentration highly affect workplace safety. Injuries at the workplace are the least expected occurrences during uncertainty. They reduce the workforce while increasing expenditures on renovation and employee medication. Research indicated a rise in workplace injuries in 2019, which caused a $42,000 expenditure on every injury. Uncertainty further halts investment decisions in organizations (Narayanamurthy, and Tortorella, 2021). Organizations dread market risk factors, such as inflation or currency volatility, that arise in these uncertain periods. The inherent operation conditions may also obstruct the generation of enough revenue to allow the expansion of the company’s operations. Uncertainty reverses the organization’s operation strategies which affects productivity.
Uncertainty causes management challenges which are negatively reflected through reduced productivity. Periods such as pandemics or civil wars affect the prediction of outcomes on managerial decisions. Uncertainty is an opportunity for informed risk-taking which can offer huge organizational rewards (Baxter et al., 2013). However, uncertainty may cause fear which impairs risk assessment. Risk assessment is crucial since it determines the success of organizational decisions during demanding situations. This assessment provides insightful data on expected outcomes, reversibility of a decision’s result, probability of social conflict or demographic factors that may affect the decision. A recent survey by the Federation of European Risk Management Associations indicates that sixty percent of organizations have competitive risk management strategies. Uninformed risk-taking may affect productivity through adverse financial losses. The crisis periods are challenging to organization heads due to the varied nature of the data. The information may be too much to derive specific insights. For instance, too many variables affecting a financial crisis may threaten the success of any contingency measures taken during that period (Baxter et al., 2013). Otherwise, a crisis period could also have too little information, which affects the clarity for effective decision-making. Mostly, crisis periods affect productivity through their volatile factors. There is a significant fluctuation in factors such as stock prices, which can cloud the clarity of financial investments during this period.
Productivity is also dependent on ease in decision-making. Uncertainty periods may have inadequate information for the required decision-making. Uncertain events may present new challenges which demand innovative solutions. For instance, the Covid 19 period caused uncertainty in the organizational management policies, which required work-from-home solutions (Afrianty et al., 2021). The work-from-home model had not been actively implemented recently and thus required intensive research on optimization mechanisms. For some employees, the mechanism would pose distractions at first, working close to family. The model further was further not optimally productive due to connectivity challenges (Afrianty et al., 2021). Information inadequacy can also lead to bias. Bias can occur in several forms, such as overestimating the pandemic’s outcome. Organizational productivity can be disrupted by overestimating a disaster on financial portfolios or a country’s economic performance. These factors might be extremely challenging to determine during a crisis. Organizational management may also rely on data from adverse economic downturn scenarios such as the Great Depression to predict outcomes of less severe uncertainty. The results obtained in such an estimation will be inaccurate. Individual motivation further challenges organizational decision-making during a decision-making process (Cortez et al., 2020). For some, the decision-making process is motivated by the urge to meet a personal need or motive. This approach is a selfish move that will compromise production efficiency. These crisis response strategies should reduce risk and uncertainties in line with organizational goals. Each manager should synchronize their decision-making during the crisis period to increase productivity.
Uncertainty, however, offers an opportunity for organizational development. It demands reforms in organization practices and restudies of the existent. For example, uncertainties call for plans to optimize value, improve team collaboration, and minimize waste. Situations such as imminent market risks have propelled organizations to intensify their development methods which will eventually guarantee the product’s success. These uncertainties compel companies to conduct market research and testing campaigns parallel to the product development process (Bundy et al., 2017). Undesired market conditions make companies step up their online surveys, develop test websites and enroll an active sales team interacting with the target market. Uncertainty improves team collaboration by increasing adaptability. Organizations must create mechanisms to maneuver through the disaster while maintaining a desirable production performance (Bundy et al., 2017). Most companies during the Covid 19 had to adhere to the regulations hastily. These timely responses prevent effects on stalled production. Uncertain situations improve organization production practices by emphasizing a data-driven approach in the operation culture. These principles command an overall improvement in the organization’s productivity.
Organizations respond to uncertainty by restructuring their management and management techniques. This presents an opportunity for the organization to improve its future productivity through enhanced management techniques. Uncertain occurrences may cause a shift in the organization’s short-term goals. This demands a shift in the management framework. The management shift is essential for improved organizational productivity during uncertainty (Karahan, and Karasioglu, 2014). An organizational crisis is perceived to threaten the organization’s goals and the relationships within its management. This crisis period will offer a space for developing better management techniques. Intense analysis of the organization’s position enables the management to plan a contingency plan effectively. Here, uncertainty enables the organization to understand its operation principles better. Karahan, A., and Karasioglu (2014) attribute organization restructuring to streamlining operation systems. The management will identify the internal and external factors shaping the change in operation structures. This prompts the improvement of organizational factors such as improved communication among its leaders to improve its survival during the uncertainty. Crises periods provide a chance for learning and development. The management and personnel will acquire skills and experiences to improve overall productivity. More so, they will be able to experiment with new response techniques, which might be beneficial. An unfamiliar crisis will demand a new contingency or risk aversion strategy. The management will analyze unfamiliar factors which affect production planning, safety or quality
Conclusion
Uncertainty may present undesirable circumstances. It may impair the risk assessment methods because of the fluctuating aspects or inadequate data for efficient decision-making. This situation possess a risk of financial losses from the investment and operation decisions taken. Crises periods severely impact the organization’s performance by affecting employee welfare. This period may cause fear due to expected layoffs. Fear affects employee concentration which may lead to injuries. The injuries are costly and also reduce staff availability which reduces productivity. Furthermore, the salary cuts that may be incorporated as a response strategy to the cost-cutting might demoralize the employees. Among the motivating factors for increased organizational performance is competitive remuneration. This crisis period affects decision-making effectiveness partly due to the unfamiliarity with the situation. Organization heads may over or under-estimate the effect of the crisis regarding previous occurrences. Such situations reduce the practicality of implemented strategies. Crisis durations, however, present an opportunity for organizational development. It prompts an organization to revise its operation strategies and develop more efficient techniques. Companies achieve this development during the crisis through immense industry research and frequent surveys. More so, these uncertain situations demand management techniques and reforms that are beneficial in the long run. Improved management techniques brace the organization for future crises.
References
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