ING and the decision-making process

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ING

and the decision-making process

Master Thesis Mark Nagengast

University of Groningen

Faculty of Economics and Business

MSc Business Administration

Specialization: Organizational and Management Control

February 2013

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ING

and the decision-making process

Master Thesis Mark Nagengast

University of Groningen

Faculty of Economics and Business

MSc Business Administration

Specialization: Organizational and Management Control

February 2013

Mark Nagengast

Address: Grote Beerstraat 282

Postal Code: 9742 SK

City: Groningen

Mobile: 0630165052

MSc Business Administration

Specialization: Organizational & Management Control

S1731017

Supervisor:

Drs. M.M. Bergervoet

Co-supervisor:

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Preface

With this report, my study Master of Science in Business Administration (MBA) at the University of Groningen comes to an end. In September 2007 I started my study, which focused on learning about scientific methods, as well as knowledge about Organizational & Management Control (which is also my specialization within the MBA).

During the previous years I have gained, in my opinion, valuable theoretical and practical

knowledge about organizations, management, (business) economics, finance, logistics, administrative organizations, and bookkeeping. During the last year I learned on top of this, how to look at, and address different kind of issues.

At the beginning of December 2011, I had a first meeting with Vincent Bonninga, who became my contact within the M&O cluster of ING Service & Direct Call until the thesis would be finished. All meetings with Vincent and with other employees went very good, for which I thank them. I also thank them for the resources they made available, and for the trust they have put in me and the university from the little that they knew about it. During that period, the supervisor from the University of Groningen, Drs. Marcel Bergervoet, was also assigned to me, who I thank for giving necessary comments on my work and other support.

I finally thank the following persons who were helpful and/or necessary to get this thesis finished or for my motivation: my parents, my sister, Drs. Marcel Bergervoet, Vincent Bonninga, and all other friends, family, and acquaintances who had a directly positive influence.

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Abstract

During the preliminary research it became clear that the decision-making process within the Mortgages & Outbound (M&O) cluster was showing deficiencies. So the research was focused on giving an insight to the management of the M&O cluster into the possibilities of improving the process of decision-making such that this process is in line with the new structure and new customer service concept.

Prior to the research at the M&O cluster, attention was paid to review the literature regarding possible factors that could influence a decision-making process. After this literature review, the research was carried out by interviewing different people from various departments that are involved in the M&O cluster. During this research there was attention to multiple components within the decision-making process. These components were: the characteristics of the decision-making process and the organizational culture.

During the research it became clear that a number of these components are partly responsible for the deficiencies during the decision-making process. For this reason, among others, adjustments were proposed in relation to communication, distribution of responsibilities and areas of attention for the organization culture.

Key Words

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Introduction

Service & Direct Call of the ING Group N.V. (ING) has undergone influential changes and developments in the last two years such as the change in structure. From a structure focused on the locations: Amsterdam, Arnhem, Leeuwarden and Groningen. To an organization structure focused on different clusters such as: Mortgage & Outbound (M&O), Daily Bank Affairs, Business, and Capital (Appendix 1). This means that the different customer services are in direct contact with their own formule & information (F&I) department. These developments and changes could be an interesting source for a research subject and therefore interviews took place with the managers of the customer services and F&I departments for the purpose of preliminary research. During the interviews with the managers of the customer service and F&I department of the M&O cluster it became clear that the current process of decision-making was showing deficiencies and was not entirely well suited to the current structure and new customer service concept.

These deficiencies were given expression by the fact that managers have to establish too often that they have not taken the most appropriate decision regarding a project or changes of procedures and processes. Because e.g.: the consequences of a certain decision were not clear, the new project has an influence on more procedures and processes than was taken into account, or that the changes did not have the desired effects. Different options and areas of interest were considered, like the application of an intake document and documents with process descriptions. The interviews concluded with the statement that adjustments to the decision-making process of the M&O cluster should be considered, when this leads to a process that fits better to the new structure and customer service concept. To achieve this goal, the following research objective was formulated:

Give an insight to the management of the M&O cluster into the possibilities of improving the process of decision-making such that this process is in line with the new structure and new customer service concept.

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1. Introduction to the topic

1.1 Preliminary research

Service & Direct Call of the ING Group N.V. (ING) has undergone influential changes and developments in the last two years such as the change in structure. From a structure focused on the locations: Amsterdam, Arnhem, Leeuwarden and Groningen. To an organization structure focused on different clusters such as: Mortgage & Outbound (M&O), Daily Bank Affairs, Business, and Capital (Appendix 1). This change in structure is carried out in such a way that every customer service is in direct contact with their own formule & information (F&I) department and this is a result of the new customer service concept where customers are the central point of attention of the organization (Appendix 2). These developments and changes could be an interesting source for a research subject and therefore interviews (appendix 3) took place with the managers of the customer services and F&I departments for the purpose of preliminary research.

This preliminary research consisted of eight interviews with managers of all four customer services and all four F&I departments. The central topic in these interviews was the influence of all these developments and changes on the operations of the different clusters. In general, the various managers indicated that the changes had a positive influence on the contact and cooperation between the customer services and the F&I departments, which was also one of the main objectives of the adjustments. The overall negative influence indicated by the different managers, was the change in the working methods, which resulted in a different design of various processes and procedures.

The managers of the M&O cluster indicated during these interviews that the majority of their time is taken up with making decisions. These decisions are e.g.: starting a new project which is focused on attracting new mortgage customers and decisions regarding changes in procedures and processes to improve efficiency or to meet new regulations. The managers indicated that they have to establish too often that they have not taken the most appropriate decision regarding projects or changes of processes and procedures (appendix 3). Because e.g.: the consequences of a certain decision were not clear, the new project has an influence on more procedures and processes than was taken into account, or that the changes did not have the desired effects (Appendix 3).On the basis of the above information and specific statements of the M&O managers can be stated that the decision-making process within the M&O cluster is showing deficiencies and is not functioning as desired.

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1.2 The decision-making process of the M&O cluster

During the interviews with the managers of the customer service and F&I department of the M&O cluster it became clear that the current process of decision-making was showing deficiencies and was not entirely well suited to the current structure and new customer service concept.

An example of an implemented change from which it appears that in the first entities not the most appropriate decision is made, is a change implemented in the preparation of the personal consultation with customers. It is important for an organization that the most expensive capacity is used as efficient as possible, which means that the advisors needs to minimize his time spent on the preparation of personal consultations with customers. Because the mortgage advisors are seen as the most expensive capacity within the M&O cluster, the administrative staffs takes over the tasks of preparing these personal consultations with customers (appendix 3). Within the M&O cluster there was a change in the process and procedure relating to the preparation of personal consultations with customers such that the administrative staff and advisor should be more effective and efficient. After the introduction and the use of the new processes and procedures, the conclusion could be drawn that the changes did not had the desired effect. A result of the changes was a longer throughput time between the request and the personal consultations with customers and there was also a clear increase of the noise in the communication between the administrative staff and the advisors. The increasing noise in the communication was reflected in the clarity about the intentions of the customers. For the advisors, it is important that the arrangements made in the agenda regarding personal consultations are as “clean” as possible. With clean arrangements is meant that the advisors are prepared for the right meeting and that the customer has the necessary papers present. This will result in more effective and efficient appointments to close out a new mortgage or to renew an interest period for a mortgage.

Taking into consideration the above example, there is every appearance that not the most suitable decision was taken with regards to changing and rearranging the original process or procedure. Because the changes had not the desired effect of a higher effectiveness, and there were even side effects which were not taken into account. These changes in earlier decisions have a negative impact on e.g.: budgets, personnel, efficiency and the NPS (Net Promoter Score).

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As a result of these changes and developments, the current process of decision-making no longer fits the new structure, changing responsibilities and the new customer service concept. According to the M&O manager:

“The environmental complexity and dynamism of the M&O cluster is still increasing. Within M&O there is an on-going process of current projects and new regulations. A good functioning process of gathering, processing and interpreting information is a big issue and makes it more important to get it under control” (appendix 3).

The environmental complexity and dynamism manifests itself in e.g.: high level of competition, continues changing regulations, stricter regulations, shrinking acquisition market and possible changes in tax advantages for mortgages.

Finally, the interviews concluded with the statements that adjustments to the decision-making process of the M&O cluster should be considered, when this leads to a process that fits better to the new structure and new customer service concept. This statement is also supported by the quotes of the two managers of the M&O cluster (appendix 3).

The following section will be assigned to outline the research objectives and how this research will contribute to the subject and the current developments at the ING.

1.3 Purpose of research and central research question

The goal of this research is to give an insight to the management of the M&O cluster into the possibilities of improving the process of decision-making such that this process is in line with the new structure and new customer service concept.

The research performed at the M&O cluster of the ING will result in a rapport containing: a description of the current process of decision-making

an analysis of the factors that are responsible for the mismatches in the decision-making process

an advice which addresses the possible adjustments to the process of decision-making

In order to achieve the research objective the following research question was developed; What adjustments have to be made to the process of decision-making at the Mortgage &

Outbound (M&O) cluster so that this process is in line with the new structure and new customer service concept?

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2. Theoretical Framework

This section is focused on the theoretical framework, which addresses the different concepts, ideas and opinions regarding the decision-making process. The goal of this section is to get insight into the literature regarding decision-making processes which will also be used in the design of the conceptual model. In order to get familiar with the background of decision-making processes, there is made use of the aid of authors such as e.g.: Mintzberg, Nutt, Cray and Citroen. This resulted in an overview of different frames in section two. After which in the third section attention will be paid on factors that influence the decision-making process. Subsequently, section four focuses on the conceptual model which has been developed on the basis of the literature.

2.1 Decision-making process

Organizational decision-making takes place when a person in authority identifies an important issue and carries out a process to make a choice that produces outcomes with consequences (Citroen, 2011). According to Nutt (1993, p.227), a decision-making process is made up of a stream of action-taking steps that begins with claims by stakeholders drawn from signals that seem important and ends when a decision has been adopted. These action-taking steps are in the literature frequently used in what are known as frames.

2.2 Different frames of decision-making processes

Dean and Sharfman (1996) state in their study that a decision-making process matters and managers have the power to influence the success of decisions to fortune their organizations. The decision processes influence the choices made by managers, which in turn influence the outcomes affecting a firm. These processes or frames come in many different shapes and Nutt (2011) states that proposed frames complicate things. Such frames are self-fulfilling, because when you look at a decision as a process with unfolding steps and someone sees a process with steps. This suggests that a frame offers a particular view and that no single view is best. A way to cope with this narrowed view to a decision-making process is to merge frames, as suggested by Eisenhardt and Zbaracki (1992). In the following subsections, a portion of the frames used in the literature are discussed. The frame of Mintzberg, Raisinghani and Théorêt (1976) will be discussed first because this frame is seen by many authors as an originator.

2.2.1 Frame by Mintzberg, Raisinghani and Théorêt (1976)

Mintzberg, Raisinghani and Théorêt (1976) defined on the basis of a field study of 25 decision processes a structure in terms of twelve elements.

Three central phases:

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o Decision recognition, in which opportunities, problems, and crises are recognized and evoke decisional activity.

o Diagnosis, management seeks to comprehend the evoking stimuli and determine cause-effect relationships for the decision situation.

- Development phase. This phase consists of two routines: o Search, find readymade solutions.

o Design, develop custom-made solutions or to modify ready-made ones. - Selection phase. This phase consists of two routines:

o The screen routine, when search is expected to generate more ready-made alternatives than can be intensively evaluated.

o The evaluation-Choice Routine, ratification of the solution that was determined during design and diagnosis. Three modes: judgment, bargaining and analysis.

Three sets of supporting routines

- Decision control: not only the decision-maker executes the steps leading to a solution, but he also plans his approach and allocates the organizational resources to get there.

- Communication: Communication activities dominate every phase of decision-making. Three communication routines: exploration routine, investigation routine

and Dissemination

- Political routines: Political activities reflect the influence of individuals who seek to satisfy their personal and institutional needs by the decisions made in an organization.

Six sets of dynamic factors:

- Interrupts, sudden events that interrupt and can e.g. cause changes in pace or direction. - Scheduling delays, every step of the decision process is separated by time delays - Feedback delays, the decision maker awaits the results of the previous action taken.

- Timing delays and speedups, Managers may purposely speed up or delay a decision process to take advantage of special circumstances.

- Comprehension cycles, factors causing the process to cycle back to earlier phases.

- Failure cycles, decision processes are sometimes blocked for want of an acceptable solution.

2.2.2 Frame by Nutt (1984)

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2.2.3 Frame by Cray, Mallory, Butler, Hickson, and Wilson (1988 & 1991)

Cray et al. (1988 & 1991) describe in their studies three types of decision making processes. Process Type Process type Characterized by process

Sporadic

(informal, spasmodic and protracted)

More delays More impediments

More sources of information More variability of information

More informal interaction Some scope for negotiation More time to reach decision Decision taken at highest level Fluid

(steadily paced, formally channelled and speedy)

Fewer delays Fewer impediments

Fewer sources of information Less variability of information

Some scope for negotiation More formal interaction Less time to reach decision Decision taken at highest level Constricted

(narrowly channelled)

More sources of information Less effort to acquire information Little scope for negotiation

Less formal interaction

Decision taken below highest level

Table 1. Three types of decision-making processes (Cray et al., 1991, p. 229)

2.2.4 Frame by Citroen

Citroen (2011) mentioned the following in his study about a rational approach:

In a rational decision-making process, executives reach decisions without a prejudiced opinion about the eventual decision and only after a structured process of careful consideration of circumstances, alternative lines of thought and consequences of the decision made (p.493).

The structured approach of the decision-making process is characterised by the fact that the decision is reached after dealing in due consideration with a number of distinct phases that are programmed in time and that can be observed and studied in a rational and objective way (Citroen, 2011, p.494).

Citroen (2011) uses in his study six steps. First, the preparation phase for defining the issue, setting the objectives of the decision and studying an initial amount of information on relevant issues in the environment. Second, the analyses phase where additional information on internal and external parameters had to be identified, selected and studied. Third, the specification phase where on the basis of the information gathered in the analysis phase, alternatives could be specified. Fourth, the limiting phase where the alternatives and options identified is limited to those that have a real chance to succeed. Fifth, the assessment phase where feedback from additional sources of information gives the ability to appreciate the consequences of each otherwise valid alternative. Finally, the final decision.

Many authors argue (as cited in Nutt, 2005, p.852) that search should follow a (bounded) rational approach in which a target provides direction and a formal protocol is followed to uncover a solution that can provide the results called for by the target.

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2.3 Influencing factors on decision-making processes

This section discusses various factors which have a possible influence on the decision-making process and these influences will be dealt with in the following sub-sections: business characteristics, decision task characteristics, decision-making process characteristics, decision-maker characteristics, organizational culture, external environment and national culture. The number of characteristics that can be distinguished will undoubtedly be greater than the one presented here, however to get a good impression of the possible influences these different characteristics are discussed.

2.3.1 Business characteristics

Organization Structure - Mechanistic structures are characterized by such attributes as centralized

decision making, strict adherence to formally prescribed rules and procedures, tight control of information flows, and carefully constructed reporting and workflow relationships. Conversely, decentralized decision making, organizational adaptiveness and flexibility, open communications, and a de-emphasis on formal rules and procedures are typical of organic structures (Slevin and Covin, 1997, p.193–194)

Organization Size - Brouthers, Brouthers and Werner (2000) state that different scholars suggest that

larger firms will be more rational than smaller firms because of the availability of resources. However, Dean and Sharfman (1993) did not find a significant relation between firm size and the rationality of the decision-making process.

Performance – Performance is defined as how a firm performs in comparison to companies similar in

size and industry over the period of making the decision. Some studies have found a significant relationship between past performance and the use of a rational approach to decision-making (Elbanna and Child, 2007).

Power distribution - Power can be described as the possible influence that a department or person can

have on e.g.: the decision-making process (Hickson et al., 1971). Power in businesses can be classified into vertical or horizontal power and it can also be of interpersonal nature or involve relations between organizational units (Salancik and Pfeffer, 1974). Shrivastava and Grant (1985) suggest in their research that formal structures and the centralization of power are in relation with the usage of rational decision-making processes.

2.3.2 Decision task characteristics

According to Beach and Mitchell (1978, p. 444) the decision task characteristics can further be divided into two groups: the decision problem and the decision environment.

The Decision Problem

Unfamiliarity - The degree to which the decision-maker is unfamiliar with the decision problem.

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Ambiguity - The degree to which the problem is unclear to the decision maker. This includes the

ambiguity of the goals, decision alternatives, constraints and the unavailability, unreliability, and imprecision of relevant information.

Complexity - Is the number of different components of the decision problem such as e.g.: number of

alternatives to be considered, amount of relevant information to be considered, number of criteria on which the decision will be judged and the degree to which the problem will influence future decisions.

Instability - The degree to which the criteria, goals and constraints of the problem change during and

after the decision (Beach and Mitchell, 1978).

The Decision environment

Irreversibility – Decision-makers normally make the decision, monitor effects, and turn back decisions

if things do not unfold as planned. When this possibility is not there, it increases the stress because there is an increase of the pressure to be immediately correct or to live with any negative consequences (Beach and Mitchell, 1978).

Significance - According to Beach and Mitchell (1978) the significance of the problem is determined

by two reasons: first, the magnitudes of the outcomes involved. Second, the influence of the decision's consequences on the decision maker's life (future promotions).

Accountability - The degree to which the decision maker is accountable for the results of the decision.

First, personally imposed accountability and this is a result from personal involvement with the decision and the related outcomes. Second, externally imposed accountability and results from being accountable to others for the decision's results rather than for the quality of the procedure used to make the decision. High accountability increases the pressure to be correct (Beach and Mitchell, 1978, p. 445).

Time and/or money constraints - When taking decisions in companies, there is no question of

unlimited possibilities and resources. Any alternative or decision has its limitations in terms of time and / or money and the limits established must be met (Beach and Mitchell, 1978).

2.3.3 Decision-making process characteristics

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The process followed to make a decision influences both the decision and its consequences and according to Dean and Sharfman (1996) this rests on two statements: (1) different processes lead to different choices, and (2) that different choices lead to different outcomes and that all choices are not equally good.

2.3.4 Decision-maker characteristics

One of the basic assumptions in the decision-making perspective is that virtually all organization members are potential decision-makers, as they may influence processes in one way or another (Laroche, 1995). Many articles and studies have shown that characteristics of decision-makers may have an influence on the decision-making process and this is then expressed by e.g.: restricting of gathering, processing and interpreting information (Brouthers et al., 2000).

Age - Many authors (as cited in Brouthers et al., 2000, p.866) suggest that older managers tend to be

more risk adverse than younger managers. Markoczy (1997) found a significant difference in managerial beliefs between older and younger managers. Taylor (1975) found that older managers take longer to reach decisions, seek more information and are less confident in the decisions than younger ones. But older managers were able to diagnose the value of information more accurately.

Education Level - The Level of education reflects an individual's cognitive ability and skills. Higher

levels of education have been associated with a greater capacity to process information and a greater span of organizational boundaries (Wiersema and Bantel, 1992, p.99). Hitt and Tyler (1991) found that a managers cognitive complexity, level of education and risk orientation were not statistically significant moderators.

Experience - The managerial experience will affect decision-making by limiting the information

selected by managers to process and by limiting the manager’s conceptualization of organizational success (Brouthers et al., 2000). According to Walsh (1988) differences in search for information can occur because managers with an accounting/finance background inclined to restrict their information search and processing to financial/accounting information while managers with more general management backgrounds use a broader range of information.

Management Level - The management level will affect managerial perceptions about the environment,

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2.3.5 Organizational culture

Organizational Culture - Organizational researchers have utilized a wide variety of culture

definitions; most empirical work has centred on the view of culture as an enduring, autonomous phenomenon that can be isolated for analysis and inter-organization comparison (Detert, Schroeder, and Mautiel, 2000, p. 851). Although there is yet no single, widely agreed conception or definition of culture, there is some consensus that organizational culture addresses the following characteristics: it is (1) holistic, (2) historically determined, (3) related to anthropological concepts, (4) socially constructed, (5) soft, and (6) difficult to change (Hofstede, Neuijen, Ohayv, and Sanders, 1990). According to Hofstede et al. (1990, p.291) organizational cultures are supposed to manifest themselves into four manifestations: Symbols are words, gestures, pictures, or objects that carry a particular meaning within a culture. Heroes are persons who serve as models for behaviour. Rituals are collective activities that are technically superfluous but are socially essential within a culture- they are therefore carried out for their own sake. Symbols, heroes, and rituals can be subsumed under the term “practices”, because they are visible to an observer although their cultural meaning lies in the way they are perceived by insiders.

The core of the culture is formed by Values and these are nonspecific feelings that are often unconscious and rarely discussable, and cannot be observed as such but are manifested in alternatives of behaviour. A company's prevailing cultural characteristics can inhibit or defeat a decision effort before it begins (Detert et al., 2000). Gerhart and Fang (2005) argue that two reservations can be placed to strong attribution of culture to decision-making processes. Firstly, company culture and national culture are ‘phenomena of different orders’ and should not be confused. Secondly, the arguments for a homogeneous national culture are questionable with perhaps the exception of comparisons between Western countries and those in the Far East.

This study will make use of the following definition where organization culture is “a system of shared values defining what is important, and norms, defining appropriate attitudes and behaviours, that guide members' attitudes and behaviours" (O'Reilly and Chatman, 1996). The impressions which are gained with regard to the characteristics of the organizational culture will be discussed on the basis of several dimensions that are derived from the article by Reynolds (1986).

2.3.6 External environment

Uncertainty - External environments have been characterized on a variety of dimensions, the degree of

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competitors, customers, suppliers (including labour), and regulators. Brouthers et al. describes environmental turbulence as a multidimensional construct that measures the speed, complexity, novelty, and predictability of changes in the environment. Fredrickson and Mitchell (1984, p. 404) define uncertainty as the difference between the information needed to perform a task and the information available. The environment can increase or decrease uncertainty (and the possibility of achieving a high level of rationality) by providing or withholding needed information.

National culture - National culture is defined as the values, beliefs and assumptions learned in early

childhood that distinguish one group of people from another (Newman and Nollen, 1996, p. 754). Geert Hofstede's 1980 book, Culture's Consequences, used worldwide data on IBM employees to develop the four national culture dimensions: uncertainty avoidance, masculinity/femininity, power distance and individualism. Pennings (1993) (as cited in Brouthers et al., 2000, p.866) suggests that in non-individualistic and low power distance countries, such as the Netherlands, group decision-making and consensus predominates. Group and consensus decision-making have been linked with satisficing solutions that fall short of rational/optimizing decisions.

The following section will discuss the conceptual model that has been prepared on the basis of the literature.

2.4 Conceptual model and sub questions

For clarification of the concepts and goals of this research, a conceptual model has been developed. In this model (figure 1), the relationships between the elements of the decision-making process are pictured. The light grey arrows in figure 1 indicate relationships, and there are undoubtedly also relationships between the different elements which do not appear in figure 1; however his relationships will not be investigated and can probably constitute a topic for future research. The reason for the exclusion of these relationships lies in two areas: first, the opportunities to make adjustment to these characteristics or factors are not there or are very limited for the M&O cluster. Second, involving these characteristics and factors in the research would result in an investigation of a too excessive magnitude and therefore not possible given the available resources.

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20 Decision-making process characteristics Frames / stages Responsibilities Communication Organizational culture Stability vs. innovation Open system vs. closed system Simple vs. complex organization Normative vs. pragmatic

Informal vs. formalized procedures Cooperation vs. competition Centralized vs. decentralized decision-making Decision-maker characteristics Age Education Level Experience Management Level

Fig. 1. Conceptual research model

Sub questions:

1. What are the characteristics of the decision-making process at the M&O cluster? 2. What are the characteristics of the organizational culture within the M&O cluster?

3. How do the characteristics of the decision-making process influence the decision-making process? 4. How do the characteristics of the organizational culture influence the decision-making process? 5. What adjustments should be made to the characteristics of the decision-making process, so that the decision-making process reconnects to the new structure and customer service concept?

6. What are the areas of attention for the organizational culture so that the decision-making process reconnects to the new structure and customer service concept?

The previous section appoints the sub-questions which will provide support in answering the research question. The next section will discuss the research design with the following elements: descriptors of the research design, research methods, data sources and data analysis.

Decision-making process 2

1

The decision environment

o Irreversibility o Significance o Accountability

o Time and/or money constraints

Business characteristics

Structure Size

Performance

Decision task characteristics The decision Problem

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3. Research design

This section first focuses on the descriptors of the research design. These descriptors are able to classify the research design which is used in answering the research- and sub questions. Following the descriptors of the research design, the research method, the data sources and data analysis will be addressed.

3.1 Descriptors of the research design

The degree of research question crystallization - The exploratory research in finding a suitable

research subject is followed by a formal study in finding an answer to the research question. The formal study begins where the exploration leaves off; it begins with a research question and involves precise procedures and data source specifications. The goal of a formal research design is to answer the research question(s) (Cooper and Schindler, 2006, p.139).

The method of data collection - This study can be classified as a communication study, because the

researcher questions the subjects and collects their responses by personal or impersonal means such as interviews (Cooper and Schindler, 2006, p.140).

The purpose of the study - Referring to the purpose of a study, two terms are relevant, namely:

descriptive- and causal studies. The difference between descriptive and causal studies lies in their objectives. This study is concerned with finding out what adjustments have to be made to the decision-making process of the M&O cluster so that this process is in line with the new structure and new customer service concept. This study can therefore be described as a descriptive study (Cooper and Schindler, 2006).

The time dimension - Cooper and Schindler (2006) make use of two terms in describing the time

dimension of a research. Cross-sectional studies are carried out once and represent a snapshot of one point in time and longitudinal studies are repeated over an extended period. For this study can be stated that the cross-sectional dimension is applicable because the research will be done over a period of two months.

The topical scope - The exploratory research in finding a suitable research subject will be followed

with a single case study at the M&O cluster. The objective of a case research is to obtain multiple perspectives of a single organization, situation, event, or process at a point in time or over a period of time. Case studies place more emphasis on a full contextual analysis of fewer events or conditions and their interrelations (Cooper and Schindler, 2006, p.217). After describing the research with the specific descriptors, the following section will address the research method used in this case study.

3.2 Research method

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to e.g.: how much, how often, how many, when, and who. While the survey is not the only methodology of the quantitative researcher, it is considered a dominant role (Cooper and Schindler, 2006, p.198). Qualitative research is based on researcher immersion in the phenomenon to be studied, gathering data which provide a detailed description of events, situations and interaction between people and things, provide depth and detail (Cooper and Schindler, 2006, p.198).

This study can be classified as a qualitative research because the objective is to analyse an event, situation and interaction, namely: the decision-making process at the M&O cluster. In answering the six sub-questions, this study used the qualitative method by means of interviews. The reason for choosing interviews lays in the fact that interviews are the primary data collection technique for gathering data in qualitative methodologies.

Interviews may vary on the basis of e.g.: the number of people involved during the interview (individually or in a group), the level of structure, the proximity of the interviewer to the participant, and the number of interviews conducted during the research (Cooper and Schindler, 2006, p.204). There are three possible ways to structure interviews, namely: unstructured (no specific questions or order of topics to be discussed), semi structured interview (generally starts with a few specific questions and then follows individual preferences), and structured (often uses a detailed interview guide similar to questionnaire) (Cooper and Schindler, 2006, p.204). During this study the interviews took place in a structured manner; however the interviews in this study will not be the only source for data. In the following section, there is an explanation regarding the use of the different data sources.

3.3 Data sources

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The interviews were recorded on tape and during the interviews notes were made by means of keywords. Before starting with the analysis, first the notes and tapes of the different interviews were processed into transcriptions such that the interviewees had the possibility of making comments and adjustments, and some interviews made use of this option. In this study, the transcripts of the interviews were analysed by means of a content analysis. Content analysis is a widely used qualitative research technique. A content analysis measures the semantic content or the: “what” aspect of a message. The breadth aspect of content analysis makes it a flexible and wide-ranging tool that may be used as a stand-alone methodology or as a problem-specific technique. Content analysis may be used to analyse written, audio, or video data from experiments, observations, surveys, and secondary data studies and the obvious data to be content-analysed include transcripts of focus groups, transcripts of interviews, and open-ended survey responses (Cooper and Schindler, 2006, p.449).

Rather than being a single method, current applications of content analysis show three distinct approaches: conventional content analysis, coding categories are derived directly from the text data. With a directed approach, analysis starts with a theory or relevant research findings as guidance for initial codes. A summative content analysis involves counting and comparisons, usually of keywords or content, followed by the interpretation of the underlying context. The purpose of a content analysis is to follow a systematic process for coding and drawing inferences from texts (Hsiu and Shannon, 2005). This research will make use for a large proportion of the conventional content analysis approach because of the following reason: this approach avoids using preconceived categories, instead allowing the categories and names for categories to flow from the data and this is an important component, because Butt (2011) states that proposed frames complicate things, such frames are self-fulfilling because when you look at a decision as a process with unfolding steps and someone sees a process with steps. The data analysis consists of the following steps, according to Hsieh and Shannon (2005) part of the conventional approach:

The data analysis starts with reading all data repeatedly to achieve immersion and obtain a sense of the whole as one would read a novel.

Then, the data are read word by word to derive by first highlighting the exact words from the text that appear to capture key thoughts or concepts.

Next, the researcher approaches the text by making notes of his or her first impressions, thoughts, and initial analysis.

As this process continues, labels for codes emerge that are reflective of more than one key thought and these often come directly from the text.

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4. Research results

This section presents the results regarding the interviews and the research of the documents such as notes, proposals, process descriptions, or files regarding decision-making. The results will be discussed on the basis of the sub-questions mentioned in section 2.4.

4.1 What are the characteristics of the decision-making process at the M&O cluster?

The answer to sub-question 4.1 consists of the answers to questions 6 up to and including 34 and this answer provides a description of the characteristics of the decision-making.

The inducements for the decision-making process stems from a variety of sources and these sources are e.g.: telephone advisors, team-managers (TM), unit-managers (UM), evaluations, Authority Financial Markets (AFM), Association of Home Owners, marketing department, advisory team mortgages. All these different sources of inducements are picked up and treated in a different way and this processing can be divided into three groups (appendix 6.1): first, signals originating from advisors are handled through a regular process and this means that a dialogue manager (DM) (F&I department) is responsible for the initial assessment and subsequent progress. Second, signals originating from different departments involved at the M&O cluster find their way centralized towards a formule manager (FM) (F&I department). The FM makes the assessment and has the responsibility for the preparation of a case and the processing and dissemination within the M&O cluster. Third, inducements originating from outside organizations and government agencies are in general for the first time dealt with by the marketing department. The marketing department will, such as with a change in legislation, prepare a case which is processed further for implementation. All inducements, including cases from the marketing department, are processed within the M&O cluster through the FM (appendix 6.2).

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Preparing solutions and scenarios is a step or component that frequently emerges in the frames which are discussed in the theoretical framework. During the interviews it became clear that there is not one specific procedure or process established regarding the preparation of solutions or scenario’s. The interviewees did provide the following examples regarding the preparation of different solutions and scenario’s during several projects: first, often there is one solution specified in the intake document and this is a result of deliberation between a FM and the different stakeholders. Sometimes things are tightened, but that is still in the same solution or scenario (appendix 6.7). Second, other solutions come forward during the discussion of an intake document in the sub-management meeting (appendix 6.8). Third, in some larger projects there are multiple solutions or scenarios, as with the future commission ban (appendix 6.9). The responsibility for the preparation of the different solutions and scenarios generally lies at the FM, as the FM is also responsible for filling out the intake document (appendix 6.10-11). In the preparation of different solutions it depends on the responsible persons whether the advantages, disadvantages, and the possible impact of that solution are appointed (appendix 6.12–13). There are several ways to deal with limiting the prepared solutions or scenarios. Sometimes possible solutions or scenarios already have been rejected during the process of information gathering. Because, it already appears that the solution is not feasible in terms of planning. If indeed there are multiple solutions or scenarios on the intake document, then the restriction of these solutions or scenarios takes place during the sub-management meetings.

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The following quote makes clear how important the communication within the M&O cluster is perceived; "Very often it is in the communication, if you just know from each other what is important. Explain why you do things, then it becomes much more understood than that you just say no, or indicate that it cannot be done”. During the interviews it became evident that the communication particular towards the advisors (operations) is perceived as the main and most important and this is based on the fact that they are the only ones with direct contact to the customers. The advisors within the M&O cluster are informed in through the following ways: UM’s, TM’s, information systems and e-mail. The communication towards the advisor is considered as the main responsibility of the FM, because they are seen as the interpreter from organizational policies towards the operation and advisors (appendix 6.18-19). The TM’s and UM’s provided the advisors with the necessary information through email, work meetings and personal contact. Another important point with regard to the communication in the M&O cluster is the communication between the customer service and the F&I department. This communication refers to the communication between the FM’s, DM’s, TM’s, UM’s and the managers of both departments. This communication and information transfer is not specifically defined in processes and procedures, but named as cooperation.

While describing the characteristics of the decision-making process of the M&O cluster, there are several different responsibilities appointed. These different responsibilities are hereby once again appointed for a clear overview. Responsibilities regarding the inducements are divided between the DM and FM, depending on the extent and impact of the adjustments to processes or procedures. The responsibility for the information gathering from the various stakeholders is distributed towards the FM, due to the mentioned intake document. The responsibility for the preparation for various possible solutions or scenarios in projects lies also on the FM and the possible project group. The ultimate decision-making power lies entirely with the sub-management meeting. Responsibilities regarding the communication during the decision-making process are distributed among several people. For example, the TM is responsible for a large proportion of the communication towards the advisors. A wide range of the responsibilities regarding communication within the M&O cluster is assigned to the FM because of their role as interpreter of organizational policies towards the advisors.

The preceding description of the characteristics of the decision-making process provides a comprehensive and clear overview and the following section will describe the characteristics of the organization culture.

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Slightly different from a tendency toward action and change is a tendency to seek innovative new ways of doing things. One extreme may be a reluctance to adopt any new procedure that is not well established and the opposite extreme is a constant search for novel and distinctive goods, services, and procedures (Reynolds, 1986). The analysis of the data has made it clear that although the stakeholders within the cluster have the desire for stability, there is certainly innovation. This is almost inherent to the numerous changes that have occurred within the M&O cluster for the last two years. In innovative organizations there is often a push for constant, continuous improvement and an institutionalized belief that "we can always do better" and this belief is also applicable to the M&O cluster (appendix 6.20).

Open system versus closed system is a dimension that says something about e.g.: the communication within an organization (Poole, 1985), which is also discussed in the characteristics of the decision- making process. The data showed that new employees need about a year to know the organization and the people, and this would indicate especially a closed system (appendix 6.58). However, the remaining data and the impressions during the research indicated a more open system, whereby there is a transparent and open communication between the departments and individuals. During the study, there was no reluctance in providing information and there was also a possibility to gain access to all process documents. Several interviewees emphasized also that an open and transparent approach is pursued and actually expected from everyone (appendix 6.21).

Simple versus complex organization refers to the tendency of organizations to develop elaborate procedures and structures (Reynolds, 1986). Within the M&O cluster there are a large number of different departments with their own objectives and this diversity results in a high degree of complexity (appendix 6.22). The many changes and the large number of projects also increase the complexity of the organization (appendix 6.23).

The popular notion of customer orientation is dealt with by normative or pragmatic. Pragmatic units are market-driven and normative units perceive their task toward the outside world as the implementation of inviolable rules (Hofstede, 1990, p. 304). After the analysis of the data it cannot be said that there is an explicitly normative or pragmatic thinking within the cluster. The data shows that the organization routines are still receiving a large part of the emphasis and not all the emphasis is on the external requirements of the customer (appendix 6.24). Because many departments and individuals do not have direct contact with customers, the work of these departments and individuals are not all directly aimed at the customers of the ING (appendix 6.25).

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endorsed that, when the respective roles of the members of a department become complex, detailed job descriptions are a useful way of clarifying (appendix 6.26). However, a similar number of interviewees endorse the opposite way and consider even more detailed job descriptions as undesirable. A comparable description of opinions may be established when it comes to the job descriptions of managers. Regarding this subject, there are also differing opinions about the desirability and added value of a more detailed job description for managers. The tendency of particularly the F&I department is to make use of extensive process documents that exactly describe the steps that should be followed in different situations.

Cooperation versus competition is a complex of ideas related to whether the individual members consider their work peers as competitors for scarce rewards (salary and bonuses, status and influence) or trusted colleagues assisting in the competition with outsiders (other units in the corporation, other businesses, government agencies, and the like) (Reynolds, 1986). The data clearly demonstrates that cooperation prevails during the decision-making process. Several interviewees indicated that everyone together is trying to make the best of it and there is a goal together (appendix 6.20). This is somewhat contradictory relating to following quote; “most people seem to be more motivated by obtaining power than by achieving objectives”.

Centralized procedures imply that those in key positions, individuals or groups, may have considerable impact on the programmes and actions of the organization. In contrast, decentralization of decision- making may allow individuals or work teams to make decisions about their own situation (Reynolds, 1986). The data analysis has shown that within the cluster there is a centralized and a decentralized way of decision-making. The centralized decision-making takes place when there is a substantial impact on the capacity of the organization and these decision-making takes place in the sub-management meeting. The decisions regarding smaller issues are decentralized taken and these smaller issues concern e.g.: changes in processes and procedures which demand no capacity in terms of costs or hours.

The preceding description provides a good impression of the characteristics of the organization culture within the M&O cluster and the following section will describe which influences the characteristics of the decision-making process have on the decision-making process.

4.3 How do the characteristics of the making process influence the decision-making process?

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Many authors, including the process model presented by Mintzberg et al. (1976), begin with the sensing of a stimulus or motive. In addition, those authors and others (Dutton, Fahey, and Narayanan, 1983) have argued that initial actions are critical because they shape what is done throughout the decision-making process. The first steps taken in the decision-making process of the M&O cluster are among others corresponding to the identification phase named by Mintzberg et al. (1976) and the preparation phase named by Citroen (2011). There is within the M&O, not yet a clear and comprehensive recognition and diagnosis regarding all the signals originating from the three different directions. This should be in accordance with the two following routines that are part of the identification phase: recognition and diagnosis (Mintzberg et al, 1976). Not specifically and consistently completing the recognition and diagnosis phase, influences the course of the decision-making process because some inducements are not presented for decision-decision-making and possible consequential effects are not clear in time. The current handling of the inducements results also in the fact that many inducements or signals do not reach the sub-management meeting, leaving the decision-makers with no insight or total overview into changes made (appendix 6.27). In addition, this is also resulting in the fact that the TM’s and UM’s will not be aware of any submitted inducements or signals, as the process is running completely through the DM and the FM (appendix 6.28). Another important point is that advisors regularly remain unknowingly about any progress and outcome of the submitted signals (appendix 6.29). Advisors are to a large extent responsible for the identification of possible improvements and if they are not regularly kept informed of the submitted inducements or signals, this can have an influence on their motivation. According to Dutton et al. (1983), the magnitude of the motivating force will affect what is done, as will the label that is initially placed on it. In the worst case, a reduced motivation can result in fewer submitted signals; because the advisors probably have the impression that nothing is done with the submissions.

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information throughout the organisation, including information to decision-makers and thereby speed up decision-making. The way that decision-makers decide to acquire and make use of information is a determining factor in the process of decision-making and rationality involves choosing which information to order and read and which not to (Schwenk, 1986; Choo, 2006, p. 104).

During the preparation of solutions within the decision-making process of the M&O cluster, there is according to several interviewees not always a specific appointment of pros and cons (appendix 6.35). If there is not consequently with each alternative a clear appointment of the pros and cons, there can never be a good trade-off regarding what alternative is actually the best choice. The basis for a rational decision-making process is an understanding of the implications of all identified and thereby feasible alternatives. Rationality implies that this process is characterised by the fact that the decision is reached without a prejudiced opinion about the eventual decision (Citroen, 2011). A consequence of the inconsistent naming of objectives prior to a project has also implications for the assessment of solutions and alternatives. According to Miller et al. (2002), each potential solution of an issue should be compared against predetermined criteria in order to assess the degree of fit. A second deficiency with regards to the solutions, is that prior to the sub-management meeting several solutions have fallen and it is not clear for the decision-makers whether this has been justified. Nutt (2005) subscribes in his research the following two approaches for the preparation of solutions and which correspond to the approaches that are used within the M&O cluster: politics/bargaining and the bounded rational approaches. Bargaining for a satisfying solution to all stakeholders may result in a compromise and a not optimal solution for the organization. Citroen (2011) states that several authors propose the following three conditions concerning solutions with a rational and structured process: first, carefully weigh the advantages and the disadvantages of these alternatives and the chances of success for each of them. Second, even when a preliminary solution is in sight, new information or expert judgement is accepted, studied and analysed, even if it contradicts earlier ideas and preferences. Third, before a final decision is made, positive and negative consequences of all alternatives are re-examined (Citroen, 2011, p.494).

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description of the decision making during the sub management meeting in section 4.1. There is no consistent approach of the discussion during the meetings and that multiple interviewees appoint this as an area of attention (appendix 6.40-41). Much of the interaction between decision-makers is informal interaction during which the substances of the decisions are discussed in hallway conversations, over lunch, or during brief visits to colleagues' offices (Cray et al., 1988). At some point in almost all decisions, the process becomes more structured and formal interaction takes place, in meetings of committees, special purpose working groups or project teams (Mallory et al., 1983). A third aspect of the decision-making that is causing deficiencies is that there should be a preparation of provisions for implementation of the decision, including a contingency plan that might be required if the implementation fails. Some authors consider implementation of the decision and evaluation of the results to be an integral part of the decision-making process (Baum and Wally, 2003). During the decision-making in the sub management meeting there is not a mentioning of the drafting of a contingency plan (appendix 6.42). Something which is clearly endorsed by several authors as a crucial part to the implementation of any decision (e.g. Nutt, 1984; Dean and Sharfman, 1996). Identifying and executing the implementation and evaluation influences the decision-making process, probably not directly, but possibly for future decision making. The final important aspect that is causing deficiencies and that should be taken into account regarding a rational and structured process, is a defined procedure for follow up of the decision to judge if the purpose has been achieved or has to be reconsidered (Citroen 2011, p.494). Several interviewees mentioned that within the M&O cluster, evaluations are sometimes fallen short (appendix 6.43- 6.45). This may also originate in the fact that there is not always a clear and specific appointment of objectives. The appointment of the objectives is according to Miller et al (2002) one of the requirements for a proper evaluation.

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lunch, or during brief visits to colleagues' offices. This is also an important form of interaction during the decision-making process and this has also an influence (Cray et al., 1988). Within the M&O cluster is endorsed that this form of communication takes place and that certainly deserves attention. This is particularly, because the cluster operates from several locations (appendix 6.51). The communication between the F&I department and the customer service is the final important aspect of the communication and this is not always as desired by the stakeholders. Several interviewees indicated that some decisions taken in the operation or customer service are not being passed on to other departments (appendix 6.52).

When exploring and discussing all the different phases of the decision-making process within the M&O cluster it has become evident that there is a wide variety of responsibilities and this has accordingly an influence on the decision-making process. The main point that emerged is that there is an excessive division and that according to several interviewees this results in the fact that you are actually responsible for nothing (appendix 6.53). “There are too many little responsibilities, too many small areas where someone can say something about” (appendix 6.54). Another important point is related to the division of responsibilities, is that too little control and management takes place on these responsibilities and that there is therefore not always possible to make clear arrangements (appendix 6.55–6.56). It is also shown that by dividing the responsibilities into smaller pieces that influences the intrinsic involvement of employees (appendix 6.57).

The preceding section describes the influences of the characteristics of the decision-making process have on the decision-making process. The following section will address the influences of the characteristics of the organizational culture on the decision-making process.

4.4 How do the characteristics of the organization culture influence the decision-making process?

The previous section addresses the influences of the characteristics of the decision-making process on the decision-making process. Sub question four examines the influences of the characteristics of the organization culture on the decision-making process and if these influences result in deficiencies.

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nature of the organization creates deficiencies in the supply of signals from e.g. advisors. Improvements cannot come without change, so change should be viewed positively rather than fearfully (Detert et al., 2000) and improvements can also only be achieved by improving internal processes, focusing on customers' needs, and preventing quality problems from occurring in the first place (Flynn, Sakakibara, and Schroeder, 1994).

The open and transparent communication within the M&O cluster is another point that ensures that the available information needed during the decision-making process is also shared by everyone. There is the distinct impression that no department or person will withhold information that could be disadvantageous to the decision-making process. At this moment the open system is not resulting in deficiencies in the decision-making process, but it can certainly be seen as one of the most powerful points.

The following characteristic, which is previously discussed, is that according to the interviewees, a newcomer needs over a year to know the organization and the people (appendix 6.58). Something which can find its origin in the complexity of the organization through the many different departments and the complexity of the organization is responsible for a large portion of the deficiencies in the decision-making process. Presumably, a complex work context takes longer to learn than a simple work context and that is something which clearly emerged during the analysis of the data. The complexity of the organization ensures that the people involved in the decision-making process must be part of the organization for a reasonable time to be aware of all individuals and departments.

ING and the decision-making process

ING

and the decision-making process

ING

and the decision-making process

Preface

Abstract

Table of contents

Introduction

1. Introduction to the topic

2. Theoretical Framework

3. Research design

4. Research results