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RISK-TAKING BEHAVIORS, DECISION-MAKING STYLES AND LEADERSHIP

STYLES OF CITY OFFICIALS OF TUGUEGARAO

Mark Lawrence S. Tattao, Lovely Alyssa T. Bonifacio, Jomar B. Bacud, Rochelle P. Ulila,

Lovely B. Banguilan, Elizalde Y. Tagal, and Gio M. Antonio

INTRODUCTION

A leader’s decisions are necessary actions in any organization. Most often than not, it

is the leader who serves as a rudder that directs the movement of an organization. The

decision of a leader is crucial because it can make or unmake organization’s move towards

the attainment of its goals thus, necessitates a lot of weighing of things and pondering

coupled with a risk. Hence, decision making is often associated with risk taking.

Decision often necessitates risk because not all decisions could bring about positive

effects to the institution. Risks are uncertainties about events that may or may not happen.

Almost any human endeavor carries some risk, but some are more risky than others. Hubbard

(2009) proposes instead that risk is a kind of “vector quantity” that does not collapse the

probability and magnitude of a risk by presuming anything about the risk tolerance of the

decision maker. Risks are simply described as a set or function of possible loss amounts each

associated with specific probability. How this array collapsed in a single value cannot be

done unless the risk tolerance of the decision maker is quantified.

Kimberly and Rottman (1987) describe decision making in organizations as a process

of behavior with the economic model (or total rationality) at one extreme and with the social

model (or complete irrationality) at the other extreme. This description implies that only

irrational decision making accords human values precedence over economic values. In the

organizational environments of the 21st century, leaders must find some middle ground

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between these extremes, for it is evident that neither set of values can be ignored. Leaders

make decisions every day that affect their team and their institution. Before any leader makes

a decision, one has to define first the goals. To make sound decisions as a manager, one needs

to collect information from anyone involved and affected by the decision.

Decision making is a mechanism for making choices at each step of the problem

solving process. It is an important process for organizational effectiveness. It is an

organizational process because it transcends the individual and has an effect on

organizational goals. It is a process of identifying and choosing alternative courses of action

in order to come with the most suitable option. The decision making process is a key

determinant of the success of both the management and the organization. The process of

decision making involves selecting a particular course of action from all the alternatives

available. It helps an individual to narrow down the choices available to him.

C.V Raian (2010) states that decision making plays an important role in all phases of

the management, i.e. planning, organizing, directing, controlling, staffing, etc. Leaders often

find themselves facing alternative courses of action, out of which they are expected to choose

or decide upon a single course of action. The decisions they make are influenced by various

factors like past experience, the external environment, human relationship within the

organization and the cognition levels of the decision makers themselves. These decisions

made by the managers are expected to lead the organization towards the achievement of its

objectives.

Along this line, organizational structure plays an important influence on the elicitation

of the desired risk-taking behavior and decision making. Like any society, Tuguegarao City

undergoes the process of decision making through its elected officials, the city officials who

may exhibit varied risk taking behaviors.

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The city officials play important roles in ensuring that the needs of the people within

its jurisdiction are met. Much of the expansion and advancement of Tuguegaraoenos’ welfare

and development lies on the official’s ability to take a risk as well as to decide. Issues,

problems and concerns are threshed out based on the official’s ability to smoothen the rough

sailing journey of the city.

Indecisiveness will make the city officials appear not making tough choices or taking

a stand on issues that affect the society. They need not to be concerned that taking a stand on

issues will cause dislike from others because it is impossible to anyone to like them. Every

day, they need to make decisions that affect the entire organization.

Apparently, most officials would hate the idea of risk but along with decisions are

risks one has to contend with. One may spend a great deal of time and money to reduce risks

but one can never eliminate it. The reason is that some amount of uncertainty is built in to all

aspects of the world around us. One cannot predict with certainty which events will occur or

where they might occur.

Public official’s leadership style would be determined based on their way of providing

directions, implementing plans, and motivating their employees which might improve their

governance and attain progress to their city.

By understanding personal decision making style, it is possible to make adjustments

according to the situation and results the city officials are working towards. Strong decision

making requires the ability to assess the situation, determine the best style of decision

making, and utilize that style to come to a positive solution. These are leadership skills that

will benefit them both personally and professionally. By consistently using the correct style

of decision making, they will prove themselves to be a valuable asset as leaders.

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Leadership can be defined as a process by which one individual influences others

toward the attainment of group or organizational goals. Three points about the definition of

leadership should be emphasized. First, leadership is a social influence process. Leadership

cannot exist without a leader and one or more followers. Second, leadership elicits voluntary

action on the part of followers. The voluntary nature of compliance separates leadership from

other types of influence based on formal authority. Finally, leadership results in followers'

behavior that is purposeful and goal-directed in some sort of organized setting. Many studies

of leadership focus on the nature of leadership in the workplace.

Leadership is probably the most frequently studied topic in the organizational

sciences. Thousands of leadership studies have been published and thousands of pages on

leadership have been written in academic books and journals, business-oriented publications,

and general-interest publications. Despite this, the precise nature of leadership and its

relationship to key criterion variables such as subordinate satisfaction, commitment, and

performance is still uncertain, to the point where Fred Luthans, in his book Organizational

Behavior (2005), said that "it [leadership] does remain pretty much of a 'black box' or

unexplainable concept."

Leadership should be distinguished from management. Management involves

planning, organizing, staffing, directing, and controlling, and a manager is someone who

performs these functions. A manager has formal authority by virtue of his or her position or

office. Leadership, by contrast, primarily deals with influence. A manager may or may not be

an effective leader. A leader's ability to influence others may be based on a variety of factors

other than his or her formal authority or position.

(http://www.referenceforbusiness.com/management/Int-Loc/Leadership-Theories-and-

Studies.html#ixzz3Ci193ugE)

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As leaders, the officials have the responsibility to make decisions to cater to the

present dilemma the city is experiencing. Thus, they play a significant role in transforming

the city based on their risk taking behaviors, decision making styles and leadership styles

which affect the processes in the organization.

It is on this context that the researchers will embark on this endeavor to look into the

risk taking behavior, decision making styles and leadership styles of City officials of

Tuguegarao.

Conceptual Framework

Organizational decision making is complex, multifaceted and multidimensional

process which is influenced by many factors. Rowe and Boulgarides (1992) explain that the

decision maker is influenced by various factors including personal needs (such as security,

structure, support, recognition, opportunity, and rewards), pre-potent needs (such as

frustration, anxiety, achievement and control), organizational forces (such as policies,

staffing, culture, productivity, and conformity), and environmental forces (such as

government, society, competition, resources, technology, clients/customers). After the

interplay of these forces the emergent behavior results in feelings, decisions and actions.

Decision-related factors can be defined broadly into two categories including

organizational factors and individual factors i.e. personal characteristics of the decision

maker. As cited by Muhammad Naveed Riaz, et al (2010), many researchers investigated that

decision making styles of managers are influenced by many factors including national origin,

type of organization, industry, education, age, socioeconomic status, organizational size and

management level in the organization.

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Further, managers make various types of decisions depending in the management

level and hierarchical position in organization. Managers may make relative minor decisions

that are primarily operational or tactical in nature. In contrast, managers may make more

strategic decisions that involve layer outlays of capital (Certo, Connelly, and Tihanyi, 2008).

Using Decision Style Inventory relationships between decision making styles and varying

management levels, Pennino (2000) found that lower level managers displayed a behavioral

decision making style (quest for support, low tolerance for ambiguity, and short term problem

solving) an the individuals in the high level of management displayed a conceptual style of

decision making (creativity, risk taking, high tolerance for ambiguity and cognitive

complexity). Researchers (Blankenship and Miles, 1999; Heller and Yuki, 2000) found that

decision making styles of managers vary across management levels.

Moreover, as cited by Muhammed Naveed Riaz, et.al (2010) women generally

thought to be more intuitive and empathetic than their male counterparts (Brenner and

Bromer, 2001), who are seen as analytical and logical problem solvers in the workplace

(Loden, 1998). Despite this, women are often under-represented in management, where the

use of intuitive decision making style is thought to be effective (Agor, 1989). Hablemitoglu

and Yildirim (2008) said female leaders were more likely opt to use avoidant decision

making style in relation to rational decision making style. On the other hand, male students

were more likely to adopt intuitive decision making style in relation to rational decision

making style.

On the other hand, Kim and Hasher (2005) investigated that older adults are more

likely to employ intuitive decision making style (involving heuristic and information

processing intuitively), while younger adults are more likely to adopt rational decision

making style (characterized processing information in an analytic and systematic manner).

The results show that older adult are less likely to change their decisions or decision making

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style because of larger past experience in decision making. The results are to some extent

consistent with the somatic marker hypothesis which illustrates that feelings and emotions

(somatic markers) becomes associated with the positive and negative outcomes of a given

response situation via lifetime experiences. Spaniol and Bayen (2005) observe tranquil

judgment in retired people, probably because of their difficulties with the working memory.

Many researchers (Charness and Bieman-Copland, 1992; Craik and Salthouse, 1992) argue

that working memory declines with age, thus limiting older peoples’ capacity to monitor

decision processes. On the other hand Dror, Kotana, and Mungur (1998) suggest that age

does not degrade the quality or speed of the decision. Minett, Yaman, and Denizci (2009)

discovered that older managers are less likely to be involved in rule-based decisions. (Riaz,

et.al 2010)

Experienced people are also more likely to employ intuitive decision making style

(Bergstrand, 2001; Callan and Proctor, 2000). Some decisions are made under conditions of

urgency and demand highs technical expertise. Other decisions can be the product of a more

deliberate analysis of information and data. Furthermore, many decisions are sequential or

conditional; the decision made at one point in time will affect the decisions options available

at a later time. It is typically impossible for a leader to possess all the information needed to

make an informed decision. Consequently, the ability to make obtain relevant information,

the skill to know the differential importance of the information as it related to a given

decision, and the capacity to way various decision options are all critical leadership skills.

Great leaders are skilled decision makers, or they know how to delegate the responsibility for

decision making to others within the organization (Muchinsky, 2007).

This study is based on the concept that city officials play a significant role in the

decision making process that could affect the city of Tuguegarao and its residents. It is

undeniable that the officials play a significant role in meeting the public thrusts. Therefore, as

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leaders in the organization, the officials’ risk taking behavior, decision making style and

leadership styles are important in ensuring that the thrusts of the city government are carried

out and met.

Figure 1. Conceptual model of the study

Figure 1 shows the paradigm of the study. It shows the Profile as the Independent

Variable and the Risk Taking Behavior, Decision Making style and Leadership style as the

Dependent Variables of the study. It will also look into the risk taking behavior, decision

making styles and leadership styles of the respondents when grouped according to their

profiles.

Statement of the Problems

This study aims to look into the risk taking behavior, decision making styles and

leadership styles of the elected officials of Tuguegarao City. Specifically, it seeks to answer

the following questions:

1. What is the profile of the respondents in terms of:

a. Age

b. Sex

c. Position

d. Years in Service

Profile

Age Sex Educational attainment Position Years in service Political Function

*Risk Taking Behavior

*Decision Making Style

*Leadership Style

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e. Educational Attainment

f. Political Function

2. What are the risk taking behaviors of the respondents?

3. What are the decision making styles of the respondents?

4. What are the leadership styles of the respondents?

5. Is there a significant difference in the risk taking behavior of the respondents when

grouped according to profile variables?

6. Is there a significant difference in the decision making style of the respondents

when grouped according to profile variables?

7. Is there a significant difference in the leadership style of the respondents when

grouped according to profile variables?

Research Hypothesis

There is no difference in the risk taking behavior, decision making style and

leadership style of the city officials when grouped according to profile variables.

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RESEARCH METHODOLOGY

The study will investigate the risk-taking behaviors, decision making styles and

leadership styles of city officials of Tuguegarao. This chapter presents the methodology that

will be used in the conduct of the study. It includes the research design, respondents and

sampling techniques, research instrument, data gathering procedures and data analysis.

Research Design

This study will use descriptive research design. The main goal of this type of research is to

describe the data and characteristics about what is being studied. It provides a better understanding of

a topic and explores the existing certain phenomena.

The descriptive method will look into the profiles as well as the risk taking behavior,

decision making style and leadership styles of the respondents.

Locale of the Study

The study will be conducted in Tuguegarao City. It will be conducted at the

Tuguegarao City hall.

Respondents and Sampling Techniques

The respondents will be all the elected officials of the city of Tuguegarao. It will

employ purposive sampling. The respondents will be the Mayor, Vice Mayor, Councilors and

Ex-officio Councilors.

Research Instruments

The primary data will be obtained through floating of questionnaires to the city

officials.

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The Decision Making Style inventory based on Pierre Casse’s Training for

Multicultural Managers (1982) will be used to determine the decision making styles of the

public officials. It will be consist of twenty items that will determine whether one employs

factual, intuitive, analytical or normative decision making style. Factual decision making

style reflects managers who are basically cool, patient, down-to-earth, oriented to the present,

precise and realistic, stick to facts and content-oriented. Intuitive decision making style

reflects managers who are charismatic, imaginative, and quick to their reactions and jumps

from one idea to another. Analytical decision making style is characterized by a systematic,

logical, step-by-step way to look at things, people and ideas. Normative decision making

style is people-oriented and stresses the importance of communication, relations and

teamwork. It uses the following scale:

5 - Very Much

3 – Somewhat

1 - Marginally

The Risk Taking Inventory authored by Gene Calvert of the Highwire Management

will be used to determine the risk taking behaviors of public officials. It is a fifteen item

questionnaire that determines the level of risk taking behavior of the officials. High risk

taking behaviors are characterized by officials who prefer uncertainty and stimulations over

choices where the risk is low and the certainty of the outcome is high. Low risk the officials

in the situation where they need to decide on. It is reflected by the official’s ability to

maintain their comfort zones.

The Leadership Style framework developed by Kurt Lewin will be used to decide

what kind of leadership styles do public officials used and depict whether they are:

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1. Autocratic leaders;

2. Democratic leaders; or

3. Laissez-faire leaders.

Autocratic leaders make decisions without consulting their team members, even if

their input would be useful. This can be appropriate when you need to make decisions

quickly, when there's no need for team input, and when team agreement isn't necessary for a

successful outcome. However, this style can be demoralizing, and it can lead to high levels of

absenteeism and staff turnover.

Democratic leaders make the final decisions, but they include team members in the

decision-making process. They encourage creativity, and people are often highly engaged in

projects and decisions. As a result, team members tend to have high job satisfaction and high

productivity. This is not always an effective style to use, though, when you need to make a

quick decision.

Laissez-faire  leaders give their team members a lot of freedom in how they do their

work, and how they set their deadlines. They provide support with resources and advices if

needed, but otherwise they don't get involved. This autonomy can lead to high job

satisfaction, but it can be damaging if team members don't manage their time well, or if they

don't have the knowledge, skills, or self-motivation to do their work effectively. (Laissez-

faire leadership can also occur when leaders don't have control over their work and their

people.)

Lewin's framework is popular and useful, because it encourages managers to be less

autocratic than they might instinctively be.

http://www.mindtools.com/pages/article/newLDR_84.htm

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Collection of Data

The researchers will seek the permission from the City Mayor for the conduct of the

study. After the approval, a separate letter will be sent for the distribution of research

instruments to the public officials.

Here is the Proposed Timetable of Activities of the Researchers:

Activities Date

Photocopying of questionnaires for floating August xx

Submission of letter requesting for the approval of the conduct of

the studyAugust xx

Floating of questionnaires to the respondents August xx

Retrieval of questionnaires August xx

Encoding of Data Collected August xx

Analyzing of Data September xx

Write the first draft of document Sepber xx

Review & revise first draft September xx

Write & revise additional drafts October xx

Edit final draft October xx

Publish & submit document October xx

Note: Dates depend on the accomplishment of succeeding activities and agreements between

Researchers and their Professor.

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Data Analysis

The data will also be collected and analyzed through descriptive statistics such as

frequency count, percentage, z test on proportions with bonferonni adjustments, Kruskal

Wallis Test and Mann Whitney U Test. Frequency count and percentage will be used for the

profile of the respondents. Z test on proportions with bonferonni adjustments will be used for

the significant difference of decision making style and leadership style of city officials based

on profile variable. Kruskal Wallis Test will be used to test the significant difference of risk

taking behavior based on profile variables with more than two groups while Mann Whitney U

test was used to test for only groups.

Republic of the Philippines

CAGAYAN STATE UNIVERSITY

College of Business, Entrepreneurship and Accountancy

Andrews Campus

Greetings and God be with you!

This is to inform you that the 4th year Legal Management Students of Cagayan State University will be conducting a research titled: “Risk-taking Behaviors, Decision-making Styles and Leadership Styles of City Officials of Tuguegarao.”

Relevant to this, the researchers prepared a questionnaire to aid them in gathering the needed data for the study. Your participation in this endeavor will be highly appreciated.

Yours truly,

THE RESEARCHERS

Q U E S T I O N N A I R E

------------------------------------------------------------------------------------------------------------

Date: __________________

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Name: Hon.______________________________________________________________

Sex: [ ] Male; [ ] Female Age: _________________________

Position: _______________________________ Years in service: _______________

Instructions: Please check as spontaneously as possible the evaluation below on how you rate yourself for each of the following questions.

Questions Marginally Somewhat Very Much

1. Do you enjoy working on new problems?

Questions Marginally Somewhat Very Much

2. Are you good at noticing what needs attention now in a given situation?

3. Are you rather unemotional person?4. Are you interested in other people?5. Can you predict how other people

will react to a proposal?6. Are you good at analyzing the pros

and cons of a proposal?7. Do you dislike doing the same thing

over and over again?8. Do you rely on past experiences to

solve new problems?9. Are you good at pinpointing flaws in

a proposal?10. Do you let your likes and dislikes

interfere with your decisions?11. Do you perceive the unknown as

challenging?12. Do you usually resent being

interrupted when working on a project?

13. Do you perceive yourself as a logical person?

14. Do you enjoy teamwork?15. Do you have many ups and downs

when working?16. Are you able to keep track of

essential details?17. Do you perceive yourself as a

realistic person?18. Do you put two-and-two together

very quickly?

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19. Are you good at organizing things?20. Do you enjoy Public Relations

work?

Instructions: Please put a check on the column that matches your answer.

Agree Disagree1. Taking management risks makes good sense only

in the absence of acceptable alternatives.2. I generally prefer stimulation over security.3. I have confidence in my ability to recover from

my mistakes, no matter how big.4. I would promote some with unlimited potential

but limited experience to a key position over someone with limited potential but more experience.

5. Anything worth doing is worth doing less perfectly.

6. I believe that opportunity knocks only once.7. It is better to ask for permission than to beg for

forgiveness.8. Success in management is as much a matter of

luck as ability.9. I would choose a three thousand pesos monthly

raise over a thirty thousand pesos bonus, when I had about a one-in-three chance of winning the bonus.

10. I can handle big losses and disappointments with little difficulty.

11. If forced to choose between them, I would take safety over achievement.

12. Failure is the long road to management success.13. I tolerate ambiguity and unpredictability well.14. I would rather feel intense disappointment than

intense regret.15. When facing a decision with uncertain

consequences, my potential losses are my great concern.

Thank you very much for the information you’ve provided. God bless!