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Decision Making in Communities
Why Groups of Smart People Sometimes Make Bad Decisions

ISBN: 0-944715-62-1
2001, 93 pages
1st edition
Author(s): Jasmine Martirossian
Product Format: Book
Item #: 5621
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Non-Members Only Sale: USD $12.95
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Unlike anything CAI has published, this pioneering book presents a fascinating look at the unseen forces that affect groups of people in community associations—including boards, management teams, and committees-and the decisions they make.

  • Why do we privately complain about things we publicly agree to?
  • Why are facts so annoying once we've made a decision?
  • Why do we trust people in white coats?
  • Why do we make quick decisions when we feel good?
  • Why haven't we considered all the options?
  • Why do we always want the very thing that's not available?
  • Why is it easier to say yes to someone we like?
  • Why do well-educated, analytical, rational people respond to a pitch based on emotions?
The answers to these questions have more to do with governing, managing, and promoting harmony in your community than you might think!
  • Read how group polarization, minority influence, brainstorming, groupthink, and the seven major defects of group decision making can lead a board to disaster.
  • Learn how the power of persuasion operates and the types of mental shortcuts managers or committees take when making a decision.
  • Find out how to recognize and combat weapons of influence brandished in your association—and how to use them yourself.
  • Loaded with real life examples of what happens when community associations make bad decisions—and a few good ones.
Members are raving!

"Very well written, easy to follow, clearly describes the aspects of group dynamics and interrelationships—and it's entertaining!" -Patricia Popovitch, Homeowner

"This book does a good job of relating general knowledge of organizational dynamics to the unique nature of community associations." -Steve Harvill, PCAM®

Contents

Preface

Chapter 1: What is a Group?
Aggregates, Categories, Primary and Secondary Groups, In Groups and Out Groups, Reference Groups

Chapter 2: What is Group Dynamics?
Group Size, Group Composition, Group Leadership, Group Conformity

Chapter 3: Decision Making in Groups
How Do Groups Influence Decision-Making?, Group Polarization, Too Much Invested To Quit, Group Polarization in Communities, What Causes Group Polarization?, The Informational Influence, Normative Influences, Minority Influences, Brainstorming

Chapter 4: Groupthink
Group Cohesion, What is Groupthink?, Structural Features That Lead to Groupthink, Group Situations That Lead to Groupthink, The Eight Symptoms of Groupthink

Chapter 5: The Seven Major Defects of Group Decision Making
How To Avoid Decision-Making Defects, Satisficing

Chapter 6: The Power of Persuasion on Groups
Advertising, Selling, Persuading, Persuasion in Community Associations, How Persuasion Works, The Communicator, The Message, How the Message is Delivered, The Audience

Chapter 7: Mental Shortcuts Used in Groups
How the Brain Works, Fixed-Action Patterns, Mental Shortcut: Because, Mental Shortcut: Expensive Equals Good, Mental Shortcut: Relying on Experts

Chapter 8: Weapons of Influence in Groups
Reciprocity, Commitment and Consistency, Social Proof, Liking, Authority, Scarcity


Excerpt
 
Chapter 3 (partial)
 
Popular wisdom--and an old cliché--tell us that two heads are better than one, and leads us to think that when more than one person contributes to the process, together they make a better decision. Does that imply that the more people involved, the better the decision? That seems to be the popular perception. Consider, for instance, the mutual fund companies that emphasize in their marketing literature and public relations campaigns that teams of experts--not individual experts--manage their mutual funds. They are capitalizing on the strength of this perception.
 
People in some community associations also share the perception that group decision-making is superior. For instance, one condominium association board was determined that all decisions, even those regarding the most minor issues, be ratified by the entire seven-person board. They refused to call the board president a president, or even a chair, adamantly insisting on "point-person," as the acceptable term. They specified that this person would be a mere conduit for communicating with the management company and would have absolutely no leeway for individual decision-making--even in the most trivial matters.
 
But if groups make better decisions than individuals, why is individual decision-making a highly valued social function? For instance, why is it that the more decision-making power associated with a given job, the better the compensation?
 
How Do Groups Influence Decision Making?
 
Let's just assume for now that groups do make better decisions. What is "better?" To answer that, let's also assume that "better decisions" are those limiting risk and increasing caution. To find out if groups actually make decisions that are cautious and relatively risk free, social psychologists have conducted experiments and found that--interestingly--groups make decisions that both limit risk and increase risk, and that both effects are valid and are to be expected as outcomes of group decisions.
 
Group Decisions Increase Risk
 
James Stoner wrote up a number of real-life scenarios that called for making drastic decisions and taking risks. In his experiments, he asked individual test subjects to read these scenarios and assess the risk that should be taken on a scale of 1 to 10. Then he presented the same scenarios to groups of test subjects, once again asking them to make a decision and rate the level of risk that should be taken.
 
Stoner's experiments turned popular belief on its head. In his experiments, people actually increased their level of risk when they were making a decision as members of a group, and they were less willing to take risk when making a decision on their own. His experiments found that "group decisions [are] significantly more risky than the mean of the individual group members' prior decisions." [36] This phenomenon came to be known as the "risky shift."
 
Group Decisions Limit Risk
 
Shortly after Stoner's experiments, researchers Marquis and Nordhoy conducted a series of similar experiments that produced the opposite result. They found "evidence [supporting the idea] that group discussion might also lead to more cautious decisions." [37] This means that people in groups also make decisions that are more cautious than decisions they would make on their own.
 
In light of these findings, what should a community association manager or board member do when working with groups? The logical answer is: gauge the possible outcome based on group discussion and decide which direction the decision will swing--in the direction of increased or decreased risk? In order to do this, you need to understand group polarization.
 
Group Polarization
 
The puzzle of these opposite outcomes was solved with the discovery of a phenomenon called "group polarization," which reflects "a tendency for group discussion to enhance the individuals' initial leanings." [38] This means that if a person goes into a group discussion with a specific opinion or take on an issue, that individual's position will be enhanced by the time the group meeting is over. James Stoner summarizes his research in the following way, "For items on which the widely held values favored the risky alternative and on which the subjects considered themselves relatively risky, unanimous group decisions were more risky than the average of the initial individual decisions. The group decisions tended to be more cautious on items for which widely held values favored the cautious alternative and on which subjects consider themselves relatively cautious." [39]
 
For example, in a condominium association where lighting was insufficient, the board had to decide whether to replace the exterior lights at association expense with modern fixtures--which they would also have to maintain--or at county expense with standard fixtures supplied and maintained by the local utility company. The association had budgeted for the modern fixtures, and the residents wanted them because they were more attractive and provided more light. However, the board suspected that future maintenance costs might burden the association's resources or require a dues increase. During the discussion, individual board members said, "If it were just me, I'd get the attractive fixtures, and figure out later how to pay for the upkeep." But in the end, they voted for the county owned and maintained "institutional style" lights--a position favored strongly by one member who represented the community's fiscal conservatism.
 
Too Much Invested To Quit
 
Along with group polarization, groups also experience the "too much invested to quit" phenomenon that has cost many businesses huge sums of money. [40]
 
For instance, in one experiment Canadian business students were asked to make a decision on investing in a business that had a track record of failures: "72 percent [of students who] reinvested said they would seldom have invested if they were considering it as a new investment on its own merits; when making the same decision in groups, 94 percent opted for reinvestment." [41] Once again, decision-making within the group setting had risk-taking outcomes.
 
Most of us are familiar with this phenomenon--indeed we talk about it everyday. We say we're "throwing good money after bad," when we have too much invested to quit?or we "get out while the getting's good." And, if the getting out isn't good, we "cut our losses." It's likely we've all experienced it at one time or another as private citizens, professionals, or members of a community association board.
 
For instance, a condominium association board had hired a superintendent who, after his first three months of stellar performance, totally slacked off. Yet for the next two years, although the board constantly debated what to do with him, they gave him three pay raises, two extra weeks of vacation, a better health insurance policy, and finally determined that this superintendent was not the right fit for the association. They had become the victims of the "too-much-invested-to-quit" phenomenon because they felt that they had already spent considerable amounts of time searching to fill this job, and did not want to feel as if they had wasted resources.
 
In another example, the president of a community association management company had a client association that, in the past seven years, had contracted with three management companies that collectively provided eight community association managers. Obviously, the association management company that could satisfy this association hasn't been created yet, and the association manager that could make this board happy hasn't been born yet. Nevertheless, this association management company president made an obvious effort to honor his professional commitment, and he tried to please this association at all costs.
 
However, the group polarization phenomenon and the too-much-invested-to-quit phenomenon were very much at work. As the real or perceived disputes deepened, each side became more entrenched in their original position, yet neither side was willing to end the relationship because each was too invested in the situation to quit. Generally, it's is a good idea to cut your losses in situations like this at the time when you feel that had you know, then what you know now, you wouldn't have invested in them in the first place.
 
Group Polarization in Communities
 
The effects of group polarization are all around us, in varied social situations, and can often be observed in communities. "During community conflicts, like-minded people increasingly associate with one another. This amplifies their shared tendencies." [42]
 
Elvira Jackson, and her neighbors, tell a story of "a long, convoluted conflict that seems to never end"[43] that illustrates community polarization perfectly. Elvira lives in a community association in Mt. Imaginario, California, where she introduced me to several of her neighbors, two former community association board presidents, and one of the original combatants.
 
The conflict started about seven years ago between two couples: Ed and Melanie, and Gilda and her husband. Ed and Melanie, presently retired engineers, were members of the association's seven-member board. Depending on who's telling the story, they supposedly either left a ditch open or didn't light it sufficiently one Halloween weekend. No injuries resulted, but Gilda and her husband saw this as an opportunity to oust Ed and Melanie from the board. They accused them of gross negligence and the power struggle began.
 
Although Gilda's husband became president of the board, many residents agree that Gilda was actually running the show. I think this is probably true because I was struck in my conversations with the residents by the fact that no one used this man's proper name, everybody referred to him simply as "Gilda's husband," some even had a hard time recalling his name. I later found out that his name was Greg.
 
This association is located in the heart of Silicon Valley, and it has seen a tremendous upsurge in property values in recent years. Long-time residents have seen prices skyrocket, but not necessarily their incomes. People who paid about $200,000 for a house in 1995 could sell it in 2001 for $700,000. On the other hand, half of the properties in this association have changed hands many times and brought in new owners with higher incomes--which may have contributed to a sense of division in the community. Additionally, the side that newcomers take in The Conflict has become a way to build identity in this community association.
 
Today Gilda and her husband are gone; they sold their unit and moved away a year ago, but the community is divided on everything, no matter how trivial. Amazingly, the original issue is a distant memory.
 
While the scope of this book does not allow me to provide a detailed analysis of the evolution of this conflict, it's clearly a good example of the effect of group polarization run amok within a community association.
 
 

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