The strategic consensus management of the modern organization is necessary for making important decisions and in solving complex problems that concern its present and future.
His credo can be described with the maxim “Consent determines power.” Consensus is associated with full agreement and comprehensive agreement on debated issues. It means engaging, persuading, accepting, supporting, cooperating, cooperating, consolidating, harmonizing, respecting, balancing, and adapting in the process of seeking and finding an acceptable solution for all.
It requires the presence of an appropriate atmosphere in the governing and executive bodies, which encourages, stimulates, encourages, and activates the thinking and actions of the people. Excludes confrontation, opposition, rivalry, sabotage, polarization, etc.
Consensus decisions of managers
Consensus solutions are crucial for the successful development of the individual company. In practice, they can be taken as a result of negotiations or voting. In some cases, it is appropriate to combine the two methods to obtain better results.
Consensus decisions are collective and express the will of the management of the company. In complex and complex situations, they prove to be significantly more efficient than conventional solutions.
They require competent, responsible, rational, and pragmatic thinking and behavior. They are based on the receipt of general support and full assistance from the staff of the respective company.
Reaching consensus through negotiation
Achieving consensus through negotiation is done gradually “step by step”, making appropriate proposals, agreements, compromises, concessions, etc. The presence of constructiveness, dialogic, correctness, openness, transparency, sincerity, equality, goodwill, etc. is essential.
It requires significantly more time, as it mainly focuses on in-depth discussion and serious discussion of the issues under discussion.
It is used in smaller groups (up to 15 people), which allows to fully engage the attention of all participants. According to P. Odeber-Larosha1, negotiations are an important tool for company managers. They are related to preparing positions, organizing meetings, holding talks, exchanging opinions, etc. They aim to reach a high degree of agreement regarding the development directions of the individual company.
The negotiation process
The negotiation process involves presenting, discussing, reasoning, agreeing, persuading, incorporating, perceiving, and finalizing the results. Achieving consensus requires strong abilities to persuade, suggest, understand, react, agree, and more. World practice shows that the negotiations should focus more on existing similarities than on existing differences.
This allows the similarities to increase permanently and the differences to decrease. Negotiating parties often come under internal and external pressure from lobby groups. This adds to the tension and significantly limits the scope for rapid agreement on the issues debated. Reference: “Negotiation strategies in a multicultural business environment”, https://www.nebraskasocialstudies.org/negotiation-strategies-in-a-multicultural-business-environment/
Collective consensus is difficult to achieve in pseudo-negotiations when the participants consciously do not intend to reach a common agreement.
Various negotiations are constantly taking place inside and outside the companies. Of particular importance for business, respectively, are labor and social negotiations, and on the other – trade and financial negotiations with current and future partners.
Achieving consensus by voting
Achieving consensus by voting is based on the expressed preferences of individuals, formed by ranking the proposals made. They fully preserve their identity and individuality. Unlike the majority principle, voting is always positive for the proposed things and is realized by an approving vote of all voters.
However, the differences in opinions persist, which is reflected in the specific arrangement of the options considered by the individual participants. It is done in relatively less time because the focus is mainly on the expediency of solving things.
It is applied in larger groups (over 15 people), which allows to quantitatively summarize and process the assessments of more participants. Determining consensus by individual voting involves the selective ranking of the proposed options by the importance of the individual participants and the calculation of the level of agreement using different coefficients – consensus coefficient C, coefficient of variation V, correlation coefficient ρ, concordance coefficient W, etc.
The consensus ratio indicates the collective agreement regarding the top position. It varies in the range from zero to one hundred, and the higher value is identified with greater consent.
The coefficient of variation characterizes the degree of scattering of the obtained estimates for the individual alternative. The lower its value, the higher the coherence. The correlation coefficient shows the level of similarity between the two rankings. It varies from plus to minus one. The achieved similarity is more significant at a higher positive value.
The concordance coefficient indicates the degree of agreement of all participants on the collective arrangement. Its value varies from zero (complete absence of an agreement) to one (the complete coincidence of opinions). The real value of the coefficient W is determined by the variation in the individual estimates. Its significance can be judged by the “chi-square” criterion.
When the estimated value χ2 is greater than the tabular value χ2 it is assumed that there is non-random agreement among the surveyed participants. The specified coefficients are calculated with the software systems “Expert” and “Consensus”.
The collective strategic consensus in the organization
The collective strategic consensus in the organization is the result of the positive thinking of its leaders and specialists. Reference: “To be a leader means to be awake”, https://www.policymatters.net/to-be-a-leader-means-to-be-awake/
Facilitates the coordination of their views, views, perceptions, and positions. It generally excludes the right of veto by influential groups or individuals. It seeks unifying things that largely unite people and consolidate their efforts to achieve ultimate success.
In the modern company, there are various management and working, expert and reference, permanent and temporary, formal and informal groups, which play a significant role in its management and perform various functions. Reference: “Effective management of organizations”, https://www.businesspad.org/effective-management-of-organizations/
They differ in size, structure, hierarchy, maturity, tasks, and other essential characteristics. Satisfy the human need for group affiliation and help our members in various circumstances, especially during serious crises and dangerous situations. Groups generally make better decisions than individuals.
They are significantly committed to their practical implementation. Collective consensus should not be equated with group (tunnel) thinking, which harms decisions. Participants can be differently engaged, integrated, associated, reserved, or neutral. The only requirement is to completely avoid aggression, hostility, conflict, confrontation, counteraction, antagonism, hatred, etc.
Important decisions in modern organizations
Important decisions in modern organizations are usually made by their governing and working bodies. They involve authorized individuals who have a specific attitude towards the things under discussion. This requires the realization of consensus among the members of the groups.
Political consensus is usually sought in governing bodies (boards of directors, supervisory boards, etc.), which express certain interests of different circles (owners, managers, shareholders, creditors, etc.). It is based on finding common ground and joint formation of common positions. It is achieved by conducting successful negotiations between the stakeholders regarding the policy pursued by the respective company.
The egalitarian consensus is based on the equality of the participants in the working groups (commissions, committees, etc.), where practical measures are proposed for the real solution of problems. It is also realized through active negotiations between responsible persons who occupy high positions in the administrative hierarchy of the individual organization.
The management consensus
Management consensus is needed in making strategic decisions to make changes, enter markets, modernize production, improve technology, redirect investment, allocate resources, and more. It is sought in the management groups in determining the leading priorities in the development of the company.
The expert consensus
Expert consensus is needed in the working groups, where current issues related to the current activity are professionally discussed. It is achieved by consistent ranking by selected indicators that best describe their importance to the organization.
Consensus management of the modern company
Consensus management of a modern company requires the correct determination of its orientation and focus, which are reflected in the policy.
The policy of the individual company can be oriented according to the objective conditions to expansion or the struggle for survival. The growth policy is related to the improvement of competitiveness, development of potential, technological innovation, product innovation, investment, diversification of the assortment, sales promotion, improvement of distribution, increase of productivity, and others.
Consensus solutions should focus mainly on the introduction of new products and the development of new functions to meet the needs of the market. The survival policy should be implemented by eliminating excess capacity, reducing production costs, getting rid of unnecessary equipment, reorientation of activities, and more. However, this policy can only temporarily solve the problems of the company.
At the same time, it is necessary to create favorable preconditions for perspective development. Consensus solutions should focus mainly on eliminating obsolete products and inefficient functions and replacing them with new ones. In addition, it is necessary to modernize production, change the product range, increase quality, enter new markets, improve the organization, and more.
The implementation of the strategic consensus
The implementation of the strategic consensus requires an objective assessment of the impact of the environment and the company environment. Various political, economic, social, market, financial, resource and other factors operate in the environment, which forms the business climate in the country. Political factors determine the security, stability, commitment, and effectiveness of institutions.
Economic factors concern the size and growth of GDP, the level of inflation, the level of prices, the volumes of exports and imports, the trade balance, etc. Social factors are characterized by the size and structure of the population, people’s incomes, the level of employment and unemployment, migration and emigration, etc.
Market factors shape the size and structure of the market, the level of supply and demand, the degree of competition, and more. Financial factors determine government spending, the amount of taxes, excises, and duties, the volume of investments, and more. Resource factors determine the availability of humans, material, energy, water, information, capital, and other resources.
In the company environment, various factors are influencing the ongoing processes and the achieved results. Reference: “Reorganization of business processes in the organization”, https://w-europe.org/reorganization-of-business-processes-in-the-organization/
The main factors are the potential of the company, the quality of production, the availability of markets, the financial situation, the level of costs, the qualification of the staff, and others.
In 2005 a practical study of the strategic orientation of the company “Production Co” was conducted, in which 16 managers took part. They determined the importance of the factors from the environment and the company environment with the help of a scale from 1 (very low importance) to 5 (very high importance). The consistency of the collected scores was assessed by the coefficient of variation V and by the coefficient of concordance W. Significance was measured by the coefficient of relative importance.
The surveyed managers point out the market, financial and economic factors as the most significant for the company, which significantly influence its activity. The values of the coefficients of variation vary in the range from 10.52% to 13.79%, which indicates the presence of consistency between the scores. The calculated value of the concordance coefficient is 0.845, which also indicates a high degree of agreement. The estimated value χ2 р = 67,625 is higher than the tabular value χ2 т = 15,086, as the probability of non-random coordination of the opinions of the managers exceeds 99.0 percent.
The most important for the company, according to its managers, is the financial situation, the availability of markets, and the level of costs, which greatly affect its competitiveness. The values of the coefficients of variation vary in the range from 9.62% to 11.92%, which again speaks of consistency in the group. The calculated value of the concordance coefficient is 0.751, which also shows a high degree of agreement. The estimated value χ2 р = 60,041 is higher than the tabular value χ2 т = 15,086, as the probability of non-random consistency of the estimates exceeds 99.0 percent.
The management team evaluates the strategic guidelines of the company using a ranking scale from 1 (most important) to 6 (least important).
The summarized assessments indicate that the expansion of the markets, the renewal of the production, and the modernization of the production are of strategic importance for the future development of the company. Reference: “Strategic modeling for organizations”, https://www.mmrls.org/strategic-modeling-for-organizations/
The level of consensus among its managers regarding these strategies is 91.67%, 78.13%, and 67.71%, respectively. This is largely due to the high values of the correlation coefficient, of which over 60.0% are in the range between 0.8857 and 0.9429. The strategic collective consensus shows that there is a strong understanding among the management team about the company’s development guidelines.
The strategic consensus management of the modern company means an irreversible transition from rivalry to cooperation. It is based on building a corporate spirit that ensures equal access of all managers and associates to management decisions.
Encourages interaction between people and cooperation of efforts in the work process. Facilitates compliance with interests, maintaining values, achieving transparency, overcoming doubts, correcting mistakes, etc. Consensus management is aimed at harmonizing human relations and coordinating management actions with a view to the prosperity of the whole company.