A Group Decision Making Technique for Appraising the Performance of Organizations

1 Ping-Hung Liu and 2 Chiu-Chi Wei

1 Instructor Department of Industrial Engineering and Management Yung-Ta Institute of Technology and Commerce Ping-Tung, Taiwan

2 Professor Department of Industrial Engineering and Management Chung-Hua University Hsin-Chu, Taiwan

Abstract Keywords: group decision, AHP, DHP, NGTHP The performance of an organization is usually appraised in terms of multiple criteria using a group of expert panels. However, when a decision is highly complex I. INTRODUCTION coupled with personal interests and emotional factors, a rational technique is Ever since Adam, human beings have necessary to extract the individual encountered multiple criteria decision- preferences objectively in order to optimize making problems (MCDM), such as picking the decision outcomes. This article proposes the juicy fruits to fill one’s stomach and a new evaluating technique for making selecting the right place to dwell and stay. group decisions efficiently and objectively. Indeed, looking back into human history, one An application example appraising the can find that MCDM problems are performance of the industrial engineering omnipresent politically, economically, and department of all colleges in Taiwan is used socially. As a result, it is usually impossible to illustrate the applicability of the proposed to deal with a decision in terms of a single method. Results indicate that the new criterion. Many evaluating techniques have approach is suitable for making decisions been proposed in helping decision-makers to with multiple criteria. reach a sound conclusion. It is noted that an appropriate technique should be selected for performance appraisal, risk assessment, a specific problem if a robust decision is to system design, optimization, and resource be expected. Moreover, special attention allocation. should be paid so that no evaluating technique can be applicable everywhere. In the case of making a decision Accordingly, applying the proper technique individually, the best alternative can be to the adequate situation is essential for the easily determined in accordance with the successful determination of the objective. preference of the decision-maker. When the decision is to be decided by a group of The evaluating techniques can be people, especially when decisions are highly invariably divided into two categories, the complex and coupled with personal interests objective and the subjective methods. The and emotional factors, it is very common that objective technique evaluates decisions conflicting preferences complicate the mostly based upon the numerical data; thus, evaluation processes leading to an erroneous conclusions can be fairly supported without conclusion. Therefore, it is necessary to any ambiguity. It is, hence, the subjective extract the individual preferences rationally decisions that need to be as objectified as and objectively in order to optimize the possible by means of the multiple criteria decision outcomes. To objectify the evaluating techniques. Weighting methods decision, group decision making is are commonly used in objectifying the frequently employed. Essentially, group subjective decision making problems in such decision making can be viewed as a process a way that qualitative comparisons are in which different individual interests are quantified and ranked. Of the techniques reduced and integrated so as to form a single available today, AHP (Analytic Hierarchy group preference or choice, Figure 1 depicts Process) [Saaty 1980] has attracted much the group decision making processes. attention and been widely used in areas such as project evaluation, organization

Many techniques have been applied for applied to transform the sets into a structural unifying the individual preferences. DEA map representing the final preference (Data Envelopment Analysis) [Charnes favored by the decision makers. The goal of 1985] was derived in view of the concept of this study is to propose a new evaluating productivity and proposed by Charnes and procedure for making group decisions Cooper to evaluate the organization efficiently and objectively. The materials preference by obtaining the output/input that follow introduce the basic concepts of ratio. Saaty (1980) developed a method, AHP. The method developed previously now widely known as AHP, to select the best called DHP is also described. A new alternative. The relative weights among technique termed as NGTHP based on this criteria are identified by constructing the study is proposed. Comparisons between pairwise comparison matrix and computing DHP and NGTHP are also indicated. the eigenvector indicating the priority. Cook and Kress (1985) presented an ordinal ranking technique with intensity of preference considered to determine the best II. AHP (ANALYTIC HIERARCHY ranking. Cogger and Yu (1985) established PROCESS) a different method for finding the weights based on the eigenvector. Matarazzo (1988) Thomas L. Saaty invented AHP in 1971. formulated another method called PRAGMA It aims primarily at simplifying the complex (Preference Ranking Global Frequencies in evaluation problems into structural Multicriterion Analysis) to construct the hierarchies. The major evaluating criteria ranking frequency matrix underlying the are first identified, and consecutively criterion involved. Rivett (1987) created a subdivided into hierarchical levels. Items at structural mapping procedure to firstly the lowest level represent the alternatives classify alternatives of indifference into sets, that are to be compared and selected. Once an algorithm named MDSCAL (Multi- the problem has been structured, the items or Dimension Scaling Algorithm) is next evaluating criteria at each level are pairwisely compared with quantitatively prevent decisions from being dictated constructed positive reciprocal matrix. The personally. Delphi method is one of the corresponding eigenvector with respect to systematic procedures used for extracting the principal eigenvalue of the matrix is expert judgments. The Delhi approach determined and normalized. The normalized typically involves three stages: (1) the design values imply the potency with which the of questionnaires, (2) the solicitation of various items in one level influence the items group judgments, and (3) the collation of in the next higher level. Therefore, the responses. It is implemented by utilizing a relative impacts of the lowest level on the panel with members in communication overall objectives can be computed. The remotely through several rounds of analyzing process of AHP can be illustrated questionnaires transmitted in writing. To as Figure 2. strengthen the objectivity of AHP, Khorramshahgol and Moustakis (1987) suggested a new technique termed as DHP (Delphi Hierarchy Process), which III. DHP (DELPHI HIERARCHY incorporates Delphi method to collect expert PROCESS) judgments. Figure 3 clearly demonstrates the procedures of DHP. As stated previously, group participation is frequently employed to Implementation of DHP can be IV. NGTHP (Nominal Group Technique briefly described as follows: Hierarchy Process)

Step 1: Select an appropriate set of people NGT (Nominal Group Technique) was familiar with the problem to design originated by Delbecg and Van de ven in and collate the questionnaires. 1968. It amalgamates brainstorming, Step 2: select and contact the respondents brainwriting, and voting technique for idea with information or experience generating and problem planning. The term concerning the objectives. “nominal” implies that the process is silent Step 3: Send questionnaire #1 to the and independent, in other words, it is a respondent panel to identify method that brings appraisers together, but objectives or criteria. Objective or prohibits them from verbal communication. criteria with low rank are The NGT has been extensively used in eliminated. social, health, education, industry, and public Step 4: Send questionnaire #2 to administrative organization. NGT is respondents to construct the conducted in such a way that a discussion pairwise comparison matrix. meeting is called to generate ideas on the If dispute exists in relation to the focused issue and each expert is asked to value of any element in the matrix, write down personal opinion, the written the arithmetic mean is taken. opinions from experts are then collected and Step 5: Determine the eigenvector duplicated on the board. Experts are next corresponding to the principal expected to comment on each opinion. After eigenvalue of the matrix a complete and thorough discussion, the obtained from step 4. The relative opinions are arranged and voted by all priorities among objectives or experts to determine the final group decision. criteria can therefore be easily attained by normalizing the It is described earlier that DHP eigenvector. consumes resources greatly, hence, a new method named NGTHP is suggested to It can be seen that DHP adopts Delphi eliminate the limitations of DHP and method to obtain expert judgments. Thus, facilitate the group decision-making the questionnaires are communicated processes. NGTHP combines AHP and remotely and transmitted in writing. In NGT to collect opinions face to face, consequence, the process is not only time- consequently, ambiguities can be instantly consuming but requires a great amount of clarified, unnecessary waste of time can expenses and manpower, which could mean therefore be saved. Figure 4 delineates the to miss a chance of market penetration or an processes of NGTHP. explosion of budget. Taking this into consideration, authors develop a better method in contrast to the DHP technique.

The implementing processes of NGTHP Step 6. Members are asked to suggest the are detailed as follows: priorities of ideas from the entire list. Ideas with low rank are Step l. Inform experts of the problem. eliminated. Step 2. The leader opens the meeting by Step 7. Clarify the inconsistent voting indicating the sincere interest of patterns as to ideas that are solving the problem. perceived as receiving too many or Step 3. The members silently write down too few votes. personal ideas in regard to the Step 8. Construct the hierarchy and objectives or criteria without pairwise comparison matrix. discussion with each other. Step 9. Calculate the principal eigenvalue Step 4. The leader records the ideas of group and check the consistency ratio of members on a board visible to the each level. group. conflicting ideas should be Step10. Normalize eigenvector corres- tolerated. ponding to the principal eigenvalue. Step 5. Clarify or dispute with the ideas. Step 11. Check the consistency ratio of the hierarchy. It is to be noted that the NGTHP is Step 12. Conclude the group decision. developed for appraising the organization performance because of the following Compared to DHP, the major reasons: advantages of the NGTHP can be summarized as below: (1). The appraisal committee evaluates subjective criteria anonymously at 1. Posses the efficiency of the NGT in first. A discussion meeting is next extracting the expert judgments and the summoned to determine the final easiness of the AHP in prioritizing the scores. objectives or criteria. (2). The necessity of conducting the on- 2. Collect the opinions in a relatively short the-spot investigation. time leading to group preference (3). The limitation of the time schedule. objectified. (4). NGTHP is capable of evaluating 3. Objectives or criteria with low rank can subjective criteria. be removed, subsequently, unnecessary pairwise comparisons can be avoided. After a productive written and verbal discussion, the evaluating criteria are identified and structured as shown in Figure 6. It is obvious that three levels form the V. APPLICATION EXAMPLE entire hierarchy of which level two consists of six criteria, level three includes sixteen To validate the proposed method, a real criteria. Moreover, eleven colleges are to be application appraising the performance of the compared and appraised. It is followed that industrial engineering department of all AHP is applied for suggesting the priorities colleges in Taiwan is conducted. Figure 5 of the performance of the industrial shows the appraisal procedures. engineering department among those colleges. A program written in C+ and runs on personal computer is developed to assist NGT and AHP so that the expert judgments the appraisers in determining the scores. The can be taken in efficiently and decisions can final appraisal results are listed as Table l. It be concluded objectively. The NGTHP is apparent that college K receives the outperforms DHP in extracting the expert highest score and thus performs better than opinions. DHP requires a great amount of the others. On the contrary, college H is the resources and time to solicit and collate worst. Further examination of the result comments. Whereas, NGTHP gathers reveals that college H needs to improve the recommendations face to face, hence, design of the curriculum, namely, criteria nebulosities can be instantly clarified on the (2,3), especially, the arrangement and the spot, unnecessary waste of time and material. Since they are the most defective expenses can thus be avoided. In essence, items and receive the lowest scores. the main purpose behind the performance Similarly, the items that need to be improved appraisal is to provide the organizations with for other colleges can be easily discovered. constructive suggestions so that the shortcoming can be corrected. NGTHP enables colleges to trace back deficient items, therefore, actions can be taken to VI. CONCLUSION improve the overall performance. It is believed that, through proper An efficient evaluating technique for implementation, the NGTHP can be a useful making group decision has been presented. technique for solving multiple criteria The proposed method, NGTHP, includes decision-making problems.

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