"Risk Perception"
Risk perception is influenced by conscious, subconscious, and
affective factors. Conscious factors are associated with
familiarity of situation, proximity, severity of impact, group
dynamics, and organizational culture. On the other hand,
subconscious factors are based on cognitive and heuristic bias.
Nonetheless, affective factors are based on emotional situations
and factors. The conscious factor in the projects that involves
outsourcing includes familiarity, manageability, and severity of
impact. The organization may have been familiar with the previous
high cost of production. This may be the reason for the company to
outsource its production. Furthermore, it would be easier to manage
outsourced employees other than those who report directly to the
management of the company (Boone, 2012). The severity of impact as
conscious factors may have led to the decision of outsourcing. With
outsourcing, the company would be able to spread its risks and
improve the effectiveness of risk management. Next, the
subconscious factor in the project includes the precautionary
principle. This is an approach to cope with possible risks in a
situation that scientific understanding is not yet complete. In
this case, the organization might have the seen the possible risks
associated with production such as machine breakdown. Outsourcing
is a strategy that would deal with the possible production risks in
the future. I think the affective factor that would have
contributed to the outsourcing decision is fear. The fear of the
risks that may affect the production process led to the outsourcing
decision. This is an effective strategy of coping with the dynamic
and volatile business environment. It may difficult to address the
employees on the outsourcing decision. I think it is important to
consider compensation when making the announcement to the
employees. It is an ultimate fact that some employees will be
relieved from their duties. Therefore, the employees should be
addressed in a manner that will show that the management is
concerned on their fate. There may be organizational resistance,
and there is need to use an inclusive approach in addressing the
issues (Boone, 2012). A participative approach in addressing the
issues would reduce the overall resistance on the project.
References
Boone, L. &. (2012). Contemporary Business (14th Ed.).
Hoboken, NJ: John Wiley& Sons.
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