What is decision-making?
The process of choosing between two or more possible courses of action or perspectives is known as decision-making.
Definition and Origins
Mary Parker Follett (1942), a pioneering organizational theorist, wrote about decision-making complexity when few others did. Managers and employees, in her opinion, must learn how to cultivate conscious knowledge of their experiences by, among other things, giving them opportunities to participate and take on responsibility and accepting orders in a way that respects their dignity. When decisions are made, the decision-maker must be conscious and willing to follow the law of the situation, just as the decision follower is aware and willing to follow the direction of the case when the decision is made.
Follett believes that to make effective decisions, decision-makers must be aware of the circular nature of orders – that is, that the reasons for acceptance by followers always include the reasons for non-acceptance – and be aware that orders are circular in nature. When discussing decision-making, the vast majority of people prefer to avoid discussing allegiance to those who make the decisions instead of focusing on the rationality and articulation of those conclusions.
Making decisions entails assessing the facts at hand to select the best course of action. One of the most common descriptions of decision-making in management textbooks is a rational process (that is, a judgment based on the use of data or evidence). In terms of structure, this explanation appears to be very close to a description of the control process.
An appropriate rational model of decision-making, as described in this perspective, entails decision-makers first identifying the problem to be addressed or the issue of concern; second, gathering and analyzing relevant data and evidence that pertains to the problem/issue in question; and third, solutions to the issues should become apparent, and action plans should be developed as a result of the analysis. Because multiple solutions/plans would be visible, decision-makers would be required to select the best one based on a set of criteria developed from a thorough description of the problem/issue in the vast majority of cases. After identifying an optimal solution or plan, decision-makers would implement that solution or strategy.
Decision-makers would assess the success or failure of the solution/plan during and after its implementation, and they would provide feedback to determine whether additional action or problem resolution was required.
An important caveat to this description of rational decision-making is that all problems or anxieties (and, by extension, their solutions or plans) occur in three distinct types of contexts: social, political, and economic environments, in that order.
A certainty environment is one in which decision-makers have complete information about the environment and, as a result, understand how effective solutions or plans should be implemented.
When decision-makers do not have complete environmental information, they can’t predict the success or failure of solutions or plans. This is referred to as a “high-risk” situation.
An ambiguous environment in which decision-makers have only a limited understanding of the environment and, as a result, only a little knowledge, or even no comprehension, of how successful their solutions or ideas will be.
Kurt Lewin and his colleagues (Lewin, Lippitt, and White, 1939) were pioneers in studying the various decision-making processes used by managers, and their findings are still used in decision-making today. Management experts developed the following decision-making process continuum based on their original contrast of democratic versus authoritarian decision-making styles:
Managers who use an autocratic management style make decisions independently, without consulting anyone else. Instead, they make decisions based on the information available to them.
When a manager employs an autocratic/consultative management style, they seek additional information from subordinates before making a final decision on their behalf.
Consultative managers meet with their employees one-on-one to gather information and ideas about the best decision to make before making the final decision on their own. Consultative managers meet with their employees one-on-one to gather information and ideas about the best decision to make before making the final decision on their own.
When making a decision, the manager consults with their subordinates as a group, gathering information and ideas about the best course of action. Finally, the manager decides in front of the entire group.
After the manager has discussed the matter with them and provided any relevant information they may require, a group of subordinates makes a decision. The group then decides while management monitors the discussion.
Laissez-faire management occurs when management defers to and does not intervene further in the group’s decision-making process.
March and Simon (1958) cast doubt on the rational decision-making paradigm, claiming that no optimal solution can be chosen because no solution can be known in advance. As a result, management operates in a world in which they can never fully comprehend the full complexity of any problem, never have access to all relevant information, and never have knowledge of all possible solutions, resulting in decision-making becoming an arena of uncertainty and ambiguity – otherwise known as a world of political decision-making. They developed the Carnegie model, which was based on bounded rationality, to accomplish this.
According to March and Simon, we will never be able to achieve true rationality in our decision-making and will have to be content with using an incomplete set of criteria to make our choices, be satisfied with using means/ends analysis to reach a goal agreement, and allow for further specialization of organizations to hopefully improve our boundaries of expertise.
The concept of the garbage can decision-making model aided in clarifying this point of view. As demonstrated in 1972, when there is disagreement about the nature of the problem or goal and the knowledge required to make a decision, the likelihood of selecting an effective solution is, at best, a random process.
Nils Brunsson (1985, 1989) proposed the concept of irrationality in decision-making as an alternative to rational decision-making, taking the critique of sound decision-making a step further. Irrationality in decision-making is the phenomenon in which the amount of commitment to a particular activity increases for illogical rather than rational reasons. When this happens, the action is considered successful. Solutions that are approved because they are based on political power rather than logic, and decision-makers who only consider the positive and expected consequences of their decisions, are two examples.
According to Brunsson, rational thought may reduce the desire to act due to increased doubt caused by a person’s lack of understanding of all possible answers and access to all relevant information. According to Brunsson, the level of motivation and commitment required to carry out the desired activity is more important than logic in deciding whether or not to engage in the activity.
In response to these two criticisms of rational decision-making, Vroom, Yetton, and Jago (1972, 1988) developed a decision tree model. The decision tree model was created to help leaders achieve success through sound decision-making practices (Vroom and Yetton, 1972; Vroom and Jago, 1988; Vroom and Yetton, 1972). When faced with various situations (e.g., information available/not available; decision important/not necessary), the leader would choose a basic decision-making style that was appropriate for the circumstances (e.g., agreement/disagreement with the problem; high/low probability of acceptance), and whether the decision involved individuals or groups (i.e., autocratic, consultative, participative).
Discussion from scholars:
Because of the development of evidence-based management, there has been a tremendous breakthrough in the field of decision-making in recent years. This, according to the authors, entails combining practitioner knowledge and judgment with contextual evidence, an assessment of published research, and participant participation to make effective decisions (Briner, Denyer, and Rousseau, 2009).
It is, in their words, “a collection of practices adopted by the practitioner to raise concerns about uncritical acceptance of other firms’ best practices—to produce one’s own best practice—to develop one’s own best practice.” Going thru the steps of discussing and clearly articulating the issue, gathering and reviewing internal organizational evidence or data, gathering and reviewing external evidence or data (for example, published research), collecting and considering the views of participants, and beginning the process of making a decision choice is usually straightforward (Strategy and innovation).
Che and Kartik conducted a theoretical examination of the situations in which a decision-maker will consult with an advisor or consultant before finalizing a specific topic (2009). They predicted that as the gap between the advisor’s and decision-makers’ perspectives grew, so would the number of discoveries.
Each side must put forth more effort to persuade the other party. When decision-makers take a new path or depart from previous practice, they are expected to exert even more effort to persuade those who have followed their lead. Wen and Zhou (2009) take a theoretical approach to decision-making, arguing that when making critical decisions with limited information, a manager should act with openness – that is, to consult with and consider the opinions of subordinates.
When making a wise decision, the decision-maker must establish objectives that are relevant to the decision at hand (Bond, Carlson, and Keeney, 2008). The Oxford English Dictionary defines a goal as “a desire that a decision-maker intends to achieve through the implementation of choice.” (Environmental Uncertainty) – or, to put it another way, the criteria or goals that have been established. Bond and colleagues discovered evidence for the following hypotheses when they conducted a study on students attempting to develop goals to improve the quality of their decision-making:
People become ensnared in a minimal mental image while contemplating a decision, preventing them from considering a wide range of alternatives. This means that rather than triggering several unrelated (but critically important) objectives in the process, they only generate the purposes that are cued by this inaccurate representation. page 68, 2008
Decision-makers are less likely to generate and evaluate alternative objectives to avoid this.
In comparison, in their 2010 research, they argued against the widely held belief that as the number of ideas increases, so does the quality of those ideas (Briggs and Reinig, 2010). Instead, according to the authors, each decision maker’s solution space has several borders. These include, among other things, a “capability boundary, a comprehension boundary, a focusing boundary, a goal congruence boundary, and an exhaustion border.”
As a result, the relationship between a person’s output quantity and the quality of their output becomes curved rather than linear, “with a positive but decreasing slope,” to use an expression. Several studies, including those by Kaufmann, Michel, and Carter (2009), investigated supply chain management decision-making in 15 companies and discovered that decision-makers attempted to increase their effectiveness by implementing a variety of debiasing strategies, lend support to this conclusion. They may reduce the complexity of difficulties by standardizing supplies, for example, or by limiting the number of vendors available to them.
To name a few examples, cross-functional groups, feedback sessions, computer-supported feedback data, and teaching management how to recognize decision biases can all be used to improve the rationality of decision-making processes.
As a result, decision-making models can be classified into several categories, ranging from rational approaches that prescribe several stages in decision making to political systems such as the Carnegie model, contingency approaches (Vroom and Jago, 1988), and intuition-driven approaches that are based on intuition (Brunsson, 1989).
Source:
Corporate governance. (2013). In A. L. Cunliffe, & J. T. Luhman, SAGE key concepts: Key concepts in organization theory. Sage UK. Credo Reference: https://go.openathens.net/redirector/adler.edu?url=https%3A%2F%2Fsearch.credoreference.com%2Fcontent%2Fentry%2Fsageukot%2Fcorporate_governance%2F0%3FinstitutionId%3D4074
