Decision-making process - Essay Example

DECISION-MAKING AND RATIONALIZATION WITHIN ORGANISATIONS This paper will focus on the decision-making processes in modern companies, andexamine the role of decision support systems in an indeterminate world. In terms of how emphasis is laid on different phases of the decision-making process by managers, there are clear differences in the ways decisions are arrived at as indicated by results from empirical data. When different people within the organisation have responsibility that occurs in different stages, the analysis shows what happens. Also discussed is the importance of decision rationality in the analysis, and linked to the classical theories in decision making are the different cultural styles such as administrative man, economic man and muddling through. New models are suggested under the labels of action man and emotional man since the afore-mentioned are found inadequate to characterize the actual behaviour of organisations. An active area within sociology is the study of organizations for the past half-century. An overview is provided of the second half of the twentieth century of the emergence of this specialty, how it relates to the larger field of organization studies, as well as looking into the open system framework and the important theoretical advances associated with the adoption of such during the 1960s. Changes in our conceptualization of organization boundaries, controls and strategies, and the new era shift from an entity-based to a process-based view of organization are among the recent trends I described. The increasing number of sociologists now employed in professional schools shows evidence of success, and at the same time simultaneously raising concerns about the future of organizational sociologists. (Scott, W. Richard) In an indeterminate world, the role of decision support systems. Processing, and/or applying information and knowledge involves “Decision making” and depending on the characteristics of the decision making context, is appropriate and absolute information/knowledge mix. Central to decision making situations involving complexity and uncertainty is information or the absence of it, associated with problems of ambiguity and equivocal is knowledge or the absence of it. Appropriate to support decision making under conditions of uncertainty and complexity is computer-based decision support technologies as proposed by this paper, while under conditions of ambiguity or equivocal the more appropriate approach will be human-centric. For organizational learning to occur, both approaches must be integrated tightly. On the one hand occupying a middle ground between the study of organizations as command hierarchies is network theories of organization and on the other, portraying organizations as atomized rational decision-makers optimizing utility, is market theories. As such, in political science consistent with long-standing schools of thought is network theory such as pluralism, which lays emphasis on partnerships negotiation and alliance-building. It is as a matter of fact also related to governance theory as well as systems theory they both lay emphasis on the study of networks. In network theory, there is renewed interest obviously because networking is promoted by information technology, it ranges from the personal networking of MySpace to corporate networking in order to achieve and enhance competitive advantage that governmental will derive in networking of states on policy issues to global networking through international organizations. Every activity of human that is organized from pot making, to placing of a man on the moon -- two fundamental and opposing requirements arise from this: dividing various tasks to be performed, (division of labour) and the coordination of these tasks to accomplish the activity" “A degree of differentiation and integration in organizational boundary-spanning functions which is compatible with environmental demands is achieved by the most effective organizations” (Lawrence & Lorsch, 1967) "Formal organization: " In the course of social interaction, the goals to be achieved, the status structure that defines the relations between them and the rules the members of the organization are expected to follow have not been spontaneously emerged, but have been consciously designed a priori to anticipate and guide interaction and activities" (Blau & Scott, Formal Organization, 1962, p.5) A commitment towards the achievement of members goals by means of an explicit and stable structure of task allocations, roles, and responsibilities is one peculiar characteristic that distinguishes organizations from other collections of people. Informal groups and mobs are not organizations. Partly an organization is social and service clubs like Kiwanis and Rotary. However, there should be emphasis on the modes of behaviour in which organizations specialize as long as the concern is with organizational behaviour and not with social behaviour in general. Suitable for particular environmental conditions are different types of organizational structure. Argued that what is needed or deemed to be appropriate for stable environmental conditions is an organization with well-defined tasks and a rigidly hierarchical system of decision-taking. Deemed more appropriate, is an organic form of organizational structure in a situation where the environment is changing, in which case tasks are flexibly defined and cooperation by participants is on the basis of expertise and not on hierarchical positions. Internal shapes of organizations are now changed with a frequency and most times rashness that makes that makes people wonder. Titles are changed from week to week. Natures of jobs are transformed. Responsibilities shifted and reassigned. Vast organizational structures are revolutionized, and come out again in new forms. Departments and divisions spring up, and are circulated and recycled over again. In the aerospace industry, project organization are widespread...Proposal-writing teams most-times work together for a few weeks... new team are successively established for the development when the contract is won and ultimately for the production of the goods required... now proliferating and common throughout the government and business bureaucracies are task forces and other ad-hoc groups. A corporation can work seamlessly with professionals such as accountants, writers, web-designers marketers, lawyers etc through the internet. They remain "outside" the corporate walls as consultants rather than company employees... companies should focus on the areas where they are more competent... irrespective of the fact that there emergence of flexible boundaries that are new, there is no way that big companies would deconstruct themselves into per-project production companies. There is need therefore to excel in consistent in-house execution of their core competencies.... technology remains the key to do it more efficiently. They will experiment to find their optimal size and organizational structure. It is appropriate to take a look at administrative decision making. (March and Simon, 200) offer a descriptive approach that is described as the administrative decision-making model. This model depicts decision makers as operating with incomplete information and being impacted by their cognitive abilities and by psychological and sociological factors. Managers who are faced with limitations and restrictions often use what is referred to as the bounded rationality approach. In this approach the decision makers are assumed to have a limited or incomplete view of the problem or opportunities facing them. The number of solutions that can be implemented is limited by the capabilities of the decision maker and the resources that are available. Since the information, data, and knowledge are not perfect, which is best is known. In the bound rationality approach, the following assumptions are made: Managers (decision makers) rarely have all the information they need or want. Decision makers are not aware of all possible alternatives and are not able to predict consequences. Early alternative and solutions are quickly adopted because of constraint and limitations. The organization’s goals constrain decision making. Conflicting goals of different constitutions (e.g employees, customers etc) These bounded rationality-type assumption point to making decision that are constrained, limited but good enough. They are referred to as “satisfying decision”. We also have “Intuitive decision making”. Managers sometimes simply make decision based on feelings or intuition. The user of such makes use of experience, self-confidence to process information, data, and the environment or address a problem or opportunity. It has to do with an unconscious process that incorporates the decision maker’s personality and experience in giving a decision. This occurs frequently because of the following factors: An excessive number of alternative can be difficult to thoroughly analyzed High levels of uncertainty about a problem, the goals and the decision criteria can exist In some situations there is no history or past experience to draw from Time pressure is quite enormous These factors suggest that when uncertainty is high, time pressure are bearing down, and complexity exist, intuitive decision making is likely to be involved the rational and administrative explanations of decision making are appealing because there is some logic and system associated with each of these processes. But in chaotic, rapidly changing and pressure-packed situations, there is likely to be a lot of intuitive decision making going on. May it is better to combine the systematic and intuitive approaches when decision is to be reached. There some factors that influence decision making in an organization. Certain aspect of the process is influenced by these factors, while others influence the entire process. We shall take a brief look at some of these factors: values, propensity for risk Value: in the area of decision making, values can be thought of as guideline a person makes use of when a situation confronts him and a decision needs to be made. They area acquired early in life and they part of his thoughts. The following are some of the influences of value on the decision making process. In establishing objectives, it is necessary to make value judgement regarding the selection of opportunities and the assignment of priorities. In the evaluation and control phase, value judgement cannot be avoided when corrective action is taken In developing alternatives, it is necessary to make judgement about the various possibilities. In implementing decision, value judgements are necessary in choosing the means for implementation. It is also necessary to take a look at “propensity for risk”. Decision makers vary greatly in their risk taking. This one specific aspect of personality strongly influences the decision making process. The one who has a low aversion to risk will establish different objectives, evaluate alternative differently, and select different alternatives than will another decision maker in the same situation who has a high aversion to risk. It is also affected by whether potential outcomes are characterized in terms of losses or gains. This in turn, depends on how the decision maker “frames” the decision. It refers to the decision maker’s perception in terms of gain or losses of the decision maker’s possible outcome when it is seen as losses; there is a greater propensity to take risk than when it is perceived as being between gains. References Brunsson.N () The consequences of decision making Johnson, G and Kevan Scholes () Exploring Corporate Strategy Grundy, T (1998) Exploring Strategic Financial Management March, J.G. & Simon, H.A. (1958) Organization, John Wiley & Sons, New York Scott, W. Richard () Reflections on a Half-Century of Organizational Sociology Stanford University, Stanford, California 94305 Scott, W.G. (1961) Organization Theory: An Overview and an Appraisal, Academy of Management Journal, 4, 7-26. Scott, W.R. (1987) Organizations - Rational, Natural, and Open Systems, Prentice- Hall, New Jersey Thompson, J.D. (1967) Organizations in Action: Social Science Bases of Administrative Theory, McGraw-Hill, New York, Thompson, J.D. & McEwen, W.J. (1958) "Organizational Goals and Environment: Goal Setting as an Interaction Process," American Sociological Review Read More