Managerial Decision Making in Organizations

If this was all there was to decision making, over time it should grow to be a relatively accurate and self-adjusting process. Existing theory does go beyond this, but there has been little application of it in business and governmental situations. In the following passages, additional theoretical considerations will be outlined in terms of an organizational context.

Many people are often involved in organizational decision making. Each additional party increases the complexity of the process greatly. Moreover, some of the thought processes are conscious and some are unconscious. The conscious thought processes are easier to analyze and learn from than are unconscious processes. Further, information from each “Other” may be selectively presented or distorted. If people are operating based on fragmentary or inaccurate information, the accuracy of their anticipations are likely to be negatively impacted.

Organizational decision making often involves more than a single “Self” and “Other.” Some decisions are made by an individual manager, while others are made by groups of managers. In the latter, one could think in terms of a “We” instead of a “Self” (Sumner, 1906). In addition, former managers often continue to exert influence long after they are gone. The current managers were socialized into the organizational culture by the former managers. In order to be promoted, the current managers had to embrace the historic culture. The role of a manager in terms of what goals should be sought, what means ought to be used and the typical range of corrective actions are often strongly influenced by predecessors (Schutz, 1971b:232).

Organizational leaders routinely anticipate the reaction of broader audiences. The senior executives regularly make decisions that impactgroups of middle managers, first line supervisors and employees. In such cases, “Other” takes the form of a group of people. Thus, one could think in terms of a “They” instead of an “Other” (Sumner, 1906). A historic cultural dimension normally exists in most workplaces. Whether one calls it informal organization, cliques or subcultures, predecessors have passed many things on to the current group members.

Organizational leaders often need to anticipate the reactions of multiple groups. The earliest view of senior executive decision making included suppliers and customers. Plans were made to take the resources provided by the suppliers and transform them into products that would satisfy customers (Freeman, 1985:38). Next, owners/stockholders and employees were added. These additions meant the revenue generated by sales had to be used to satisfy the employees, owners, suppliers and customers (Freeman, 1985:39).

In the 1980s, it was recognized there were far more “stakeholders” that should be taken into consideration, including governments, competitors, consumer advocates, environmentalists, special interest groups and the news media (Freeman, 1985). Historically, senior executives often ignored the issues each of these groups could raise. When a problem surfaced, they then reacted to it. This produced a crisis, reaction, crisis cycle. Alternatively, senior executives can be proactive by predicting external changes and altering the positioning of the organization ahead of time. They might also go further by engaging in ongoing interactive involvement with these groups to find more common ground and limit future concerns.

Some groups have largely uniform reactions, while others have varied reactions. If “Self” has previously been a member of a group, it should be easier to accurately anticipate reactions. Thus, managers should be better able to anticipate the reactions from employee groups than those of customers or the news media. Those who have little or no exposure to certain jobs, though, may not anticipate jobholder reactions very well. As the social distance grows, the accuracy of anticipations progressively declines (Schutz, 1971a:226).

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