Decision-Making in Organisations
Alistair McKinnon 2003 Copyright Reserved
This report examines the topic of decision-making. It attempts to identify the important elements of decision-making and present them in a form that will help the understanding of managers. The report’s scope involves the processes that managers at all levels go through in making a decision, through to the issues surrounding the implementation of a decision. One of the main issues covered in this report is the role of politics in decision-making. The process of decision-making is also an important area to understand, with Mintzberg, Raisinghani & Theoret (1976) providing a useful general model of the strategic decision process. Butler, Astley, Hickson, Mallory & Wilson (1979) supply eight variables that can be used to understand how a decision process works in an organisation. Basi (1998) gives insight to the types of decision-making skills individuals require at various levels in an organisation. The area of decision implementation gives rise to models that can help provide a match with a decision solution and an environment. The structure of this report begins with this introduction, followed by a discussion section. Here the research area of decision-making is briefly summarised, with important works (classic and contemporary) being identified. Following this, three papers that are of great interest to managers are summarised. These are Henry Mintzberg and colleagues’ classic 1976 work ‘The Structure of “Unstructured” Decision Processes’ (Mintzberg et al. 1976), Richard Butler and colleagues’ 1979 research on ‘Strategic Decision-Making: Concepts of Content and Process’(Butler et al, 1979), and finally a contemporary analysis of decisionmaking by Raghbir Basi entitled ‘Administrative Decision Making: a Contextual Analysis’ (Basi, 1998). Closing the report are the conclusions that succinctly identify the important elements that managers should understand about decision-making. Whilst this analysis of important issues in decision-making tries to cover a wide area, it cannot hope to be an exhaustive list of ideas in the field. The reader curious to learn more about decision-making and the decision-making process is urged to read some or all of the references listed in section 4 of this report.
2. Discussion 2.1. Decision-Making Research
One of the first works to give insight into the decision-making process is that of Simon (1945, cited in Miller, Hickson & Wilson., 1996). He viewed the choice process involved in decision-making as being ‘saticficing’, rather than ‘optimising’. This is because decisions cannot be made in a completely rational manner due to limitations of organisational complexity and managers’ cognitive abilities. This general concept of bounded rationality links to the examination of the decision-making process in more detail. Lindblom (1959, cited in Miller et al., 1996) shows that the decision-making process is not linear or sequential in public institutions. A more iterative model was shown, with existing strategies being tweaked with no great steps forward (Lindblom, 1959, cited in Miller et al., 1996). Mintzberg et al. (1976) provides a breakdown of the process into various stages (examined in detail in section 2.2.1), while Hickson et al. (1986, cited in Miller et al., 1996) defines decisions as being either sporadic, fluid or constricted. Sporadic processes are characterised by delays, whilst the opposite is true for the more structured fluid processes. Constricted processes are a mixture of both sporadic and fluid, but tend to focus on one individual who is making the decision and who makes use of a wide range of resources (Hickson et al., 1986, cited in Miller et al., 1996). Investigating the decision-making process in investment decisions, Butler et al. (1993, cited in Miller et al., 1996) found that computation, judgement, negotiation and inspiration...