Decision Making at the Organizational and Individual Level
Authored by: Kedisa Johnson October 31, 2010
Abstract This paper will attempt to outline comparable and parallel ideologies of decision making at the individual and organizational level as well as the differences between the two. Employing both Harrison’s and Simon’s definition of decision making, the topic will also be explored within the context of organizational learning--an important construct of decision making at the organizational level that also has an impact on individual decision making within an organization.
An overwhelming amount of scholarly research, literature and discourse have been attributed to the topic of decision making. Harrsion (1999) in his book The Managerial DecsionMaking Process first defines the word decision as "a moment, in an ongoing process of evaluating alternatives for meeting an objective, at which expectations about a particular course of action impel the decision maker to select that course of action most likely to result in attaining the objective"(Harrison, 1999, p. 5). He further supports this definition and argument by stating that “ it is significant that a decision is simply a means to an end, not, as it is frequently assumed, and end in itself (p. 29). This ideology is echoed by Herbert Simon, whom Harrsion (1999), references in his book. Simon states that the decision making process has three principal phases--“finding occasions for making a decision; finding possible courses of action; and choosing among courses of action" ( Harrison, 1999, p. 4). The individual and the organization alike fits into both definitions. The individual, being the sole decision maker on behalf of his or her own self-interests will decide, for example, that he or she wants to make a career change. The occasion from which that choice was made can be attributed to numerous factors such as lack of fulfillment, wanting a boost in salary, or simply a change in environment. Possible courses of action are to request new and challenging responsibilities, ask for an increase in salary, or resign from current position and company altogether. The individual then has to choose the best course of action for his or her own needs. Typically, individual decision making is corroded with very “few courses of action when making a choice” (Harrison, 1999, p. 12) and is often time “constrained by imperfect information, time, and cost factors” (p. 13)--but no matter the course of action chosen by the individual, “any alternative that fails to meet an aspiration level with respect to the considered aspect is eliminated” (p.13). Additionally, individual decision making tends to fall into the trap of the decision being an end within itself, not a means to an end. It can also be argued that individual decision making on behalf of the individual can be viewed in the context of self-actualization and can be completely separated from the organization.
Conversely, in an organizational setting, if a company decided that it needed to streamline its operations, it would seek to find an “occasion” where it could so. If a unit or department, for example, was not producing as much or not doing as well as others, the company could downsize that entire unit, conduct internal reorganization to help boost production within the unit, or change the business nature of the unit completely. The organization must then decide the best course of action. However, once the organization decides a particular course of action, there is a ripple effect that transcends beyond organizational “aspiration” to reaching and often times affecting multiple structural levels and individuals within the organization. From this perspective, decision making at the individual and organizational level are only similar in the sense that both seek a similar outcome--change. Huber (1981) argues that organizational decisions are decisions made on behalf of the organization. The decision making units may be as small as an individual, e.g., a manager, or as large as the entire organizational membership. While personal goals often influence organizational decisions, the decisions themselves are legitimized to other units and agencies as fulfilling organizational needs (Huber, 1981, p. 2). Hence, any decision made by an individual on behalf of the organization has nothing to do with self-actualization, but rather “attaining an objective”--which highlights Harrison’s definition of the word decision. Decision making at the organizational level is more complex and risky, with the potential to affect the way an organization learns. Dodgson (1993) views organizational learning as a “metaphor for individual learning” (Dodgson, 1993 p.377) and argues that “individuals are the primary learning entity in firms, and it is individuals which create organizational forms that enables learning in ways which facilitate organizational transformation”(p. 377).
References Dodgson, M. (1993). Organizational learning: a review of some literatures. Organization Studies, 14(3), 375-394.
Harrison, E.F. (1999). The managerial decision-making process, 5th e d i t i o n . B o s t o n , M A : H o u g h t o n M i f f l i n C o m p a n y.
H u b e r , G . P. ( 1 9 8 1 ) . T h e n a t u r e o f o r g a n i z a t i o n a l d e c i s i o n m a k i n g a n d t h e design of decision support systems . MIS Quarterly,
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