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Individual decision making in organizations

A Study OF THIS Structure, Content and Mother nature Of Person Decision Making In Organizations

Introduction

Individual decision making is indeed an intrinsic process in an organization. What plan of action individuals within an company, at various levels, opt to take ultimately figures the future of the business. In changing times, with ever increasing pressures of your energy and information, rising responsibilities, better performance expectations, and confronted with newer, sophisticated and ambiguous situations, the decisions used by a director may not be ideal, but adequate enough to best suit their goal. Today's business environment has increased both number and intricacy of decisions which may have to be made and has generated a need for new decision-making functions. In spite of enough information processing tools and helps available, decisions might not exactly always be motivated quantitatively. What determines the quality of a choice is not the amount of processing that occurs, but the manner in which information is utilized by a specialist. Managers deviate from the rational approach to taking decisions and start using experience and judgement rather than sequential reasoning or explicit reasoning to make decisions. This is intuition. It is not arbitrary or irrational because it is based on the past learnings of the average person, embedded in his or her unconscious. Here it is assumed that there is no bargain in the effort to engage in the decision making process. The value of intuition for effective decision making is reinforced by an evergrowing body of research from mindset, organizational research and other disciplines.

Chapter 1

Literature Review

Perception And Person Decision Making: Conception AND ITS OWN Importance

Perception is thought as a process where individuals plan and interpret their sensory impressions in order to give so this means to their environment (Robbins, 2000). However, what one perceives can be considerably different from target reality. It do not need to be, but there exists often disagreement. People's tendencies is dependant on their conception of what the truth is, not on reality itself. The world as it is recognized is the entire world that is behaviorally important. For instance, a research on 56 top, middle and lower-level managers within three Southern American companies demonstrated significant dissimilarities in perceptions of environmental uncertainty among individuals at different levels (Ireland, Hitt, Bettis & Porras, 1987).

Factors Influencing Perception

A variety of factors operate to condition and sometimes distort perception. These factors can reside in the perceiver, in the object or target being recognized, or in the context of the problem where the perception is manufactured (Robbins, 2000).

When a person talks about a concentrate on and endeavors to interpret what he or she sees, that interpretation is closely inspired by personal characteristics of the individual perceiver. Among the more relevant personal characteristics impacting perception are behaviour, motives, interests, earlier experiences, and prospects (Daft, 2004).

Characteristics of the prospective that is being observed can affect what is identified. Motion, audio, size, and other qualities of a target shape the way we see it. Because targets aren't looked at in isolation, the partnership of a focus on to its background influences conception, as will our trend to group close things and similar things mutually. Objects that are near to one another will tend to be perceived along rather separately. As a result of physical or time proximity, we often come up with objects or events that are unrelated. Situation affects perception. Enough time at which an object or event is seen can impact attention, as can location, light, heat or any number of situational factors.

The Link Between Notion And Decision Making

Individuals in organizations make decisions. That's, they make options from among several alternatives. This is done at various levels of top, middle and low management and also at non-managerial levels. Individual decision making, therefore, can be an important part of organizational tendencies. But how individuals in organizations make decisions and the quality of their final selections are largely influenced by their perceptions.

Decision making attaches the organization's present circumstances to actions that will take the organization into the future (Daft, 2004). The consciousness that a need for decision making is out there and a decision needs to be produced is a perceptual concern. Moreover, every decision requires interpretation and analysis of information. Data are usually received from multiple options and they need to be screened, prepared and interpreted. Which data, for illustration, are highly relevant to your choice and which are not? The perceptions of your choice manufacturer will answer that question. Alternatives will be developed, and the advantages and weaknesses of every should be assessed. Again, because alternatives don't come with 'red flags', figuring out them as a result or using their advantages and weaknesses evidently marked, the average person decision maker's perceptual process will have a huge bearing on the ultimate end result (Stoner, Freeman & Gilbert, 1996).

How Are Decisions Made?

How individuals should react in order to increase or enhance a certain results is named as the rational decision making process (Harrison, 1999). In this technique, it is assumed that the optimizing decision manufacturer is rational. That is, she or he makes dependable, value-maximizing choices within specified constraints (Langley, 1989; Simon, 1986). These choices are made following a six-step logical decision making process:

1. Establish the problem

2. Identify the decision criteria

3. Allocate weights to the criteria

4. Develop the alternatives

5. Select the best alternative

This process includes lots of assumptions like clearness of the problem for your choice manufacturer, all alternatives and requirements known, clear choices of alternatives, frequent decision criteria and their steadiness over time, no time or cost constraints and maximum payoff chosen.

The rational model offers a fairly accurate description of the decision process when decision manufacturers are confronted with a straightforward problem possessing a few alternative programs of action, so when the price of looking out and analyzing alternatives is low.

But such situations are the exception. Most decisions in the real world don't follow the logical model. Folks are usually content to find an acceptable or affordable solution somewhat than an optimizing one. Selections have a tendency to be restricted to a nearby of the problem and to a nearby of the existing solution (Beach, 1997). Most crucial decisions are created by judgement, alternatively than by a precise prescriptive model (Bazerman, 1994)

Bounded Rationality

When confronted with a sophisticated decision making situation, most people answer by reducing the situation to an even at which it could be readily understood. It is because the limited information handling capability of individuals helps it be impossible to assimilate and understand everything necessary to optimize decisions.

Stoner, Freeman & Gilbert, 1996). Added to this, the limited information about the type of the condition and its own possible alternatives, immediate ramifications of time pressure and cognitive fill, and individual cognitive styles and limits of your respective own cleverness, also affect the quality of specific decisions. So people satisfice, that is, they seek alternatives that are sufficient and sufficient. They allow the first reasonable decision they uncover, rather than optimize, or search until they find the best possible decision (Robbins, 2000).

Since the capability of the human being head for formulating and resolving sophisticated problems is much too small to meet up with the requirements for full rationality, individuals operate within the confines of bounded rationality. They create simplified models that draw out the fundamental features from problems without capturing all their difficulty (Simon, 1976). Instead of looking for the perfect or ideal decision, managers frequently settle for one that will adequately serve their purposes. Individuals may then act rationally within the boundaries of the easy model.

Once a need (when planning on taking a conclusion) is discovered, the seek out conditions and alternatives commences. But the list of criteria is likely to be far from exhaustive. Your choice manufacturer will identify a restricted list made up of the more conspicuous choices. They are the choices that are easy to find and that have a tendency to be highly apparent. Once this limited set of alternatives is determined, the decision machine will begin reviewing it. However the review will not be comprehensive - not all the alternatives will be carefully assessed. Instead, the decision maker will get started with alternatives that differ only in a comparatively small level from the decision currently in effect (Daft, 2004). Pursuing along familiar and well-known pathways, the decision maker proceeds to review the alternatives only until she or he identifies an alternative that is 'good enough' - one which meets a satisfactory level of performance. The first option that fulfills a 'good enough' criterion ends the search. So the final solution represents a satisficing choice somewhat than an ideal one. An interesting aspect here is that the order where alternatives are believed is crucial in deciding which choice is chosen. Since, decision makers use simple and limited models, they typically start by identifying alternatives that are clear, ones with that they are familiar, and those not too much from the status quo. Those solutions that depart least from the status quo and meet the decision criteria are most likely to be preferred (Stoner, Freeman & Gilbert, 1996). A unique and creative option may present an optimizing solution; however, it's unlikely to be chosen because a satisfactory solution will be recognized well before your choice maker must search very very good beyond the position quo.

Intuition

Intuitive decision making has recently come out of the closet and into some respectability. Experts no more automatically expect that using intuition to make decisions is irrational or inadequate (Agor, 1989). There is growing recognition that logical evaluation has been overemphasized which, in certain situations, counting on intuition can improve decision making. Intuitive decision making is thought as an unconscious process created out of distilled experience (Robbins, 2000). This type of decision making doesn't invariably operate separately of rational examination; rather, both complement each other. Eight conditions have been discovered where people are most likely to work with intuitive decision making. These are:

1. Whenever a high level of doubt exists

2. When there is certainly little precedent to sketch on

3. When factors are less scientifically predictable

4. When 'facts' are limited

5. When facts don't clearly point the way to go

6. When analytical data are of little use

7. Whenever there are several plausible alternate solutions from which to choose, with good quarrels for each

8. When time is bound and there is pressure to create the right decision (Agor, 1989)

'Left brain' intuitive decisions are 'established on inputs from facts and activities gained over time, combined and included with a well-honed level of sensitivity or openness to other, more unconscious operations. Intuition is most useful to managers in uncertain situations where they are really faced with inadequate facts and complex alternatives (Agor, 1989).

Although intuitive decision making has gained in respectability, ethnicities in which logical examination is the approved way of making decisions, especially those of North America and Great Britain, do not acknowledge the utilization of the intuition (Daft, 2004). People with strong intuitive abilities don't usually tell their colleagues that they come to their conclusions. Since rational analysis is known as more socially desired, intuitive capability is often disguised or concealed.

Individual Differences: Decision-Making Styles

Research on decision styles has recognized four different person approaches to making decisions (Rowe, Boulgarides & McGrath, 1984). The essential foundation of this construction is the acknowledgement that people fluctuate along two dimensions. The foremost is their thought process. Some people are reasonable and rational. They process information serially. On the other hand, a lot of people are intuitive and creative. They perceive things as a whole. These distinctions are far beyond general human limits. The other dimensions addresses someone's tolerance for ambiguity. Some people have a high need to structure information with techniques that minimize ambiguity, while some have the ability to process many thoughts at the same time. When both of these sizes are diagrammed, they form four varieties of decision making (see Display 1). These are directive, analytic, conceptual, and behavioral.

Way Of Thinking

Source: A. J. Rowe and J. D. Boulgarides, Management Decision Making, 1992 Prentice Hall, Top Saddle River, NJ, p. 29.

People using the directive style have low tolerance for ambiguity and seek rationality. Directive types make decisions fast plus they focus on the short run.

The analytic type has a much higher tolerance for ambiguity than the directives. This leads to the desire for more information and concern of more alternatives. They can be careful decision designers with the ability to adapt or cope with new situations.

Individuals with a conceptual style have a tendency to be very wide in their outlook and consider many alternatives. Their concentrate is long range and they are very proficient at finding creative answers to problems.

The behavioral style categorizes decision manufacturers who work very well with others. They are concerned with the achievement of peers and those working for them and are receptive to recommendations from others, relying seriously on meetings for communicating. This sort of manager will try to avoid conflict and seeks approval.

Although these 4 categories are distinct, most professionals have characteristics that fall under several. This should be thought in conditions of the manager's dominant and back-up styles. Some managers rely almost solely on their dominant style; however, more versatile managers can make shifts with regards to the situation (Daft, 2004; Robbins, 2000). Business students, lower-level managers and top professionals tend to report finest in the analytical style. This is given the emphasis formal education provides to developing rational thinking.

In addition to providing a framework for taking a look at individual differences, concentrating on decision styles can be handy for helping one understand how two equally smart people, with access to the same information, can differ in the ways they approach decisions and the final options they make.

Organizational Constraints

Managers form their decisions to indicate the organizations' performance analysis and prize system, to comply with the organization's formal polices, and also to meet organizationally enforced time constraints (Stoner, Freeman & Gilbert, 1996; Robbins, 2000). Past organizational decisions also become precedents to constrain current decisions.

Cultural Differences

The logical model makes no acknowledgement of ethnical differences. Nonetheless it is important to recognize the cultural background of your choice maker as it can have a substantial influence on his / her selection of problems, depth of examination, the importance based on logic and rationality, or whether organizational decisions should be made autocratically by an individual manager or collectively in teams (Adler, 1997).

Importance Of Specific Decision Making In Organizations

Decision performance is the outcome of die interaction between the condition and explanation of the challenge as seen by individuals, how individuals build and develop support for tactical solutions within the group and the effect particular people have on the type and timing of the decision process itself. This has been demonstrated by longitudinal research (Simon, 1976). Thus, an understanding of the cognitive talents of individuals is critical to the effectiveness of tactical decisions in organizations. This is also true for unprogrammed or unstructured decisions as how individuals find a remedy has a direct impact on the potency of the group decision. Understanding the conceptual models used by individuals is, therefore, vital both to the researcher wanting to understand your choice process, as well as the administrator trying to evaluate the grade of ideas made within the group.

Gaps In The Existing Research

Many studies stress the value of incorporating intuitive insight and normative techniques in decision making (Blattberg, Hoch, 1990). But as the impact of varied factors on a person's decision making performance has been analyzed by most studies, the composition and content of what they perceive has hardly been explored. Relatively little are available about the type and form of cognitive constructs, their romantic relationship with intuition and the role in decision making. Therefore there is a clear need to examine how managers conceptualize important issues (Ireland et al. , 1987). Also, the differences and similarities between your constructs of professionals at various levels within an organization havent been explored to the fullest and may give a useful insight in to the nature of an individual's cognitive construction. Though some research on the above areas has been initiated in recent years, none has been adopted in the Indian business circumstance.

Research Problem

This research seeks to explore and understand the framework, content and nature of the cognitive constructs of people in a proper decision making situation, by learning the similarities and variations in the same, across 2 levels of management in the same group: the top management or the amount of managers relatively remote from the day to day business and the middle management or the efficient managers.

Research Objectives

Objective 1

As explained within an earlier discussion, intuition emerges from experience and includes a 'gut feel' on the basis of this experience (Robbins, 2000). It do not need to necessarily entail a conscious procedure for cognition from the inputs to the decision till your choice itself. This implies that intuitive managers are likely to utilize a great deal of non-factual information in their decisions, reflecting their personalities and encounters.

This forms the foundation of the first research goal, that is, to comprehend the differences between your cognitive constructs of top management executives and those of the middle managers based on the factual content and the degree of intuition employed.

Objective 2

This dimension arises from the cognitive capability of a person and his / her contribution to evaluating a situation holistically, along all sizes, arising from an improved understanding of a situation.

From this, the next objective is derived, that is, to comprehend the differences between the cognitive constructs of top management executives and the ones of other middle level professionals based on their understanding of decision situations, as mentioned by the coherence, complexity and explanation of their cognitive constructs.

Objective 3

A third dimensions to intuition is the 'questioning prospect' on certain types of data and situations which includes been witnessed of some mature managers (Blattberg, Hoch, 1990). This implies that the habits of the cognitive of mature managers are considerably different from that of the middle level managers.

Thus the 3rd objective is, to understand the difference in the composition of the cognitive constructs of top level managers and middle level professionals based on their coverage and experience, that leads them to perceive situations diversely.

Chapter 2

Research Methodology

Information Areas

Objective 1: To understand the differences between the cognitive constructs of top management executives and the ones of the middle managers based on the factual content and the degree of intuition used.

  • Proportion of non-factual principles used by professionals.
  • Relation of the percentage of non-factual concepts used to the depth of experience and degree of seniority of the individual.

Objective 2: To understand the differences between the cognitive constructs of top management executives and those of other middle level professionals based on their knowledge of decision situations, as indicated by the coherence, complexness and explanation of these cognitive constructs.

  • Coherence of understanding between managers.
  • Degree of perception of a predicament by professionals.
  • Degree of description offered by professionals.

Objective 3: To understand the difference in the composition of the cognitive constructs of top level managers and middle level managers based on their publicity and experience leading them to understand situations in different ways.

  • Degree of similarity and difference between the managers in terms of common, partially common, and individual constructs.
  • Proportion of the 'residual' individual constructs being the genuinely intuitive measurements perceived by every individual, not 'seen' by the others in the group.
  • Individuals' cognition of the energetic aspects of the decision situation.
  • Importance of any difficult-to-measure influence as mentioned by a person.

Research Design

The decisions shall be studied across 2 degrees of seniority (and roles) in the organization, on a person level; this can help explore potential dissimilarities within the business. Similarities and variations between organizations will be reviewed through a assessment of the cognitive schemas across ten professionals (five at each level of seniority) operating in four companies with an identical scope and content of job.

Sampling Plan

The industry chosen could it be. Only one industry sector is chosen in order to be hypersensitive to the distinctions between the nature of decisions in various establishments. Four different organizations will be selected across the industry sector. Ten professionals from each organization (five at each of the 2 degrees of seniority) will be picked for the study. Here, the convenience sampling method will be utilized. The location and demographic profile of the sample will be determined depending after their convenience and supply.

Data Collection Process

Upon the recognition of tactical decision making situations in the chosen organizations, an exploratory qualitative interview will be conducted with a representative sample of at least 2 managers at each of the 2 levels within an organization to comprehend their views on the decisions associated with the situations and the normal goals of decision making with regards to the task at hand shall be diagnosed. In-depth interviews will be conducted with each of the selected managers individually to map their specific cognitive constructs of decision making in the determined situations.

Analysis

In this research, the aim is to qualitatively examine the framework and content of managerial perceptions using cognitive mapping to isolate the intuitive elements within their individual decision schemas. Predicated on the initial circular of exploratory interviews, individual maps will be developed during the in-depth interviews, accompanied by a discourse with the respondent, for better clarity and comprehension. Cognitive mapping is a widely used technique in general management research and may be used to mirror managerial perceptions of the 'real world' problems they face. Its attractiveness stems from its simplicity in accordance with other techniques and the convenience with which a holistic picture of the individual's perspective can be captured and displayed. The technique acknowledges different viewpoints and alternate training of action. Such mapping makes comprehension transparent, thus providing basis for further discussion on the procedure, content, structural difficulty, and detail of individual decision making. These maps will then be analysed for his or her structure and content to find answers to the goals of the study.

Chapter 3

Contribution To Literature And Utility TO THE Organization

The current research is based on earlier groundwork done on management research and the spaces recognized in the same. It is based on the first stage of the body of research being undertaken on intuition and its role in managerial decision making. Intuition and bounded rationality have never been given anticipated importance as unavoidable components of any decision. Lately some research workers have been hoping to establish the value of intuition in various decision making situations and the value addition by including what they call as the '6th sense'. This review is an attempt to interpret and understand the framework, content and aspect of specific decision making in organizations by studying its similarities and differences across 2 degrees of management. It requires into consideration various exterior and interior factors that impact decision making and forms an important precursor to a better knowledge of group decision making in organizations.

It also has important implications for improving our understanding of how important issues are conceptualized by managers in organizations, limitations of your choice making process and its own possible effects on the final outcomes. It's important and relevant for professionals to be conscious of such differences within their organizations. It could help to coordinate effectively with people, when you are tolerant with their specific styles and understanding reasons for the same. It works both ways, i. e. for a older manager to comprehend the constraints, pressures, experience, background and expertise of any subordinate, and for a middle level director to understand the reasons for the variations in his / her way of tackling a predicament and the strategy and subsequent solution followed by the employer. This understanding is the building blocks for a better coordination, better handling of prospects, enhancing compatibility and complementing different methods to ultimately make smarter decisions in organizations. As mentioned earlier, this research also offers important implications for group decisions. Organizations are all about team coordination and team adaptability, and a person cognitive analysis can be an important first step towards improving the quality of team decision making.

References

Books

Agor, W. H. (1989). Intuition in organizations. U. S. : Sage Publications.

Bazerman, M. (1994). Judgement in managerial decision making (3rd Release). New York: Wiley.

Stoner, J. A. F. , Freeman, R. E. , & Gilbert, D. R. (1996). Management (6th Model). New Delhi, India: Prentice-Hall of India.

Adler, A. J. (1997). International sizes of organizational behavior (3rd Model). Cincinnati, OH: Southwestern.

Harrison, E. F. (1999). The managerial decision-making process (5th Edition). Boston: Houghton Mifflin.

Robbins, S. P. (2000). Organizational behaviour (9th Edition). New Delhi, India: Prentice-Hall of India.

Daft, R. L. (2004). Business theory and design (8th Release). Australia: Thomson South Western.

Journal Articles

Schwenk, C. R. (1984). Cognitive Simplification Operations in Strategic Decision-making. Strategic Management Journal, Vol. 5, Pg. 111-128.

Rowe, A. J. , Boulgarides, J. D. & McGrath, M. R. (1984). Managerial Decision Making. Modules in Management Series.

Simon, H. A. (1986). Rationality in Psychology and Economics. The Journal of Business.

Ireland, R. D. , Hitt, M. A. & Bettis, R. A. , Porras, D. (1987). Strategy Formulation Operations: Distinctions in Perceptions of Strength and Weaknesses Indications and Environmental Doubt by Managerial Level. Strategic Management Journal, Vol. 8, Pg. 469-485.

Langley, A. (1989). In Search of Rationality: The Purposes Behind the usage of Formal Research in Organizations. Administrative Research Quarterly.

Blattberg, R. C. & Hoch, S. J. (1990). Data source Models and Managerial Intuition: 50% Model + 50% Director. Management Knowledge, Vol. 36. , No. 8.

Beach, L. R. (1997). The Psychology of Decision Making. Sage Publications.

Clarke, I. (2001). Management 'intuition': an interpretative bank account of composition and content of decision schemas using cognitive maps. Journal of Management Studies.

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