MODULE 2

DECISION
PROCESS IN

Group 2 Reporters:
Naima T. Masandag
ORGANNIZATION
Naiem A. Polayagan
Marlon Padojinog
Oscar Morog
LECTURE AND DISCUSSION
• Herbert Simon's book Administrative Behavior
(1947) was groundbreaking in many ways about
leadership, decision making, and rationality.

• He indicated that the premises for a decision are

the key factors in an organization's decision
making.

• These premises affect, and are affected by, how an

organization is structured.
• Simon also launched the concept of «bounded
rationality.
 The following basic assumptions are made in
the model:
1. Decision makers are generally assumed to be rational in
certain given frameworks.
2. Decision makers generally lack complete information with
regard to options, decision consequences and future
preferences.
3. Decision makers are likely to have limitations in terms of
both time and mental capacity.
4, Decision makers are assumed to have a limited capacity to
process information.
5. Decision makers are assumed to be influenced by emotions
when making their decisions.
6. Perception is assumed to be Important in the sense that
decision makers often operate according to what they
perceive.
✓ According to Witte (1972), in only 2 a minority of
decision processes can one discern a common thread
between the problem definition and the choice of
solution? Based on observations made by March
(19712), it is common that the goals of leaders and
organizations change over time.
✓ It Is also common for leaders to discover their
preferences through their actions and the
experienced consequences of them.
✓ Thus it is not always the case that leaders first
specify their preferences and then select the
appropriate action.
✓ Decision making In organizations is characterized
by the fact that problems, potential solutions and
 These rational theories generally assume that :

1. Every decision maker is aware of all the options.

2. Every decision maker is aware of the

consequences of all the options, at least in terms of
probabilities.

3. Every decision maker has a consistent

preference order for all the options.

4. Every decision maker uses decision rules from

which a single action can be selected
• In real life decision makers frequently use a
model where they scan for information in two or
more layers. This is done in order to eliminate
alternatives. Rational theories can normally be
used as an ideal in situations where the political
dimension is not so significant.

> According to Brunsson decision making

constitutes a verbal process that leaders use as an
instrument to support their actions through
creating visions for the future and mobilizing
resources. !t is often the case that an organization
has different stakeholders and objectives which
cannot be satisfied simultaneously. For this reason,
it is common that leaders are forced to present and
 With the help of sense-making it is possible for leaders to:

1. Change their perceptions so that they become mutually

consistent.

2. Modify their goals and expectations so that they are

consistent in relation to their perceptions.

3. Change their perceptions so that they are consistent with

activities that have already taken place.

4, Manipulate the environment to make it consistent with their

perceptions and needs. It has been suggested by Weick that it
Is through the sharing of perceptions and expectations that
top executive teams are able to function in a crisis situation.
 KNOWING THE
ORGANIZATIONA
L CULTURE
 Knowing the organizational culture
an important ingredient in all decision
making is the organizations culture. All
decisions are both affected by, and
affect, this culture. If the organization's
culture is authoritarian and conformist,
this implies that it is often tied to a
bureaucracy.
In the research literature three perspectives on organizational
culture are for the most part represented:

1. The integration perspective means that the organizational

culture is seen as a unifying and inclusive force, and that one
has to do with a unified culture.

2. The differentiation perspective involves a focus on cultural

differences and the existence of subcultures. Individuals and
groups are expected to have their own needs, perceptions and
values, be they organizational or personal.

3. The fragmentation or uncertainty perspective is

characterized by the organization being regarded as an arena in
which social actors constantly negotiate and renegotiate what is
perceived as meaningful.
According to there exist four different roles that
leaders can take if they want to influence their own
culture:
 
1. Leaders can mitigate conflict by creating consensus
around what is considered to be common.
2. Leaders can express culture through their
personality, their role and their way of being, and
may thus provide a platform to change the culture.
3. Can develop entirely new organizations and try to
make their mark on them.
4.Leaders can try to take the opportunity to change
the organization on special favorable occasions, for
example, during crises, mergers, etc. It is important to
remember that the type of organization has an impact
We can roughly distinguish between four
main types of organizations :
 
1. The team-oriented organization.
2. The contractor-oriented organization.
3. The bureaucratic organization.
4. The expert organization. Strategic aspects
of decision making traditionally, leadership
research has focused on middle managers in
organizations.
There is research showing that leaders have a significant
Impact on the organization's performance other results point
in the opposite direction, Le., a leader has limited Influence
on how the organization performs.

Doubters present three main arguments for their position:

 
1. An organization's performance is determined largely by
factors that the leader has no control over. Such factors
include the economic situation, the market, fiscal and
technological change.
2. Internal and external barriers Imply that only political
coalitions are strong enough to change the organization.
3. individual leaders' ability to Influence organizations is
exaggerated on a regular basis, They are often given more
credit than they deserve If things go well for the organization,
while they often get more criticism than they deserve if it goes
It is not wrong to develop a monitoring system in
this area, and research suggests five activities that
are all important in a surveillance context:
 
1. To identify what information is relevant to collect
2. To use multiple relevant sources of information
3. To learn what customers and clients need and
desire
4. To learn about competitors' products and
activities.
5. To relate ecological information to the strategic
plans. One of the most difficult tasks of a leader is to
develop a successful strategy for the organization.
Yet there are rarely simple answers as to how to do
this effectively. Research suggests seven activities
that are essential in this context.
 
1. To decide on the long-term objectives and
priorities.
2. To assess the organization's strengths and
weaknesses.
3. To identify core competencies.
4. To evaluate whether there is a need for a major
change of strategy.
5. To identify promising strategies.
6. To evaluate a strategy's likely outcome.
7. To involve other leaders in the determination of
strategy.
Different leaders learn from their experiences in
different ways, and there are three basic factors that
can influence leaders to learn from their strategic
experiences.
These are:
1. Reflection.
2. Change.
3. Dedication.
Reflection: Leaders who are good at learning tend
to have a high reflection.
This means that they actively reflect on what move
they should have made in a strategic game. Leaders
who have a low reflection index» can be trapped by
using a strategy that is not necessarily bad, but not in
the vicinity of alternative strategies
POLITICAL
ASPECTS OF
DECISION
MAKING
 Decision makers are often forced to
use political means to achieve their
goals.

 To act politically means to exercise

influence in any possible way.
 A leader can use power to mobilize
resources, energy and information in
accordance with a goal or a strategy.
 In addition, power and other resources may be
acquired developed and used in situations of
uncertainty or disagreement.
 Since both power and politics are key phenomena
in all organizational life these phenomena
constitute a major component of all leadership
decisions, and leaders who understand the
politics, political behavior, and political effects
usually make better decisions. Political power is
used by leaders to make choices that ensure pre-
determined conclusions in conformance with the
leader's preferences. The political context affects
how groups make decisions, and this context is
constantly subject to change.
 The relation between organizational
politics and power ought to be
straightforward. A power base facilitates
the use of political means to achieve more
power. Power is thus both a target and a
means.
 Effective decision makers are generally aware
of their power and use it in their efforts to
influence and determine the outcomes of
various decisions Leaders can also build a
power base by organizing themselves into
networks. They do so in order to reduce
uncertainty. Organizations are created to
exercise control and provide an overview.
However, they are constantly threatened by
circumstances over which they have no
complete knowledge or control.
The benefits of engaging in a network can
be divided into four categories {Strand,
2007):

 Market advantages.
Adaptation and uncertainty control.
Learning opportunities.
Governance and Internal
simplification.
Seven different kinds of basic types of power that a
leader can use:

1. Legitimate power
- the power a leader receives as a result of his or her
position in an organization's format hierarchy.
2. Information power
- the power a leader receives by the possession and
control of information.
3. Expert power
- the power that stems from the special knowledge
and skills of the leader.
4. Reference Power
- the power that is based on identification, namely
that the employees can identify themselves with the
leader or the organization.
5. Charismatic Power
- the power a leader can exercise by virtue of his or
her personality.
6. Coercive power
-the power that is based on the fact that leaders can
punish employees.
7. Reward power
- the power that builds an the fact that leadership
can reward employees.
According to Mintzberg, leaders have four choices in
their daily work:

1. To pretend that political behavior does not exist.

2. To recognize the existence of political behavior and

to regard it as illegitimate by trying to eliminate and
prevent it

3. To acknowledge its existence but choose not to

interfere

4. To acknowledge its existence as something inevitable

and to participate actively in the political game.
 The internal coalitions receive their
power from four different sources, or
what he chooses to call systems:

1.The authoritarian system.

2. The ideological system.
3. The expert system,
4. The political system.
 Management decisions can be manifested
in the context of three different types of
profiles of political power:

1. The creation of goals.

2. The allocation of resources
3. The use of dominance and autonomy
ETHICAL ASPECT
OF DECISION
MAKING
Leadership research indicates that there are a
number of key ethical decision making
perspectives that govern decisions.

1. The utilitarian perspective

- the goal of this perspective is to create as much
benefit as possible for an organization, and important
key concepts are efficiency, productivity and
profitability.

2. The rights perspective

- According to this perspective, decisions should
be made with regard to key policy documents
such as the Declaration of Human Rights.
3. The fairness perspective

 Distributive justice is about

distributing resources as equitably as
possible, either in full equality or on the
basis of need or performance (equity}.

 Procedural justice assumes that the

actual Process of creating justice Is as
fair as possible, even if the outcome may
be different for different individuals.
– There are many types of leadership behaviors that
are characterized as unethical by the majority.
These include falsifying information, stealing assets
for personal gain, blaming mistakes on others,
selling trade secrets to competitors, accepting
bribes In exchange for services, and pursuing a
ruthless leadership style that injures others. It is
important that leaders at all levels have respect for
their fellow human beings equal and high value,
and seek ethical awareness and maturity.
Furthermore, leaders should use their professional!
position with responsibility and objectivity, and
keep their role as leader separate from that of
citizen and stakeholder.
✓ A leader should, as far as possible, seek to
maintain loyalty to the board of the organization.

✓A leader has a specific responsibility for

employees' conditions and development and should
pay pa

✓ It should ba emphasized that a leader should

make sure that the Organization inspires confidence
and protects customers, partners and stakeholders.
– Ethical leadership decisions may in addition be
related to leaders individual needs and personalities.
Leaders who possess such personality characteristics
as narcissism, power orientation and lack of
emotional maturity more often engage in destructive
self-oriented behavior than others. These leaders also
have problems with trust in others. They often treat
others as objects that are subject to manipulation.
Such leaders use power to exploit others and
promote their own careers, rather than to achieve
objectives that are essential for the organization.
There Is also a link between ethical leadership
decisions and social context, in the sense that
these decisions are strongly influenced by the
situation. Unethical behavior can easily be
observed in organizations characterized by the
following factors:

1. High productivity demands.

2. Internal competition for rewards and

advancement.

3. Strong emphasis on obedience and authority.

4, Alack of standards for ethical behavior and

• A problem of practical leadership is that a leader's
values and actions are not always in line with each
other. For example, a leader can be a member of
various environmental protection associations while
he or she at the same time makes a decision that goes
against the environmental concerns in his or her own
industry. A useful practical guideline might be to
ask yourself as a leader if you can stand before a
group and openly declare that | have done this and
that. Several self-critical questions could be put such
as:
1. What would a person that likes me say?
2. What would a person that does not wish me well
say?
3. How would | react if someone else had done the
 Conclusions
The concepts of leadership and organization are
closely linked. A leader should get to know the
corporate culture as well as possible which can, for
example, be authoritarian and conformist or
innovative and progressive in nature. The premise
is that leaders are both affected by, and influence,
their own culture.