Decision Making
Author: Kamyar Shah

Decisions are made everyday, and it is described as
intelligently processing information that will result in
rational decision making. A manager undertakes the
responsibility of making rational choices by being logical
and consistent in a decisive manner. Assessments of
descriptive, normative, and behavioral decision theories
will be the theoretical foundation of this paper. Also, the
three different theories will be discussed in relation to
teamwork, diversity, and the ethics of organization.

Main Conclusions

The theories examined in this paper illustrate three
different types of decision making; each of them influences
the process of decision making in an organization
differently. The descriptive decision theory concentrates
on the immediate solutions, while the normative decision
theory has an idealistic standpoint - opposites of extreme.
The behavioral decision making theory acts as a middle-man
where its main purpose is to be the mediator between the
descriptive and normative decision theory. In spite of
their differences, all three theories share one common
feature: rational decision in any give circumstances.

Recommendations

In order to run a successful organization, management has
to understand the different theories behind decision-making
process. Even though the theories are bounded by
rationality, each theory values teamwork, diversity, and
ethics at different levels. Thus, different levels of
managements use different types of decision making process
for the survival of the company. It is important to clearly
distinguish the theories' boundaries and limitations to
successfully decide which variables are important at each
level of an organization.

Decision-making

Decision making is not specifically reserved for the
management; is done daily by everyone. From choosing home
appliances to family dinner preparations, decision making
is a part of everybody's daily routine. To better
comprehend the managements' role of decision making in an
organization, three theories of decision making will be
discussed: descriptive, normative, and behavioral theory.
However, for the purpose of easy comparison and contrasts,
the theories will be analyzed in relations to management
types: i.e. technical mangers, organization managers and
institutional managers.

Background:

Decision making is more than randomly choosing an option,
but a cognitive process or a thought-out process to achieve
rational decisions. Individuals, from all levels of an
organization make decisions. Not all decisions are
multifaceted, but their decisions affect their job
securities as well as the organization's interest. A
successful decision making process involves rationally
analyzing the problems to achieve the most efficient choice
that will compliment the situation. According to Walls "the
premise behind rationality in organizations is based on the
notion that reasonable people will respond to their
environment by assessing known facts, estimating possible
outcomes, and weighing those outcomes against their
respective costs Decision making process differ from one
level of management to another, however, they all share
common responsibility; rational choices that are
consistent, and "value-maximizing choice within specified
constraints

Descriptive Theory

The descriptive or positive theory is a black-and-white
concept where individuals visualize how things are rather
than how things should to be. Descriptive theory focuses on
the choices made in a situation, and considers decision as
a single event  According to Shrode & Brown, the
"descriptive decision theory is based on describing, as
precisely as possible, the actual decision-making behavior
of the decision-maker" and "how people...make decisions".
In a relation to management type, descriptive theory is
associated with the technical managers, where their primary
concern is to solve problems immediately and "have a
short-run time horizon" Computational decision making
strategies utilized by the technical managers allow them to
solve problems swiftly and effectively since the solution
to problems are accomplished by "computing various types of
input and output data, and then manipulating the data in
accordance with the criteria of rationality" According to
Petit, solutions to technical managers problems are
"quantitative in nature" and "concerned with concrete
problems that require immediate solutions"

Normative Theory:

The normative theory, also called prescriptive theory,
narrates how things should be, and lean towards
philosophical approach in decision making. This particular
theory utilizes well informed and rational individuals to
organize alternatives that will lead to a successful end
result that will benefit the organization in the long run.
The normative theory carries ethical responsibilities as
well as guidelines to seek optimum solutions. Thus, the
normative theory "attempt to describe the behavior (or
hoped for behavior) of a human decision maker...who wished
to use intellectual tools to make decisions". In relations
to management type, normative is closely linked with
institutional managers (IM) because they "have a
philosophic point of view" and "rely in wisdom, experience,
and philosophic insight in making important decision."
Decision strategy for institutional managers' are
judgmental because IM "have a long-run time horizon...The
future is always hard to read and is highly qualitative:
therefore it is interpreted subjectively." Institutional
Mangers' primary responsibility to the firm is to insure
firm's survival by managing uncertainties of firm's
environment.

Behavioral theory

Behavioral theory implicates how people deal with
uncertainties, and takes into an account both the
descriptive and normative theories. Behavioral decision
theory is bounded by rationality of the world, and the
decisions are made based upon decision-maker's perception
on given situation. According to Brooks, Highhouse, et al,
"behavioral decision...has shown that people's judgment do
not always derive from their underlying beliefs, but rather
from the need to formulate their opinions as a result of
having to express them." According to Petit "behavioral
theory of management has most in common with the social
system school...social system school focuses on the
organization and what we have called the organization level
of management" The organizational managers synchronize
technical and institutional managers' transactions by
acting as the mediator or an intermediary. Thus, the
decision-making strategy of an organizational manager is to
compromise in the interest of organizational viability.

Theories in relevance to teamwork, diversity, and ethics

Depending on the level of management or the structure of
organization, variables such as teamwork, diversity, and
ethical factors might illustrate an issue. It can increase
the complexity of management's decision-making issues.
However, incorporating the variables into different
management decision-making can increase open-line of
communication, generate additional alternatives and ideas,
and increase accuracy.

The descriptive decision theory focuses on immediate
resolution of problem with little or no concerns to ethical
issues, teamwork, and diversity. This is mainly due to the
fact that the speed and the efficiency of decision-makings
are valued rather than comprehension of knowledge and
ideas. Descriptive theory is "concerned with the choices
actually made in a given situation." Even though this
approach will eliminate miscommunications and speed up the
reaction process, it will limit creativity, and can only be
helpful in achieving short-term goal.

The normative theory is committed to ethical approach of
management and relies on the "wisdom, experience, and
philosophic insight" of people. In an Industrial Engineer:
IE article, "A diverse group of people is likely to
outperform...and brightest problem solvers...offer
different perspectives that...result in better solutions."
Since this approach deals with the long-term goals, it is
important to utilize diverse teamwork's wisdom, knowledge,
and rationality. Such integration of diverse employees may
create a better platform for effective results.

In this particular approach a balanced and optimized
reliance on all factors is possible and viable. Behavioral
decision making process is political in nature because it
acts as a mediator for both descriptive and normative
decision making. It deals with uncertainties to make a best
possible choice under given circumstance.

Future Trends:

Decision will be made at all levels of an organization, but
the question of making the "right" decision will be based
on the quality of teamwork, diverse work environment, and
commitment to ethical choices. Managers and the employees
have a social responsibility as well as the desire to
survive, thus creating a natural environment which requires
the greatest possible efficiency.


Limitations, Conclusions and Recommendations:

The three theories of decision making are generally
different, but they all share one common goal: making
rational decisions. While the descriptive theory focuses on
how things are, the normative theory concentrated on how
things should be in a philosophical way. Behavioral theory,
on the other hand, stands in the middle of descriptive and
normative theory in order to counter-balance their
strengths and weaknesses of decision making. There is no
right or wrong method to decision making because it all
depends on the type of management, type of an organization
structure, and the goals. In a large organization, it is
necessary to have all of the three theories available to
achieve both the short and long term goals set by the
company: successful organization should deploy all legal
and ethical tools in order to maximize efficiency and
effectiveness. This will ensure the greatest possible
platform for organizational success and survival, which in
turn creates a platform for responsible corporate
governance and increased satisfaction of all stakeholders.


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Decision Making
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