Decision Making by aihaozhe2


									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.


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 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


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
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 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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