Decision making is critical to a corporation. Organizational success depends on making hundreds or even thousands of decisions every day, and those decisions need to be of the highest quality in order for the organization to thrive. In a seminal work, Simon (1979) built the case that rational decision-making was essential to businesses. Data could drive decisions and the analysis of the data should reflect calm, reasoned analysis rather than gut feelings or other means of making decisions.
However, perfect rationality is not typically possible, and managers must resort to what is known, accepting the various constraints that limit the ability of the manager to obtain perfect information on which to make a decision. At lower levels, decisions are simpler, and it might be possible to obtain the needed data, but at higher levels, decision-making is often complex, and the information ambiguous. This reality challenges the ability of a manager to make a decision, as the manager is being called upon to make a reliably good decision under condition of significant uncertainty. Having people in these types of positions who can perform well is essential to the success of the organization. First, these need to be people who recognize the constraints that they face and make decisions accordingly, rather than delaying the . Further, the ability of a manager to interpret ambiguous information effectively is an essential skill.
Once a decision has been made, it is necessary at that point to pursue the chosen direction, by setting out clear strategy that implements the decision. Second-guessing and perpetual backtracking again make it difficult for the organization to thrive, as it will have no sense of direction, waiting for perfect information that will never materialize. There will often be a depth of post-decision dissonance, and how the manager handles this is important. The manager should be able to and ensure that it is not a matter of new information making the decision look bad — the manager will be faced with to backtrack, and should be able to evaluate them rationally to understand which are meaningful and which are just noise.
Leadership and strategy are critical elements of the business, closely linked because the leader formulates strategy and because the strategy has to be supported by the leader. Strategy is the direction in which a firm wishes to compete; what structure it will, in what markets it will compete, where it will operate geographically are all elements of organizational strategy. A business needs a clear sense of what it does, how it does it, and where it does it, in order to have the sort of focus typically needed to excel.
There are many different types of leaders, but each is charged with setting strategy and ensuring that the organization is in a position ot execute that strategy effectively. There are many types of leaders who are not effective, but rather just people put into leadership positions without having any genuine leadership capabilities. A true leader has a strong value system, desires to make an impact, but Positive associations have been found between ethical leadership, for example, and organizational outcomes (Eisenbeiss, et al., 2015), illustrating the important role that the leader plays in setting the tone for the organizational culture, and ensuring that the company has a strong ethical compass. When these things are in place, it makes the organization more ready to pursue whatever strategy that the leader proposes, because the organization’s followers have respect for the leader and take their cues from the leader.
There are different types of diversity, and they can all add value to an organization. Some of the different ways that diversity is conceptualized are demographic diversity, cultural diversity and diversity of thought. The former is easy to measure, the latter roughly easy to measure, the latter nearly impossible. But the former two are just proxies for the third — an organization benefits from the input of different ideas, different thought processes, different ways of seeing the world. Studies have shown that diversity matters, not just at the customer-facing levels of the organization but at higher levels of management as well, and mainly because the diversity in outlooks and thought can spur new ideas, more innovation and help the organization to solve problems more quickly and effectively (Miliken & Martins, 1996).
Another reason for encouraging diversity in organizations is to reverse patterns of exclusion — the social justice angle. It is important, however, the diversity initiatives are tied to organizational goals, for them to be successful — tokenism accomplishes nothing.
But diversity of thought has value. Increased input from previously marginalized groups will definitely increase the diversity of thought, but organizations need to be aware that there are potential conflicts that may arise from culture clash, or clash of outlooks, and that the organization has to be prepared to create an environment where conflicts that arise from increased diversity are managed effectively so that they do not become long-lasting, damaging conflicts for the organization.
Motivation is an important concept in human resources. Ultimately, there are many different ways to motivate people in an organization, and it is important that the motivators are aligned with strategy, in order to avoid having employees become motivated to perform behaviors that run counter to the interests of the organization. There needs to be alignment between what the organization needs to complete its mission, and what it is motivating people to do (Decoene & Bruggeman, 2006). An example of this would be motivating sales people to increase sales. They can do this any number of ways but if their only motivation is to run up the numbers, they will likely commit any number of ethical violations to do this — especially if they do not think that they will be caught. The sales people might run up sales by lying to customers. The motivation is short-run in nature, and perverse because it has a lot of potential negative consequences.
Ideally, human resources departments will be able to work with functional managers to achieve this motivation. If they are motivating behaviors that are visible and measureable, then that helps the organization understand which motivators are the most effective. If the motivators orient workers to specific rewards, and the organization measures those rewards, then the workers are probably going to be motivated, knowing that their efforts will a) be noticed and b) result in reward.
There are both rational and irrational theories of work. Rational theory holds that workers want to work because they receive rewards. Workers work because they can meet their various needs — Maslow’s hierarchy is discussed here as a means of understanding the different layers of human needs. HR has to look at how best to meet the needs of the workers in exchange for the services that they provide (Benson & Dundis, 2003).
Then, there must be the expectation that performance will lead to reward. For some, however, there is motivation simply to achieve, and the achievement is reward enough. These types of people will not necessarily respond well to outside motivators, such as punishments, as they are likely to take responsibility to themselves for their performance. This can slip into a more irrational workaholic attitude where the worker’s quest for achievement leads to a distorted sense of priorities. Anxiety theory is one type of irrational motivation theory, for example where knowing you are being evaluated causes anxiety which in turns causes performance to decline.
An important motivator is career management, which plays to the self-actualization side of motivation, or at least the achievement side. There are different stages that people typically go through as adults, and there are different career stages as well, and the company can influence its future by ensuring that it works with its best people to ensure that they have a pathway satisfactory to them. It has been demonstrated that career management programs are correlated with higher levels of organizational commitment, which in turn allow the organization to retain a high level of institutional knowledge among significant benefits but also to lower the costs associated with turnover rates, especially among managerial staff (Moon & Choi, 2016).
Many workers find that they run through stages in their lives characterized by turmoil and stability, and these will cycle. For example, somebody might be very stable in their work life while their children are young and mortgage is high, but as the kids get older they start to re-evaluate the direction that their life is taking. The same can be said for career — when one is generally complacent, they can stay in a career for a long time, but when they feel a change is warranted, that is when the company either has to have a plan for that, or to watch the employee leave.
Ultimately, people reach their plateau, and that is something that often spurs change. Many people see that they have no useful role, no upward mobility, and that they will gradually pushed to the periphery, and their response to this is to start looking at what their other options might be. Even these employees can be valuable, however, and it might be necessary to have some roles such as mentorship positions to help such individuals transition into the downside of their careers.
Benson, S. & Dundis, S. (2003) Understanding and motivating health care employees: Integrating Maslow’s hierarchy of needs, training and technology. Journal of Nursing Management. 2003 (11) 315-320
Eisenbeiss, S., van Knippenberg, D. & Fahrbach, C. (2015). Doing well by doing good? Analyzing the relationship between CEO ethical leadership and firm performance. Journal of Business Ethics. 128 (3) 635-651.
Miliken, F. & Martins, L. (1996). Understanding the multiple effects of diversity in organizational groups. Academy of Management Review. 21 (2) 402-433.
Moon, J. & Choi, S. (2016). The impact of career management on organizational commitment and the mediating role of subjective career success. Journal of Career Development.
Simon, H (1979) Rational decision making in business organizations. The American Economic Review. 69 (4) 493-519.