The Role of Decision Making in Companies
Disucss about the Individual Differences In Managerial Accounting.
Decision making plays a great role at the time of conducting the activities of the company. The process of decision making in the company takes place at all the levels. The manager of the company should not think that they are right in every decision. It is the duty of the manager to evaluate the issue with all the workers so that they can also get the knowledge and give their suggestions and views. The decision is taken by analyzing the different situation. Through proper decision making it can be possible for the company to identify the problems so that hindrances cannot take place at the time of conducting the activities of the company. If a proper decision is not taken in the company then it can give an adverse effect on the overall operations that are taking place on a routine basis (Kiresuk, 2014).
It can be analyzed that company itself constraints the decision makers and make a deviation from the overall rational model. The top management or the managers of the company shape their decisions to show the overall performance of the organization. The decisions are taken by focusing on the activities conducted in the company (Pettigrew, 2014).
There are various challenges faced by the organization or the manager at the time of implementing the decisions which are taken. The challenges that are faced by the company are related to the environment in which support is not given and in this, it is analyzed that decisions made by the top management or the managers are not accepted by the employees. The managers take the decisions with confidence but the individuals or the employees do not accept the decisions made by the managers. Next is related to ineffective communication as it is important for the manager to implement the decisions by having proper communication with the employees. This can help them to accept the changes but the managers do not communicate effectively and it becomes a challenge for them to implement the decisions in the company (Mone and London, 2018).
The individual difference also gives impact on the decision making. There are many individual differences like the difference in personality, self-esteem, and Gender. Each and every individual has a different personality. One of the aspects of personality is conscientiousness which is related to a desire to complete the task effectively. These type of individuals focuses on conducting the activities with efficiency and in a managed form (Pervin, 2015). Therefore, it has been evaluated achievement striving people escalate their commitment and these type of people are more affected by the hindsight bias (Butler and Ghosh, 2015). The individual who focuses on achieving success tries to enhance their level of commitment towards the organizational decisions. If decisions are not taken into consideration by emphasizing the views and opinion then it can affect the level of commitment of the employees who are conducting the activities with efficiency. There are also many individuals with high esteem and they think of themselves by not considering the other employees of the organization. They can blame other people for their failure and can take credit for the success (Jackson et al., 2017).
Challenges in Implementing Decisions
Therefore, the decision which is taken in the organization should consider the mindset of all the individuals so that these differences do not take place and activities can be conducted in a right direction. Next individual difference is related with Gender. In this, it can is analyzed that women evaluate the decisions more than men. Women engage in rumination which means that they overthink the problems as compared to men. By overthinking the problems they sometimes develop it as a depression which affects the overall activities of the company and the efficiency towards the work. Also, the differences in women take place early if a comparison is made with the men (Koch, D’Mello and Sackett, 2015).
There are various organizational constraints like performance evaluation, reward systems, formal regulations, and system imposed time constraints. The decisions are taken by the managers to reflect the organizational performance evaluation and reward system so that formal rules and policies can be compiled and to achieve organizational imposed time constraints. It has been evaluated that organizational decisions also act as a precedent to constrain the current decisions.
One of the aspects is related to the performance evaluation in which managers are influenced in their process of decision making on which there are analyzed. If the manager of the division department believes that the manufacturing plants which is under his responsibility are operating in a good manner when no negative comments are given, then the emphasis should be given on the plant manager who ensures that no negative information can reach the division boss. In this proper evaluation is made so that actual efforts made by the people can be analyzed (Shields et al., 2015). For instance: if a college dean believes that an instructor should not fail more than 10 % of the total students then it will show the ability of an instructor because expectation should be maintained that the instructor who wants to receive a favorable result will take a decision not to fail many students.
Next factor related to the organizational constraints is reward systems. In this, it is evaluated that the reward systems influence the decision makers by giving them an option which is more preferred in context to the personal payoff. For instance: of the company rewards risk aversion, and then managers will take conservative decisions. It has been seen that General Motors gave promotions and incentives to the managers who are on a low profile so that controversies can be avoided and the productivity level of the employees can be enhanced. The outcome which is analyzed is that the managers started adapting the tough issues and pass the decisions of controversies on to the committees.
Individual Differences that Impact Decision Making
By giving rewards it can be easy for the company to enhance the productivity level of the employees (Vasu, Stewart and Garson, 2017). Rewards are the best way through which the employees will take the decisions in a proper manner and also conduct the activities with efficiency. This is considered as a major organizational aspect which is considered by the top management so that employees can be motivated and conduct the activities in a right manner (Pinder, 2014). If an employee is given a target to complete a specific activity within the limited time frame and for this, he or she will be rewarded then it is seen that they will complete the task in a proper manner (Nuttin, 2014). So, sometimes the decisions are also affected by the rewards given or offered to the employees.
System-imposed time constraints are the next factor. In this, it has been analyzed that companies impose deadlines on the decisions. The decisions which are implemented are for specific time and it is important for the employees to follow it so that the outcome can be received in a proper manner.
For example: The manager tells to the employees that the department budget should be completed by the next Friday. Also, the report which is related to the new product development should be ready for the executive committee so that they can review it by the first of the month. It is important that a host of decisions should be made in a proper manner in order to be a competitive firm in the market. It is also the technique through which the company can make the customers satisfied and happy. If an organization is conducting the activities in a managed form then it can be easy to enhance the satisfaction level of both the employees and the customers. It has also been seen that every important decision is related with the explicit deadlines only and it is for certain time so that in a managed way the task can be completed (Wagner III and Hollenbeck, 2014).
In this situation, the decision makers have to face a time pressure and it is difficult to collect the information that can affect the final choice. The time given is limited and they are forced to complete the task accordingly and within the time framework. So, it is one of the important organizational constraints that impact the decision-making process.
It is concluded that there are various individual differences and also organizational constraints which constraints the organization decision process. The individual differences which are explained in the report are personality, self-esteem, and Gender. These are the major factors which constraints the process of decision making. It is important to focus on these aspects at the time of making decisions so that activities can be conducted in a proper manner. It can also help to accomplish overall goals and objectives of the company.
Also, the discussion is made on the organizational constraints which are performance evaluation, reward systems, formal regulations, and system imposed time constraints. Therefore, it is concluded that these are the major individual difference and organizational constraints that constrain the decision-making process of the company.
References
Butler, S.A. and Ghosh, D., 2015. Individual differences in managerial accounting judgments and decision making. The British Accounting Review, 47(1), pp.33-45.
Jackson, S.A., Kleitman, S., Stankov, L. and Howie, P., 2017. Individual differences in decision making depend on cognitive abilities, monitoring and control. Journal of Behavioral Decision Making, 30(2), pp.209-223.
Kiresuk, T.J., 2014. Goal attainment scaling: Applications, theory, and measurement. Psychology Press.
Koch, A.J., D’Mello, S.D. and Sackett, P.R., 2015. A meta-analysis of gender stereotypes and bias in experimental simulations of employment decision making. Journal of Applied Psychology, 100(1), p.128.
Mone, E.M. and London, M., 2018. Employee engagement through effective performance management: A practical guide for managers. Routledge.
Nuttin, J., 2014. Future time perspective and motivation: Theory and research method. Psychology Press.
Pervin, L.A. ed., 2015. Goal concepts in personality and social psychology. Psychology Press.
Pettigrew, A.M., 2014. The politics of organizational decision-making. Routledge.
Pinder, C.C., 2014. Work motivation in organizational behavior. Psychology Press.
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., O’Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.
Vasu, M.L., Stewart, D.W. and Garson, G.D. eds., 2017. Organizational Behavior and Public Management, Revised and Expanded. Routledge.
Wagner III, J.A. and Hollenbeck, J.R., 2014. Organizational behavior: Securing competitive advantage. Routledge.
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