This semester I had the exciting chance of teaching half of our department’s Behavioral Decision Making course. What especially has gotten me thinking is James March’s book chapter Understanding How Decisions Happen in Organizations, taken from the book Organizational Decision Making, edited by Zur Shapira. Similar points can be found in March’s paper called How Decisions Happen in Organizations.
In the chapter, March presents all kinds of questions and comments directed at organizational scholars. Basically, his main point is that the normative expected utility theory is perhaps not a very good model for describing organizational decisions. No surprises there – modelling organizational politicking through utilities is pretty darn difficult. What did catch my eye was that March has a pretty nice description of how some organizations do muddle through.
This idea concerns decisions as identity-based actions. The starting point is that each member of an organization occasionally faces decision situations. These are then implicitly classified into different classes For example into HR decisions, decisions at strategy meetings, decisions after lunch, etc. The classification depends on the person, of course. What’s key is the next two steps: these classes are associated with different identities, which then are the basis of decisions through matching. This way, the decision gets made by basing the choice on rules and the role, not just on the options at hand.
In the chapter, March presents all kinds of questions and comments directed at organizational scholars. Basically, his main point is that the normative expected utility theory is perhaps not a very good model for describing organizational decisions. No surprises there – modelling organizational politicking through utilities is pretty darn difficult. What did catch my eye was that March has a pretty nice description of how some organizations do muddle through.
This idea concerns decisions as identity-based actions. The starting point is that each member of an organization occasionally faces decision situations. These are then implicitly classified into different classes For example into HR decisions, decisions at strategy meetings, decisions after lunch, etc. The classification depends on the person, of course. What’s key is the next two steps: these classes are associated with different identities, which then are the basis of decisions through matching. This way, the decision gets made by basing the choice on rules and the role, not just on the options at hand.
So the manager may adopt a different identity when making strategy decisions, than when thinking of who to hire for his team. The decision is not based on a logic of consequence, but rather on a logic of appropriateness – we do what we ought to be doing in our role. “Actions reflect images of proper behavior, and human decision makers routinely ignore their own fully conscious preferences. They act not on the basis of subjective consequences and preferences but on the basis of rules, routines, procedures, practices, identities, and roles” (March, 1997) So rather than starting from the normative question of what they want, and which consequences are then appropriate, decision makers are implicitly asking “Who am I? What should a person in my position be doing?”
I feel that this kind of rule-based or identity-based behavior is a two-edged sword. On the one hand, it offers clear cognitive benefits. A clear identity for a certain class of decisions saves you the trouble of meta-choice: you don’t have to decide how to decide. When the rules coming from that identity are adequate and lead generally to good outcomes, it’s an easy procedure to just follow them and get on with it. On the other hand, the drawbacks are equally clear. Too much reliance leads to the “I don’t know, I just work here” phenomenon, in which people get in too deep in their roles, forgetting that they actually have a mind of their own.
Which way is better, then? Identity-based decisions, or controlled individual actions? Well, I guess the answer looks like the classic academic’s answer: it depends. It depends on the organization and the manner of action: how standardized are the problems that people face, is it necessary to find the best choice option or is satisficing enough, and so on. Of course, it also depends on the capabilities of the people involved: do they have the necessary skills and mindset to handle it if left without guiding rules and identities? Of do they need a little bit more support for their decisions? Questions like these are certainly not easy, but every manager should be asking them one way or another.
I feel that this kind of rule-based or identity-based behavior is a two-edged sword. On the one hand, it offers clear cognitive benefits. A clear identity for a certain class of decisions saves you the trouble of meta-choice: you don’t have to decide how to decide. When the rules coming from that identity are adequate and lead generally to good outcomes, it’s an easy procedure to just follow them and get on with it. On the other hand, the drawbacks are equally clear. Too much reliance leads to the “I don’t know, I just work here” phenomenon, in which people get in too deep in their roles, forgetting that they actually have a mind of their own.
Which way is better, then? Identity-based decisions, or controlled individual actions? Well, I guess the answer looks like the classic academic’s answer: it depends. It depends on the organization and the manner of action: how standardized are the problems that people face, is it necessary to find the best choice option or is satisficing enough, and so on. Of course, it also depends on the capabilities of the people involved: do they have the necessary skills and mindset to handle it if left without guiding rules and identities? Of do they need a little bit more support for their decisions? Questions like these are certainly not easy, but every manager should be asking them one way or another.
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