How Decisions Can Be Organized - and Why It Matters
Keywords:Organization design, decision making, organizational performance, decision aggregation, decision delegation, decision rights, decision evaluation
Recent theoretical advances allow organizational designers and managers to better understand how decision processes can be improved. These advances allow managers to address a number of critical questions about the structure and process of decision making, issues that are relevant for any kind of organization be it social, political, or economic. Can we add another employee somewhere in the decision process to increase economic performance? Can we add or eliminate a channel of communication to raise the quality of decisions? What level of skill is worth paying for when we hire a decision maker? Is it a good idea to push decision makers beyond their current capacity if doing so increases their error rate by five percent? Where does the injection of inexperienced decision makers hurt the least? We describe an organizational design approach that provides answers to such questions, and we offer specific guidelines that managers can use to improve decision making in their organizations.
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