A Study On Informal Rules In Organizational Decision-Making

Organizational Decision-Making which emphasize on "organization" is a processof a decision-making made by organization members through their respectiveknowledge and ability of problem-dealing, in a formal organization and emergence in aprocedure or non-procedure manner. The key deference between OrganizationalDecision-Making and all other complex decision-making is that both of its members, limits ofauthority and duties are definitude. This characteristic in Organizational Decision-Makingleads to relatively stable rules during its process of decision-making. Beside the formalrules of decision-making, there are lots of informal rules. Informal rules ofOrganizational Decision-Making refers to a complex whole that includes basiccognition, decision-making culture, organizational routines, behavior criterion, values,ideology and effects the subject and process of Decision-Making, although has not beenexpressly stipulated. This complex whole arises partly from historical tradition or partlyfrom circumstance and dimensionality of organization, or partly from the reactionbetween the subjects of decision-making. The existence of informal rules forms a stableexpectation besides the formal rules.The puzzle this thesis studied in a perspective of informal rules of OrganizationalDecision-Making is the rational limitations of Organizational Decision-Making. Thevalue of this research is to propose an interpretational logic of "informal rules inOrganizational Decision-Making" on the puzzle.Different from those complex subject public decision-making as GroupDecision-Making and Collective Decision-Making, the process and outcome ofOrganizational Decision-Making would always be conventional and predictable. Besides, its model of decision-making is pre-configured by the existed organizationalnorm, custom and standard. The informal rules in Organizational Decision-Makinginclude those rules evolving from custom during a long time and those temporary rulesforming from the pressure in conflicted situation. Because of the existence of theefficient code, fuzzy characteristics and decision-making adaption, rules ofOrganizational Decision-Making always become convergence. That is why this thesisfocuses on the universally convergent informal rules in the formal organization.Informal rules arising from the pressure and influence of circumstance would haveaffectations when it is in action between the decision subjects. And then, the informalrules in Organizational Decision-Making mainly exist in three dimensionalities:circumstanced, subjective and procedural ones.I. The analysis on Informal Rules in Organizational Decision-Making atcircumstanced dimensionalityThree different informal rules at circumstanced dimensionality have beenpresented in this part: the legitimate rules—a formal rules construction incircumstanced pressure, accustomed rules—a formation of Decision-Making rules insphere, and simulative rules–isomorphism in Decision-Making practice. Rather thanthe "legitimated" concept in a normal way, the legitimate rules conform to the validityof Organizational Decision-Making in an academic meaning, which means thatOrganizational-Decision Making must be obey the mechanism of politics andorganization. In fact, all the organizations will always obey legitimate rules which willinfluence the design of formal rules.The emergence of accustomed rules was pushed by the existence of organizationalsphere which refers to the existence of decision-making relations, field of action andregular interaction. It is the organizational sphere that shapes the objective relations ofDecision-Making, field of action and sphere of rules, and makes the custom whichmeans a system of steady characteristic and dispositional tendency of the organization.Organizational sphere was a complex body of all the power and elements, presented by the net of relations formed by variety organization. The custom of decision-makingexists all through variety organizational spheres and all the stages of OrganizationalDecision-Making.Simulative rules conform to that members of organization see the universallyexistent process, manner and methodology of decision-making as naturalness and useall of these into the Organizational Decision-Making. It is naturally accepted by innermembers and actors from the outside of organization. Simulation as a result ofindeterminacy, efficient request and communication is a kind of reaction forindeterminate elements in Organization Decision-Making. Simulative rules lead to theisomorphism in the process of Organizational Decision-Making.II. The analysis on Informal Rules in Organizational Decision-Making atsubjective dimensionalityThere are four Informal Rules of subjective dimensionality in OrganizationalDecision-Making, which are Authoritative Rule----the Authoritative Effectiveness inhierarchy and institutional construction; Dependency Rule-----plans of actor anddependency behaviors after planning; Balance Rule------logic of Appropriateness duringthe process of repeated Game; Mechanical Rule---mechanical formula caused bydivision of work and blurry elements.Authoritative Rule means a serial of authoritative effects of stress, obedience andblindness among makers, as a result of particular hierarchical and institutional featuresof Organizational decision-makers. Decision-making authority is a kind of arrangementbased on tacit understanding among members of influential organizations. This kind ofarrangement will bring forth a kind of stress which changes attitude, motive andbehavior, even lead to biases as well as the whole degeneration of efficiency of thinkingand abilities of fact verification and moral judgments with inclinations of obedience andblindness being showed during the process of Decision-Making.Dependency Rule is intending behaviors based on self-interests of decision-makers.Decision-Makers make inertia and shortsighted choices due to self-interests, which show dependency behaviors like free-ride, adventure migration and insurance migrationetc.Organizational Decision-Making belongs to "Repetitive Prisoner's Dilemma"-------members of the same organization participate in long range Game Playing leads toCooperative Strategy of "tit for tat", no matter Power Game or Voting Game, andfurthermore, to appropriate behavior logic of members of organization underhierarchical influence of differences for a balanced model in an interacting relation.Mechanical Rule means a mechanical Decision-Making adopted by decision makerin the process of Organizational Decision-Making. The all the fuzziness of elements inDecision-Making such as division of work, goals, information and involvement wouldlead to the mechanical action of decision maker. Furthermore, it would lead to somemechanical model like group psychology and inertial thinking.III. The analysis of informal rules in organizational decision-making atprocedural dimensionalityThe informal rules in organizational decision-making include the predeterminedrules of duel norms in value and fact decision-making, the simplified rules which lead toprocedural Stare Decision and non-procedural risk decision and also the satisfactoryrules which exist in pursuit of the second best under limited rational choice.The predetermined rules refer to organizational decision-making. It does not takethe handling or solving of the actual decision problem as a goal, but a rule which isunder the dual assumptions of organizational value and fact, makes repeat and similardecision with the organizational value concept and the factual program norm when itcomes to different decision problem. The predetermined rules often occur in the repeattask environment and reflect through the procedural decision process; value and fact, asthe logical starting point, can cause the identity limit in the value of the decision, thehomogeneous limit in the truth of the decision and the efficiency limit in thepredetermine of the decision.Simplified rules refer to, no matter in the procedural decision process or in the non-procedural decision process, various links will be compressed or eliminated as faras possible and the complex decision-making procedure becomes simple. Mostorganizational decision-making procedures are fixed and the essence of the progress issimilar. During the process of the repeated fixed procedures, there are some decisionphenomenon such as "maintaining the present status bias","loss aversion "and"anchoring effect" which will lead to the simplification of the decision and variousstages. The non-procedural decision occurs because of the sudden and novelty of theproblem, and also no cases to be followed. It is often simplified and solved by theorganization members through their instincts.Under the limited rational cognition and influence, the satisfactory rules are used.The organizational decision-making uses "the satisfactory rules "as the decision-makingcriteria to form the second best choice. The bounded rationality is the obstacle in therealization of the optimality standard in the organizational decision-making. Theorganization controls the whole process of the decision-making with the value and thefact as its prerequisite, whether the decision's organizational characteristics, or theorganization's decision-making process, there are goals, identity, information, efficiency,ability, various kinds of rational limits. Under the influence of all kinds of limit, thebehavior of the organization members almost never accord to the "absolute rationalism"mode, but based on the previous practice and the formation of the "experience" or"instinct".They pursue "satisfactory principle" rather than the "optimum principle".The satisfactory rules pull closer between the preconditions of the rational choice andthe real life and this leads to the further rational limitation of the organizationaldecision-making.The informal rules whose emergence arises from habitual model of pathdependence, and subjective creation under the rules, benefits and cognitive needs haveits own routine of emergence and evolution. In the evolution of informal rules, part ofthem which accords to formal rules would transform to the formal one, part of themwould be exist tenaciously because path dependent, change cost and institutional inertia, and there still part of them would be gone or ineffective, in the competition andevolution of organization. All the ten informal rules in circumstanced, subjective andprocedural dimensionality--legal rules, accustomed rules, simulative rules,authoritative rules, dependent rules, balanced rules, mechanical rules, predeterminedrules, simplified rules and satisfactory rules–exist in formal organization universally.They have profound influence on the process and result of OrganizationalDecision-Making in an informal manner, although they do not have a formal form.Informal rules would weaken the formal rules, build a "soft constraint" in theorganizational decision-making, form the decision action of organizational members,and lead the rational limitation in Organizational Decision-Making.