The
Carnegie model of organizational decision making is based upon the work of
Richard Cyert, James March, and Herbert Simon, who were all associated with
Carnegie-Mellon University. Their research helped formulate the bounded
rationality approach to individual decision making as well as provide new
insights about organization decisions. Until their work, research in economics
assumed that business firms made decisions as a single entity, as if all
relevant information were funneled to the top decision maker for a choice.
Research by the Carnegie Group indicated that organization level decisions
involved many managers and that a final choice was based upon a coalition among
those managers. A coalition is an alliance among several managers who agree
about organizational goals and problem priorities. It could include managers
from line departments,
staff specialists, and even external groups such as
powerful customers, bankers, or union representatives.
Management
coalitions are needed during decision making for two reasons. First,
organizational goals are often ambiguous and operative goals of departments are
often inconsistent. When goals sre ambiguous and inconsistent, managers
disagree about problem priorities. They must bargain about problems and build a
coalition around the question of which problems to solve. For example, in the
Quaker Oats decision described at the beginning of this chapter, months of
bargaining and discussion took place before the decision was made to acquire
Anderson Clayton to obtain the Gaines Division.
The
second reason for coalitions is that individual managers intend to be rational,
but function with human cognitive limitations and other constraints as
described earlier. Managers do not have the time, resources, or mental capacity
to identify all dimensions and to process all information relevant to a
decision. These limitations lead to coalition building behavior. Managers talk
to each other and exchange points of view to gather information and reduce
ambiguity. People who have relevant information or a stake in a decision
outcome are consulted. Building a coalition will lead to a decision that is
supported by interested parties.
The
process of coalition formation has several implications for organizational
decision behavior. First, as discussed in chapter 2 on goals, decisions are
made to satisfice rather than to optimize problem solutions. The coalition will
accept a solution that is perceived as satisfactory to all coalition members.
Second, managers are concerned with immediate problems and short run solutions.
They engage in what Cyert and March called problemistic search. Problemistic
search means managers look around in the immediate environment for a solution
to quickly resolve a problem. Managers don’t expect a perfect solution when the
situation is ill defined and conflict laden. This contrasts with the management
science approach, which assumes that analysis can uncover every reasonable
alternative. The Carnegie model says search behavior is just sufficient to
produce a satisfactory solution, and that managers typically adopt the first
satisfactory solution that emerges. Third, discussion and bargaining are
especially important in the problem identification stage of decision making.
Unless coalition members perceive a problem action will not be taken. The
decision process described in the Canegie model is summarized in exhibit 11.3.
The
Carnegie model points out that building agreement through a managerial
coalition is a major part of oganizational decision making. This is especially
true at upper management levels. Discussion and bargaining are time consuming,
so search procedures are usually simple and the selected alternative satisfices
rather than optimizes problem solution. When problem are programmed are clear
and have been before the organization will rely on previous procedures and
routines. Rules and procedures prevent the need for renewed coalition formation
and political bargaining. Nonprogrammed decisions, however, require bargaining
and conflict resolution.
One
of the best and most visible coalition builders is President George Bush. He
seeks a broad based coalition at the start of the decision process for all
important decisions, especially for the Persian Gulf War. He kept up barrage of
personal phone calls and visits to world leaders to gain agreement for his
vision of forcing Saddam Hussein from Kuwait and for shaping a “new world
order”.
Rod
Canion, founder and CEO of Compaq Computer Corporation, also uses coalition
building and has installed it as a primary value in Compaq’s corporate culture.
Any significant decision will be discussed with several people, many from
outside the department affected, just to keep everyone on board.
When
senior managers are unable to build a coalition around goals and problem
priorities, the results can be a disaster, as illustrated by the case of Arp
Instruments.
The
point of the Carnegie model and the Arp
case is that coalitions are needed for strong performance. When top managers perceive a problem or want
to make a major decision, they need to reach agreement with other managers to
support the decision.
