Decision-making in organizations is divided into decision management and decision control, and whether or not to separate the two depends on the complexity of firms. For instance, if a company holds a few people responsible for the management as well as control, then it may not be appropriate to separate the functions. When the two functions are carried out by the same people, the extent to which risk is shared is greatly diminished. In any organization, when debt claims are specific, it is also hard to approve and evaluate ventures (Spath & Kelly, 2017). Thus, when specialized risk undertaking is critical in a corporation, decision management and control should be executed by different persons or groups of people (Samuelson & Marks, 2011). A fictitious firm, SampleZ, does not separate control from decision management since it is relatively small and new in operations. Founded only a few years ago, the company is only run by ten directors who make decisions and perform control functions.
However, in the recent past, an issue occurred, and it was difficult to know who in the management failed in executing his or her management and control duties. In another relatively big firm, Company A, decision and control functions are separated. Recently, the board found out that the top managers of the firm did not effectively manage decisions; thus, they were held responsible for poor performance outcomes. In this context, it is important to note that the separation of the two functions is critical to monitor performance outcomes in organizations both in the short and long run (Spath & Kelly, 2017).
References
- Samuelson, W. F., & Marks, S. G. (2008). Managerial economics (7th ed.). Hoboken, NJ: John Wiley & Sons.
- Spath, P., & Kelly, D. L. (2017). Applying quality management in healthcare: A systems approach (4th ed.). New York, NY: Health Administration Press.