BUSI1702 ORGANIZATIONAL DECISION SUMMATIVE ASSESSMENT SAMPLE
1. Introduction
Introduction to essay
Organizational decision-making is a process of making appropriate business decisions depending on which potential challenges can be mitigated efficiently. This study aims to present a discussion on the corporate decision-making process by providing a stakeholder analysis and by evaluating the decisions critically. Additionally, based on the debate, some recommendations will also be provided in terms of good practices installation and bad practices avoidance. Here, a specific organizational decision is made by Shell, one of the largest energy companies, operating globally with its headquarters in London, UK.
Introduction to the Organizational Decision
This assessment is going to address the organizational decision of Shell Plc regarding its changes in executive committee and directorate changes. On 30th January of 2023, the company’s official website declared the decision to reduce the size of the Executive Committee (EC) from 9 to 7 to make the organizational design a simpler one with an aim to improve its performance level (Shell.com, 2023). This decision was a part of its future planning. The company has decided to make its Integrated Gas and Upstream business presented in a new way by creating a suitable combination of these two. As per Shell’s plating, from 1st July 2023, the combined form will work under the upstream director Zoe Yujnovich as a new part of the upstream directorate and integrated gas (Shell.com, 2023). However, the decision made a combination of the downstream business of this colony and the renewables and energy solutions, and this made the new downstream business. It was decided to be led by Hulibert Vigeveno, the downstream director. It was also responsible for removing the directorate related to strategy, sustainability and corporate relations (Shell.com, 2023). In the speech of Wael Sawan, the contemporary CEO of Shell, has considered such changes as a part of its continuous and natural evolution (Shell.com, 2023). With a vast number of directorates and business divisions, the business operational process and its associative management scenario were becoming a complex one while operating globally. For these reasons, the decision-making body of Shell has incorporated such changes to make it a simpler and more manageable one.
2. Stakeholder analysis
Identification of stakeholders
Stakeholders play an essential role in business operations, and they can indirectly or directly influence the corporate entity significantly. Additionally, a business entity can also levy either a positive or negative impact on the stakeholder group. By representing the importance of stakeholders in the business process, Heslinga et al. (2021) have considered investors, customers, employees, communities, trade associations and suppliers as the major stakeholders. Mafruhah et al. (2020) have divided stakeholders into two major tropes such as internal and external. Internal stakeholders are those that are present within the organizational territory, and employees, business owners, board members and investors are on this list. In contrast, business regulators, customers and distributors are enlisted in the external stakeholder group.
The company’s annual report of 2022 has presented its stakeholders and investors, board of directors, customers, employees, strategic partners, and government as the key stakeholders as per this publication (Annualreports.com, 2023). As per the above discussion, the company has made changes in its directorate process, which is part of its administrative process. As mentioned in the study of Stanitsas et al. (2021), organisational change within organizational terror brings transformation in the distribution of responsibilities and power. As a result of this, some specific groups of stakeholders are affected. Here, the most significant stakeholder groups that received impact from the decision-making process were employees. Additionally, the investors, customers, board of directors and communities can also face implications from it.
Stakeholder analysis: Application of stakeholder salience model
Stakeholder analysis is essential to establish good communication with the stakeholders to manipulate their influence and interest towards the organizational decision-making process. As demonstrated in the study of Lehtinen and Aaltonen (2020), the stakeholder can analyse items of power, legitimacy and urgency that reflect on the influence-making power and their eligibility to impact the business process. The following discussion is parenting a stakeholder analysis for Shell to highlight the impact of the above-mentioned strategic decision over the identified stakeholders:
Power
This phrase defines the power of stakeholders by which they can influence the firm’s performance and can also impact the organizational decision-making process. According to Pedrini and Ferri (2019), this term is responsible for identifying the capability of a stakeholder group to influence the decision-making process directly and to bring significant changes to it. The board of directors and investors have the highest power as they can make changes in the decision-making process. However, the investors have a smaller amount of energy as they can influence the organizational decision-making process at a shallow impact level.
Legitimacy
This term reflects on the relationship level and quality between specified stakeholder groups and the company itself. In the view of de Oliveira and Rabechini (2019), legitimacy offers a set of actions to influence the generalized perception and the social acceptance of a firm. Community and customers are present in this list, and they possess a higher level of legitimacy. However, the employees are in a low inventory of legitimacy concerns.
Urgency
The claim of stakeholders and its probability and potentiality are to be judged under this phase. As demonstrated by Lehtinen et al. (2019), the term urgency reflects the degree to which stakeholders can claim immediate action to bring sudden changes in the organizational process. Employees and the board of directors are to be categorised in this aspect while considering the directorate decrease related to the corporate decision of Shell. Additionally, the investors can possess a low level of urgency for such organizational structure-related decision-making processes as they are not able to influence the decision-making process.
Therefore, from the above discussion, it can be stated that the organizational decision-making process of Shell can be primarily influenced by the board of directors, investors and employees to a more significant extent. On the other hand, the customers also play a crucial role in the group of community. As demonstrated in the study by Nguyen et al. (2020), business progress and success are dependent on customer preference and attaining their satisfaction level. Therefore, from this, it can be stated that if the considered organization’s decision-making is not able to provide suitable options to its customers while buying products, it can negatively influence the decision process.
As per the considered decision, the company is dividing its directorates under which its operational process was being changed, and the leadership of directors were also being transferred to other people. According to Leone and Reiter-Palmon (2022), organizational leadership plays a vital role in controlling employees and motivating them to perform better. Within the present scenario, the changes in the directorate brought transformation in its leadership as well. This can result in a significant impact on the employees. It is to be noted that if the administration under the new directorate is not suitable for the employee group under it, this can motivate them. This, in turn, will bring negative changes in the organizational process and its performance as well. Hence, from this discussion and evaluation of the decision in light of the stakeholder salience model, employees, investors, customers, and the community’s board of directors can be considered significant influence makers or gainers.
3. Decision evaluation
Effectiveness of organizational decision towards identified problem
The identified problem for Shell had a connection with the simplification of business processes so that the company could operate and control its operations in a hassle-free way. The decision in regards to it was associated with the implementation of a suitable directorate restructuring process by which the business can be made a simpler one. At first, there were nine directorates, and specific chief executives led each of them. This, in turn, has made the work division a more complex one for Shell (Shell.com, 2023). The new organizational decision was responsible for making the business process a more comprehensive one by which the business process can be accomplished in a hassle-free way. In the study of Hasanpoor et al. (2019), the implementation of a more straightforward organizational structure has been considered as a critical way to influence the organization’s performance positively. This is also a reasonable approach for making the organizational performance an improved one. Hence, from this, the effectiveness of the selected corporate decision can be understood.
Argumentative analysis in light of evidence-based management approach
The evidence-based management system is a crucial way nowadays to assess the credibility of organizational decisions and to consider if the selected decision is a good one for improving the present scenario in the administrative territory. As demonstrated in the study of Luthans et al. (2021), this process is a combined approach of management practice and decision-making process that allows the inclusion of reliable evidence and critical thinking within the decision-making process. Extensive learning gained from the study module helped me to understand the evidence-based management approach in light of four specific categories. As per the learning, evidence from stakeholders, organizational evidence, practitioner evidence and scientific evidence are crucial. By considering these four aspects, the selected corporate decision of Shell can be critically evaluated in the following manner:
- Evidence from stakeholders
This part considers the effectiveness of an organizational decision to influence the stakeholders positively. In the view of Hillmann and Guenther (2021), it is necessary to control the stakeholders completely while making any organizational decision. This is because of the ability of this group to influence the business process. In this case, the executive decision related to restructuring has been taken by the Shell management entity and CEO, and this reflected a mixed effect on the stakeholder group. As reported in a news article, the changes in the directorate process could result in job cuts in this company (reuters.com, 2023). Thus, this is a reflection on the process of impacting the employees by the organizational decision-making process.
- Organizational evidence
The organizational evidence is associated with the resultant factors received by a company while incorporating a specific corporate decision over its operational process. In the demonstration of Shrestha et al. (2019), organizational evidence refers to the statistical data, organizational transformation and other aspects that are a result of the changes in the decision-making process. Here, news reports for Shell are showing a significant profit increase despite facing a drop in world oil prices. The essays has stated that around $9.6 billion profit has been received by this company, with a 6% jump in i6s profit level in 2023 as compared to the previous year (Nytimes.com, 2023).
- Practitioner evidence
Practitioner evidence is possible to share appropriate change in the organizational process after underpinning the suitable decisions within its trajectories. In the view of Cheng (2022), this part of an evidence-based management system is a particular way to improve organizational performance by considering the evidence from its past process. In the present scenario, the corporate evidence is associated with the internal restructuring of this company within the past three years. As the first change was successful enough and provided positive results in the business process of Shell, the second one has been initiated and implemented as a part of the organizational decision-making process (Ft.com, 2023).
- Scientific evidence
Scientific evidence considers some theoretical or practical experimentation-based reports that are present in previously published secondary sources such as journal articles, textbooks and others. As obtained in the study of Luthans et al. (2021), such evidence is beneficial to understanding the quality of organizational decisions in light of past incidents or by depending on the appropriate theoretical basics acted with it. In the present case, the evidence presented by Hasanpoor et al. (2019) in published journal articles can be considered. As per this evidence, when the organization is capable of making a suitable business decision to improve the stakeholder relationship appropriately, this influences the practice positively. Hence, in the case of the present scenario, such evidence is a beneficial one to justify the appropriateness of the resulting decision in Shell.
- A coherent argument based on the four evidence-based approaches
As the above present discussion, the stakeholder evidence, organizational evidence and practitioner evidence of the selected organization have been chosen from various news articles. The scientific evidence is from research articles. As per the company reports, the selected organizational decision was responsible for making the business process a significantly improved but simpler one. This, in turn, was responsible for making the corporate administration a simpler one despite simplifying the present business process. From the scientific evidence, the effectiveness of the decision can be considered as a justified one to make the business process a simpler one.
4. Recommendation
Recommendations for the selected organization can be provided in light of good practices that are to be incorporated for mitigating issues in future. Additionally, the bad rules that are required to be avoided for mitigating the scope of such cases’ arrival are also to be enlisted herein. Both of these two approaches are going to be described below as recommendations in light of appropriate theories and concepts associated with these:
Recommendations to imply good practices: In light of theories and concepts
Sharing of objectives and motives of organizational decision-making with the stakeholders
This is a good practice as it can enhance the effectiveness and acceptability of the organizational decision among the stakeholders. In the view of Shrestha et al. (2019), this can provide a good range of information to the stakeholders, and by this, the acceptance level can be judged among theories. As the success of organizational decisions is dependent on the stakeholder’s engagement and acceptance towards it, such practice can be beneficial for Shell in future to improve its credibility in managing business. In light of prospect theory, this can be justified. As mentioned in the study by Cheng et al. (2022), the prospect theory is a responsible one to analyse the available initiatives or options to improve the decision-making process. Hence, by using this theoretical approach, the organization can judge the level of acceptance of a specific decision from the range of available alternative options.
Identification and analysis of decision options, consequence evaluation
This one is a good practice that is to be recommended to Shell as this will provide an excellent scope to understand the best decision approach for it. In the view of Hasanpoor et al. (2019), it is essential to justify and analyse the available decision options followed by consequence evaluation so that the best alternative can be selected. In this connection, the prospectus is also a beneficial approach. This is because of the credibility of this approach to have a better idea about the available decision option based on which the best one can be identified and implemented to create the most impressive result.
Recommendations to avoid bad practice: In light of theories and concepts
Not focusing on the alternatives
This one is recommended strictly to Shell to avoid during the decision-making process. According to Pedrini and Ferri (2019), evaluation of the available decision points can be beneficial for a company to identify the best option depending on which decision can be made. However, if such a decision is being made without consulting the other available options, it can limit organizational performance equality significantly. Game theory implication is a good option here for having a better understanding towards this recommended approach. Mafruhah et al. (2020) have considered this theory as a tool to create interdependence among the relevant consequences of the organizational decision-making process. Hence, no such decision can be taken by considering the available alternatives.
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