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Case Study Report
‘The Delicate Quest for Corporate Environmental Sustainability’
Learning Development © 2012 Adapted from original student work by permission
CONTENTS
EXECUTIVE SUMMARY iii
1. INTRODUCTION 1
2. THE DECISION-MAKING FRAMEWORK AT GREENHEART 1
2a. A Sociological Perspective 2
2b. The Phenomenon of Conformity3
3. THE DECISION-MAKING FRAMEWORK AT
GREENHEART PLUS 3
3a. A Sociological Perspective 4
3b. The Phenomenon of Paradox 5
4. CONCLUSION 5
5. RECOMMENDATIONS 6
REFERENCE LIST 8
Executive Summary
This report employs a sociological perspective to analyse the decision-
making framework of the food company Greenheart, and its subsequent
entity, Greenheart Plus.
At Greenheart, decisions were made essentially by one individual,
whose rationality was, naturally, bounded. His decision to create an
environmental investment fund and to initiate other environmentally
responsible production methods ultimately threatened the economic
viability of the company.
From a sociological perspective, the CEO’s authoritative decision-
making meant that the employees were not committed to the decisions,
and therefore the decisions were not implemented successfully. The
subsidiaries of the company did not share the environmental objectives,
and this also contributed to the ineffective implementation of the
objectives. A lack of conformity among employees meant a lack of co-
operation in achieving the objectives.
This changed with the takeover in 2001 and the creation of a new
company, Greenheart Plus, which focused on increasing sales rather than
pursuing environmental policies. The decision-making process changed
to become one of consensus. From a sociological perspective, this was
more positive as it resulted in a greater commitment by employees to the
decision, and more effective implementation. The problem of
contradictory objectives was resolved as environmental production
methods were introduced slowly and systematically.
However, there is a possible paradox in homogeneity in that the
lack of constructive conflict, which is necessary for innovation and
creativity, could become a weakness.
It is therefore recommended that to address the problems of
individual decision-making, as in Greenheart, and to enhance the
consensus decision-making process of Greenheart Plus, a descriptive
action-research model of decision-making be adopted. It is further
recommended that Greenheart Plus recognize the phenomenon of
paradox, and create an environment that nurtures a heterogenous
consensus approach to decision-making .
1. INTRODUCTION
The purpose of this report is to analyse the decision-making frameworks
of the multinational food company Greenheart, which was subject to a
takeover in 2001 and subsequently became known as Greenheart Plus.
Greenheart rated the pursuit of environmental sustainability as the most
important corporate objective, which threatened the economic stability of
the company. After the takeover, Greenheart Plus paid less attention to
environmental sustainability and more to economic sustainability. The
decision-making framework also changed with the advent of the new
company. This report utilizes a sociological perspective to identify two
significant issues of the company, and makes two recommendations to
ensure effective decision-making of the company in future.
2. THE DECISION MAKING FRAMEWORK AT GREENHEART
The framework of decision making may have a profound effect on the
quality of decisions. According to Cooke and Slack (as cited in Teale et
al, 2003) the “decision body” can be either individuals or groups.
However, when decisions are made in organizations, it is assumed that
managers are the dominant decision makers (Teale et al, 2003). In the
Greenheart case, the corporate top management team (TMT) was the
nominal decision-making body, but it was a group dominated by the
CEO, who had administered the company for 25 years. In reality, then,
the decision body was an individual. When one person controls decision-
making in this way, the quality of the decision is limited by what Simon
(as cited in Tolbert & Hall, 2008) identified as the “bounded rationality”
of that individual. In other words, the information and options available
to any individual is limited.
In the Greenheart case, the CEO’s decision to create a fund for
environmentally benign investments and to initiate environmentally
responsible production methods was based on his limited personal
convictions and knowledge. As a bounded rationality decision maker, he
failed to consider the potential risk to the profit of the company and the
interest of its subsidiaries, and was thereby conforming to what Simon (as
cited in Tolbert & Hall, 2008) called “satisficing” rather than maximizing
the economic interests of the company. Therefore, the decision making
process of Greenheart was a threat to the sustainable development of the
company.
2a. A sociological perspective
From a sociological perspective, the decision-making process of
Greenheart’s CEO led to conflicts within the organization, which
adversely affected the quality and the implementation of decisions. The
CEO made decisions after discussing issues with other members of the
TMT; in other words, it was a process of decision-making by authority
after group discussion (Johnson & Johnson, 2009). Although group
members may have participated in discussions, they were not involved in
the decision making. The disadvantage of this method is that members
may not feel committed to implementing the decision. The commitment
of group members is important because, as Guth and MacMillan (as cited
in Amason, 1996) indicate, it makes a significant contribution to the
successful implementation of decisions.
At Greenheart, this potential lack of commitment was also exacerbated by
a conflict between objectives. The CEO’s decision to initiate
environmentally responsible practices meant that the objectives of the
company became different to those of the subsidiaries. When the
subsidiaries faced to the choice between productivity and environmental
sustainability, they prioritised productivity to environmental
sustainability, since the main objective of normal production enterprises
is to produce. The lack of commitment from Greenheart’s subsidiaries
caused the implementation of decisions to be ineffective.
2b. The phenomenon of conformity
At Greenheart, there was social pressure from a minority of employees to
force others to support the environmental sustainability decision. This is
the phenomenon of conformity which refers to the tendency for
individuals to behave in ways presented by other group members (Gerrig
et al, 2012). The lack of support for environmental issues was most
apparent in the operational personnel, since their values were different to
those of the corporation. The absence of social conformity among
employees meant that there was no active cooperation of group members,
a factor which is necessary to guarantee the effective implementation of a
decision (Amason, 1996). Therefore, the CEO’s decision could not be
implemented effectively.
3. THE DECISION MAKING FRAMEWORK AT GREENHEART
PLUS
In 2001, Greenheart was bought by another company and renamed
Greenheart Plus. However, the new owner did not possess the same value
of environmental sustainability as the former company, and more
attention was paid to the profit and financial performance of the
company.
One reason for this new focus was the onset of economic difficulties
caused by an unexpected external crisis. The crisis led the company to
change its product composition and this, in turn, caused significant
production problems. This event could be explained by the “Black Swan”
theory (Taleb, 2008), which refers to an event that is totally unpredictable
and has an extreme impact. The resulting uncertainty may influence the
quality of decisions, since it is difficult to find decisions that perform well
relative to other decisions in the uncertain situation (Sniedovich, 2010).
As a consequence, the economic difficulties led the corporate TMT of
Greenheart Plus to mainly focus on the improvement of output and profit.
Nevertheless, Greenheart Plus maintained some environmental
sustainability activities. This decision could be interpreted as
“incrementalism” (Teale, et al, 2003), a concept which refers to the
process of making decisions based on an existing course of action. This
was acceptable to external stakeholders, since the environmental
activities implemented by Greenheart Plus tended to fit within the
existing business framework and were only implemented to meet the
requirement of legal and regulatory compliance.
A significant change, however, was the initiation of a new decision
making framework. Greenheart Plus created Operational Teams (OTs)
which comprised the production manager, the heads of different
functional areas and so on. Therefore, the decisions related to
environmental issues were made by OTs after discussion within the team
members. In this way, the company was able to enhance the quality of
decisions and guarantee the effective implementation of decisions.
3a. A sociological perspective
From the sociological perspective, the implementation of decision-
making at Greenheart Plus was more effective than that of Greenheart.
An important characteristic of an effective group decision is that all the
group members fully implement the decision (Johnson & Johnson, 2009).
At Greenheart Plus, the environmental practices were systematically
adapted to production methods, and this was well accepted by the
operational personnel. This was an essential achievement because full
acceptance of a decision by members can have positive affect on the
attitudes of group members toward group work (Nemiroff & King, 1975).
In this way, the method of making decisions of Greenheart Plus became
one of consensus, which is the most effective method of group decision
making process, because it allows group members to share resources and
to produce innovative, creative and high-quality decisions (Johnson &
Johnson, 2009). As a result of consensus decision-making at Greenheart
Plus, the previous internal conflict was resolved, since the administrative
and production personnel in the OTs possessed the same objectives.
Additionally, the commitment of group members to implement the
decision was enhanced.
3b. The phenomenon of paradox
However, the “phenomenon of paradox” (Gerrig, et al, 2012) is a possible
weakness at Greenheart Plus, and may negatively affect the decision
making process. In the new company, the downplaying of environmental
values was not objected to by most employees, as those who advocated
environmental sustainability were excluded by the majority. As a
consequence, the group could become homogenous, and diversity may
disappear. This may lead to a lack of constructive conflict, and may
impair the ability of the group to be innovative and creative (Johnson &
Johnson, 2009).
4. CONCLUSION
This report has analysed the changes in decision-making processes when
the company Greenheart was taken over and became Greenheart Plus,
and has particularly considered a sociological perspective to identify
issues. In the former company, Greenheart, the decision-making process
was limited by the bounded rationality and authoritarianism of the CEO.
Ultimately, this threatened the economic survival of the company. A
sociological perspective highlights the issue of group members not being
involved in the decision-making process, and therefore not being
committed to the implementation of the decision. In Greenheart Plus, the
second iteration of the company, the focus changed from environmental
to economic sustainability. Decision-making also changed to a consensus
approach with the formation of Operational Teams to replace Top
Management Teams. Consequently the objectives of the company and its
subsidiaries were more aligned. As a result of both these changes, the
implementation of decisions became more effective. Yet, there is a risk
that excessive homogeneity in the new company may lead to a lack of
creativity and innovation.
5. RECOMMENDATIONS
In light of the analysis above, two decision-making actions are
recommended in order to improve the quality of decisions and enhance
the effectiveness of the implementation of decisions:
Firstly, with regard to the decision making framework of both Greenheart
and Greenheart Plus, the effectiveness of decisions could be enhanced by
adopting a descriptive approach to decision-making, such as Cumming
and Worley’s action research model (as cited in Akdere Altman, 2009).
This model accommodates the limitations of bounded rationality because
it involves a group process of gathering available data to clarify an issue,
acting on that data, and then reviewing the action in order to continually
update data and improve the consequent action. In this way, available
data is continually maximised, and, since this is achieved by a collective
process, it is more likely to produce high-quality decisions and enhance
the commitment of group members. The model not only addresses the
obvious problems of individual decision-making at Greenheart, but would
also enhance the consensus decision-making of Greenheart Plus.
Secondly, the phenomenon of paradox should be recognized by
Greenheart Plus, since it could negatively affect the quality of decisions
through minimizing constructive conflict and then impairing the
creativity and innovation of decisions. Constructive conflict could make
a contribution to the quality of decisions because a synthesis of diverse
perspectives tends to be more productive than a single homogenous
perspective (Amason, 1996). Greenheart Plus should therefore create an
environment that allows its employees to express their true feelings and
opinions, and thereby nurture a heterogenous consensus approach to
decision-making.
(1700 words)
REFERENCE LIST
Akdere, M., & Altman, B. A. (2009). An Organization Development Framework in Decision Making: Implications for Practice. Organization Development Journal, 27(4), 47-56.
Amason, A. C. (1996). Distinguishing the effects of functional and dysfunctional conflict on strategic decision making: resolving a paradox for top management teams. Academy Of Management Journal, 39(1), 123-148.
Fitzgerald, M. & Ayson, S. (Eds.) (2011). Managing under uncertainty: a qualitative
approach to decision making. Frenchs Forest, Sydney, NSW: Pearson.
Gerring, R., Zimbardo, P., Campbell, A., Cumming S. & Wilkes, F. (2012). Social Psychology. In M. Fitzgerald & S. Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 449-496). Frenchs Forest, Sydney, NSW: Pearson.
Johnson, D & Johnson, F. (2009). Decision Making. In M. Fitzgerald & S. Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 498-551). Frenchs Forest, Sydney, NSW: Pearson.
Nemiroff, P. M., & King, D. C. (1975). Group Decision-Making Performance as Influenced by Consensus and Self-Orientation. Human Relations, 28(1), 1-21.
Sniedovich, M. (2012). Black Swans, New Nostradamuses, Voodoo decision theories, and the science of decision making in the face of severe uncertainty. International Transactions In Operational Research, 19(1/2), 253-281. doi:10.1111/j.1475-3995.2011.00790.x
Taleb, N. (2008). Prologue. In M. Fitzgerald & S. Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making(pp. 163-175). Frenchs Forest, Sydney, NSW: Pearson.
Teale, M., Dispenza,V., Flynn, J. & Currie, D. (2003). Management decision-making in context. In M. Fitzgerald & S.Ayson, (Eds.), Managing under uncertainty: a qualitative approach to decision making (pp. 7-25). Frenchs Forest, Sydney, NSW: Pearson.