Decision Making Processes Affect Management Commerce Essay

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The difference between Leadership and Management is that Leadership decides on a direction for the company in relation to its objectives and motivating staff to achieve the objectives required and Management is about getting things done by organising other people to do it.

Styles of Management

Over the years many companies have used different strategies and theories on how to run their companies. There are 3 styles of strategies which are Autocratic, Democratic & Laissez-Faire.

These 3 styles were identified by experiments in 1939 by Kurt Lewin and his colleagues but the most commonly styles used today within companies are Autocratic & Democratic. Each style is unique to the way they run their company, may it be a sole trader, Limited company or a Private company. Smaller companies i.e. sole traders tend to use the autocratic style while Limited companies tend to vary but you will usually find Private Plc. companies tend to use the Democratic approach. The reasoning for this is sole trader tends to be a very small work force possibly even only one person so there would not be the need for the democratic ways a good example of this would be a company called 'DBS' which is a one man business that works in the heating engineering sector from Liverpool or 'Ian's Burger Bar' main street Widnes who only employs a couple of part time staff cooking burgers. Depending on what sector the Ltd Company is in or how large it is, you may find that autocratic ways might not always work within the structure as this tends to be a big role for 1 person to keep control off, examples of these in the hospitality trade are 365 Solutions Ltd which runs as an autocratic company, but yet you have exactly same style of company called Phoenix Management Services Ltd which runs as a democratic company as they have a management team responsible for various tasks i.e. marketing, financial HR etc. Public limited companies tend to be democratic companies as they are larger companies with a board of directors that discuss the best way to run the company after getting various opinions and facts, a good example of this would be Coca Cola Plc. The laissez-faire style is used in some companies but to apply this style you need to be able to trust your employees and ensure that they are highly skilled and experienced in their field. This style of employee would usually have more pride in their work and do not need to rely on constant supervision for eg a consultant or the army general giving a command to his troops to set up camp. However you could not use this style should an employee feel insecure without a manager being present or if a manager cannot motivate their team or should they not be able to provide adequate training or feedback for the employees which could be as result of the manager not understanding their responsibilities properly and relying on the staff to be able to get them through the task. Every company is set up differently depending on its needs and wants from its customers. As organisations grow, specialist individuals or groups appear. These have to be co-ordinated, so further layers of management are possibly required. Each department develops its own pyramid of authority. There can be specialism within a department, requiring more co-ordination. Whilst increasing specialisation which often leads to more layers of management.


As a leader you're stuck with decision making. It's your job to make decisions that are in the best interest of the whole organization. You must consider what you believe to be the good of many, not just of a few. This is a massive responsibility and very often people don't appreciate your efforts. In some occasions, people get angry with the leader because of the decisions they have made.┬áIn the democratic style, the leader involves the people in the decision-making, although the process for the final decision may vary from the leader having the final say to them facilitating consensus in the group. Democratic decision-making is usually appreciated by the workforce, especially if they have been used to autocratic decisions with which they disagreed in previous roles. It can be problematic when there are a wide range of opinions and there is no clear way of reaching an equitable final decision unlike in the autocratic style, when the leader takes decisions without consulting with others. These decisions are made without any form of consultation. An autocratic style works when there is no need for input on the decision, where the decision would not change as a result of input, and where the motivation of people to carry out subsequent actions would not be affected whether they were or were not involved in the decision-making. These decisions can be effective when it comes to short term arrangements as there can be no planning or input required. In Lewin's experiments, he found that this caused the most level of discontent. 'In Lewin et al's experiments, he discovered that the most effective style was Democratic. Excessive autocratic styles led to revolution, whilst under a Laissez-faire approach, people were not coherent in their work and did not put in the energy that they did when being actively led. These experiments were actually done with groups of children, but were early in the modern era and were consequently highly influential'. [1] 

A leader could be known also as a manger that has to lead a team. Within a business, leadership influence will be dependent upon the type of power that the management can exercise over the employees. The use of power is a social process which helps to explain how different people can influence the behaviour or actions of others. There are Five main sources of power upon which the influence of the leader is based have been identified by 'French and Raven' as reward power, coercive power, legitimate power, referent power and expert power. Leadership and power are closely linked but people tend to follow those who are powerful. People tend to follow, the person with power but leaders have power for different reasons. Some are powerful because they alone have the ability to give you a bonus or a pay rise. Others are powerful because they can fire you, or assign you tasks you don't like. Yet, while leaders of this type have formal, official power, their teams are unlikely to be enthusiastic about their approach to leadership, if these are all they rely on. Leaders may have power because they're experts in their fields, or because their team members admire them which could lead to a more productive workforce. People with these types of power don't necessarily have formal leadership roles, but they influence others effectively because of their skills and personal qualities. When a leadership position opens up, they'll probably be the first to be considered for promotion due to their people skills as this could be the makings of a happier and more productful environment. Herzberg sometimes called this the 'two factor theory' as Herzberg felt that satisfied employees would be productive employees. These factors are hygiene factors and motivators. Hygiene factors are often referred to as 'dissatisfiers'. These are elements in the workplace that could make employees unhappy, such as excessive company bureaucracy or an autocratic working environment. Herzberg motivators which are sometimes called 'satisfiers' are aspects of any workplace that give individuals job satisfaction. These include, for example, the level of responsibility of the job, promotion or recognition for effort and performance. Herzberg believed that businesses needed to ensure the hygiene factors were minimised in order to enable motivators to have their full effect however in these current economics it is most likely felt that Herzberg theory is not required or used as much as people are grateful of employment through these hard times and are more inclined to produce better standards of output thus giving employers a better performing staff due to employee fear of unemployment.


Elton Mayo conducted experiments at the Hawthorne Plant in the USA during 1930's which showed that employees were best motivated if they worked in teams and they were also motivated if managers communicated and consulted with the more and took a greater interest in their views and wellbeing.

Are People Natural Born Leaders?

There is a continuous debate about managers if people are born to be a manager or if can it be taught into people? Many believe that you are born with these qualities, as you need to have the drive and passion for results but also know when to take a step back and look at the bigger picture which could affect the business on a whole, these are not things that can be taught to you through training as you need have these natural qualities first to get to the leadership stage. People can be trained in certain areas but I believe to get the right results you need to have the knowledge of your market but the skills to achieve this with your team and no matter how much training people go through you can never teach a person people skills which are invaluable to making a manger successful.

Data Collection

For a manager to be successful with their decision making may it be autocratic or democratic they need to have the information to which they are making the decision over. This can be collected in a number of ways Quantitative/qualitative, internal/external, formal/informal, primary/secondary. Much of a manager's work will involve the use of data and information, collected and stored internally or externally. Decisions regarding the future plans of the organisation will incorporate information about past performance, future market potential, industry and company statistics etc., all of which will need to be gathered, processed and analysed without this information a manger would only be guessing. The data would usually come in several forms of information depending on what information was required.


When managers receive this information it is usually easier for them to do a more accurate swot analyses for the company as this will give them their Strengths, Weakness, Opportunities and Threats. SWOT can also help companies make decision which can help influence their decisions


PEST can have a big impact on businesses as decisions are made daily as seen in the above diagram factors being taken into account otherwise it could be quite costly and time consuming.


Management are able to make SMART decisions when they have all the information resourced and broken down, as they will be able to look at all sources from the PEST factor to the SWOT factor which enables them to apply an achievable target in a realistic fashion.

Transactional - reactive (

Transformational - Proactive (

Covey 1992 (


The conclusion of this report would be that although there is a hierarchy system in democratic based businesses staff need to feel motivated and wanted as explained by Herzberg in his motivation theory otherwise there would be a lack of produce being produced. This report would also have the view towards the view that Leaders are born and not educated as they have to make decisions for the greater good of the company whilst sometimes upsetting people based on information gathered or in some cases gut feeling.