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Discretion in Decision Making: The Fonterra Case

Management literature adopt the definition of discretion as “latitude of action” and it is typically researched as freedom of decision making associated with positions in the upper echelons of organisations. This is a narrow view of discretion which underestimates the exercise of discretion irrespective of organisational prescription. The aim of this study was to examine the exercise of discretion across organisational levels, guided by the overarching question: “How do employees use discretion in the workplace?” Valuable insight about the use of discretion by all employees was gained. In addition, the study contributed to a better understanding of the role of personal belief systems in discretionary decision making – an existing gap in the current research on discretion in the management field. Discretion is about individuals’ freedom of choice, based on their internal beliefs, values and principles. The best way to understand this individual social process was to examine it from the point of view of the decision maker, and therefore a subjectivist research position was adopted. A phenomenological approach allowed the examination of participants’ concepts and pursuits of discretion in their work environment, accessed through face-to-face interaction. Fonterra was chosen as an ideal case for this study since it was representative of other large businesses, but also unique due to the company’s different struggles within the dairy industry. The data was coded and analysed in Atlas.ti. to identify major themes as it emerged from the experiences shared by participants. Results supported the notion of discretion as a bilateral phenomenon in the form of intrinsic and extrinsic discretion, exercised across organisational levels. It was found that interpersonal factors such as management style and collaboration with colleagues in the judgement phase of decision making encouraged employees to engage in discretionary decision making. Certain organisational factors were found to discourage the use of discretion. Factors associated with internal and external organisational good (as theorised by MacIntyre) were however experienced differently: employees felt positive about restrictions on their discretion if it was associated with the internal good of the organisation; but negative about restrictions associated with the external good of the organisation. It was determined that employees strongly identified with organisational values, which seemed to act as surrogate values in the absence of clearly defined personal values. Conclusions drawn from this study were that discretion was not only an allocated level of leeway associated with organisational positions, but was associated with individuals who occupy those positions. This was clear from the examples of important discretionary decisions made by employees on lower organisational levels. Organisations need to be aware of the significant role that management style and employee collaboration play in the willingness of employees to use their discretion. Organisations will also benefit from the knowledge that employee dissatisfaction ensues from restrictions on their use of discretion due to external but less so from internal organisational practices; and to take note of the importance of articulating the values on which employees could later base their discretionary decisions.
Type of thesis
De Witt, M. (2017). Discretion in Decision Making: The Fonterra Case (Thesis, Doctor of Philosophy (PhD)). University of Waikato, Hamilton, New Zealand. Retrieved from https://hdl.handle.net/10289/11260
University of Waikato
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