The people make the process: commitment to employees,decision making,and performance

Abstract

This study argues that a well designed decision making process will have its most positive impact on company financial performance when it is carried out by a capable, motivated and dedicated workforce. Prior research has determined that such a workforce can be developed via an organization’s commitment to its employees (OCE) in the form of ample training and compensation, fairness, and meaningful personal consideration. We argue that OCE will enhance financial performance where it is able to improve the quality of a decision making process that emphasizes ample information processing, collaboration, and initiative. Conversely, these three dimensions of decision making are expected to be of little value where OCE—and hence a capable and motivated workforce—are lacking. These expectations were borne out in our study of Korean companies. Specifically, we found positive associations between return on assets and the interactions between OCE and information processing, collaboration, and initiative, respectively. We found also that these interactions contributed the most to return on assets in uncertain environments, where effective information processing, collaboration and initiative were especially important.