Herbert Simon's Essay On Decision Making Process.

Learning objectives assessed:

Objectives for this task are assessed at a descriptive knowledge level: Knowledge

K1 Define the rational problem solving process and distinguish among problem-types

K2 Identify implicit assumptions, constraints, and biases in problem solving and decision making

K3 Recognise and avoid errors in reasoning and decision-making

K4 Specify a process to ensure astute and ethically-sound decisions

K5 Compare and contrast the strengths, weaknesses and requirements of various research techniques applicable to managerial decision making

Knowledge

K1 Define the rational problem solving process and distinguish among problem-types

K2 Identify implicit assumptions, constraints, and biases in problem solving and decision making

K3 Recognise and avoid errors in reasoning and decision-making

K4 Specify a process to ensure astute and ethically-sound decisions

K5 Compare and contrast the strengths, weaknesses and requirements of various research techniques applicable to managerial decision making

Skills

S1 Critique and synthesise the literature relevant to a selected business or organisation to define problems or identify decision-making situations

S2 Apply problem solving tools and methods to analyse patterns and relationships for developing solutions

S3 Identify and counter heuristic methods associated with flawed problem solving and decision making

S4 Devise and apply a process to improve employee decision-making

Application of knowledge and skills

A1 Identify and evaluate problem contexts, explanations and alternative solutions in the work-place

A2 Illustrate theory to highlight why professionals may be unaware of their own biases in decision making

Managerial decision making is the most necessary part for an organisational growth. It is essential to know the major implications of decision making process. In order to drive the organisational functionalities in an effective way, it is necessary to understand the basic concepts of the decision making process (Sharma, Mithas & Kankanhalli, 2014). In fact, the ethical attributes maintained in the strategic decision making process may lead the organisations towards massive success. Recognizing such necessities, Herbert Simon made some of the key contributions for enhancing the clear and conceptual understanding related to the suitable decision making process (Bouyssou et al., 2013). The quotation presents the ideas about the complexities faced during the ethical business making process. It has been noticed that the human minds sometimes are unable to provide the fruitful solutions to the complex problems since the rational behaviour in the real life is much complicated.

Discussion

Herbert Simon has presented some of the cognitive solutions to such complex problems faced by the business organisations in the real life scenario. In order to make the clear implications in the decision making process, Herbert Simon has developed the discrete concepts based on the different attributes of decision making process.  

“The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solutions is required for objectively rational behavior in the real world- or even for a reasonable approximation to such objective rationality” (Simon, 1957). 

The above quote presented by Simon signifies that the rational behaviour of the human beings plays the significant role. The concept of the “bounded rationality” explores the theoretical concepts regarding the ethical decision making process. People tend to act differently in diverse situation. Human beings are more inclined towards identifying the probable solutions that can satisfy their needs (Felin et al., 2014). During any complex decision making scenario, it becomes necessary to judge the rational behavioral aspects.  Bounded rationality provides the clean and concise ideas about the individual decision making process. It is indicated that the rational behaviour of the human is limited due to the problems occur during the decision making process. The major limitation was found in the cognitive decision making process. The term “satisficing” was used by Simon in making the relevant assumptions related to the ‘satisfaction’ and ‘suffice’ (Simon, 1957). Simon also stated that the humans usually do not seek maximizing the benefits by ensuring any particular course of action. Looking forward towards the real life scenario would be more preferable for the human beings in ensuring the ultimate decision-making aspects (Kuhlmann, 2016). The acceptable situations are judged through by visualizing the real life scenario.

Another conceptualized idea of decision making is the administrative behaviour. It is to be indicated that the organisational decision depends on the two major elements, such as normative and empirical. These elements are equal to the value premises or the factual abruption. Before undertaking the relevant organisational decision, it is necessary to gather the adequate knowledge about the organisational environment and other information (Puranam et al., 2015). The factual premises refer to the collection of this information that helps in understanding the decision necessary for the decision making process. On the contrary, Herbert Simon also pointed out that value premises deals with the moral and goals along with the regulatory constraints. Simon has even presented the example of these premises. He stated,

Bounded Rationality

“For a park foreman the alternatives take the form of grass-cuttings, planting, road maintenance work, clean-up work, and so forth; the values are legislatively and socially determined standards of appearance, cleanliness, recreation use-value; the facts are budgets, wok methods, unit costs.” (Simon, 1957).

The statement suggests that it is necessary to address the regulatory factors in a significant way before undertaking the administrative behaviour regarding the decision making process. The rational decision focuses on achieving any particular goal and decides the mean of achieving these goals (Drechsler, Katsikopoulos & Gigerenzer, 2014). Simon also suggested that during the administrative behaviour, it is necessary to select the alternative solutions to resolve the issues related to the decision making process. He exclaimed,

“In the process of decision those alternatives are chosen which are considered to be appropriate means of reaching desired ends. Ends themselves, however, are often merely instrumental to more final objectives. We are thus led to the conceptions of a series, or hierarchy, of ends. Rationality has to do with the construction of means-ends chains of this kind. The fact that goals may be dependent for their force on other more distant ends leads to the arrangement of these goals in a hierarchy-each level to be considered as an end relative to the levels below it and as a mean to the levels above it.” (Simon, 1957).

In the administrative behaviour theory of decision making, Simon has presented the specification of the goals by formalizing the significant contribution of the rational behaviour. Simon even criticized Taylor’s “economic man” assumptions by introducing the “administrative man” who is mainly concentrating on the self-interests.  Simon distinguishes between the individual decisions and the organisational decision making process. The simplification of the decision is only possible if the ends are restricted for directing the activity.

Another concept discussed in Simon’s decision making evaluation is the emergence of the “decision bias”. The availability bias sets the example of the occurrence of the less rationalism in the decision making process. It is less likely to confirm the different predictions associated to the traditional economic theory (Taylor, 2013). The traditional economic theory focuses on the individual consistency on making any relevant decision. It is suggested that the availability bias is considering the influencing situations or events that create the long term memories. The individuals can easily remember these events due to the significant influence over the time. On the other hand, Simon also pointed out that the decision making process can be biased to some of the extent due to the emotional instability (Dane & Sonenshein, 2015). The emotion refers to the physiological reactions that affects conscious or sub conscious minds. Emotion has the clear influence on making the biased decisions. Such thinking biases may create the obligation in establishing the behavioural rationality during the decision making situation.

The final conceptualized ideas about the decision making process signifies the real life scenario. It is important to mention that the implications presented by Simon are closely related to the bounded rationality concept that has been discussed earlier.  It is suggested that the organisations need to manage and attend calculate the risks in order to make the relevant choices in the decision making process. Simon commented,

Administrative Behavior

“Global rationality, the rationality of neoclassical theory, assumes that the decision maker has a comprehensive, consistent utility function, knows all the alternatives that are available for choices that can compute the expected value of utility associated with each alternative, and chooses the alternative that maximizes expected utility. Bounded rationality, a rationality that is consistent with our knowledge of actual human choice behaviour, assumes that the decision maker must search for alternatives, has egregiously incomplete and inaccurate knowledge about the consequences of actions, and chooses actions that are expected to be satisfactory.” (Simon, 1957).

It generally depicts the idea that individuals are much influenced by the real life incidents that have the longer impacts. The experience of the situation is even helpful to understand the probable consequences derived by utilizing the similar solutions (Hardy & Comfort, 2015). Hence, experiencing real life scenario is essential to ensure the relevant decision making process. The consistency remained in the human behaviour is essential for generating the ideas about the necessary implications. The psychological imbalance may influence the decision making in the organisational context. Hence, it is necessary to judge the situation by considering the moral rationality.

Conclusion

The essay describes four discrete conceptual analysis of the decision making process ensured by Herbert Simon. It is indicated that Bounded rationality provides the clean and concise ideas about the individual decision making process. It is indicated that the rational behaviour of the human is limited due to the problems occur during the decision making process. During any complex decision making scenario, it becomes necessary to judge the rational behavioral aspects. On the other side, Administrative Behaviour analysis of decision making is providing the specification of the goals by formalizing the significant contribution of the rational behaviour. The presence of availability bias is considering the influencing situations or events that create the long term memories. The individuals can easily remember these events due to the significant influence over the time. The rational decision focuses on achieving any particular goal and decides the mean of achieving these goals. Hence, it is necessary to experience the real life scenario that has the longer impacts on the business decision making process. The outcome will help in making the clear assumptions regarding the future consequences.

Ill treatment of the co-employees is one such issue, which destroys the sanctity of the workplace environment. This situation stains the reputation of the companies and organizations. The reputed Australian Broadcasting Corporation (ABC) has undergone the same fate. As a matter of specification, the declaration of ill-treatment by an “asylum seeker” has given rise to biasness within the workplace of ABC (Theguardian.com, 2017). This situation has compelled the personnel to review and assess the strategy in terms of executing the business procedures. Viewing it from other perspective, this instance has attached an interrogative parameter to the efficiency with which the personnel carry out the business activities.

Discussion

Delving deep into the situation, the tag of asylum seeker does not go with the latest trends of the concept workplace. Asylum is a condition, which necessitates upon the mental incapability of an individual to maintain the balance of life. This condition contradicts the challenging tasks that the personnel of ABC need to perform for taking the organization to the peak of success (Pettigrew, 2014). Perceiving the statement from the perspective of instability, it reflects the inability of the person, accusing the navy of ill-treatment, regarding the maintenance of equilibrium in life. In view of the earlier sentence, the person somehow is a mismatch within the functionalities of ABC workplace.  The word “seeker” can be considered as the pangs of the person in terms of his helpless plight.

Theories of Decision Making Process

According to the statement of Prime Minister Tony Abbott, mismanagement is reflected through this incident. The personnel befriended the other associate partners instead of the mother organization. This aggravated the biasness (Theguardian.com, 2017). Meanwhile another story brewed up that the spy agencies indulged in partnership with the Indonesian president. This situation shunned the partnership that ABC was getting from its stakeholders and shareholders. This type of behavioral conduct acts as a deviation from the usual conventions that the business personnel are entrusted to follow. Perceiving it from a theoretical concept, it questions the stages of development as proposed by Erikson and Freud. Moreover, it nullifies the concept of maturity, which comes with the attainment of development (Shepherd, Williams & Patzelt, 2015). Professionalism gets nullified in this case due to the irrational behavior of the personnel in terms of the organizational issues.

Political influences intensify the issue largely, which reflects the careless attitude of the personnel. Politicizing rationality and decision-making acts as interplay with the emotions of individuals. Indulging in illegal partnership with the outside agencies by the members of the navy and the personnel as a whole, as a result of the declaration produced by the asylum seeker is a kind of mocking and taunts bestowed on the person (Helfat & Peteraf, 2015). This generates depression, entrapping the psyche of the person. This issue adversely affected the performance of the person within the workplace. Incapability to give the due respect to the co-employee is a kind of violation to the rules and regulations of the workplace. This violation raises doubts over the individuality of ABC personnel.

According to the article, measurement of the intensity of the incident is a difficult task. However, exposure of rational and conscious attitude towards the events alarms the personnel about the unwanted incidents. In order to achieve the means of negotiation, partnership working is an essential element, which was missing in the case of the biasness that existed in the workplace of ABC (Theguardian.com, 2017).  Taking into consideration, the perspectives of the employees supports the managers in terms of adopting efficient means of negotiation. One of the indicators is giving adequate time to the electoral politics. Here, the focus needs to be placed on the betterment of the society as a whole, which mostly ends up in the motive to secure the post for winning the rat race of competitive politics. Here, social upliftment of the so called “asylum seeker” takes a back seat. Rather, it goes into oblivion in terms of the exposure of efficient and effective rational behavior by the co-personnel in the workplace (Bohnet, Geen & Bazerman, 2015).

Apart from the electoral politics, public trust is considered as one of the indicators for measuring the intensity of the biasness, which sprang up as a result of illegal indulgence by the personnel. Herein, the word “trust” attains a darker shade. The words, illegal and trust cannot be placed in the same alignment. By doing illegal acts, the companies and organizations cannot earn the trust, loyalty and dependence from the public (Hahn et al., 2014). However, the presence of public trust generates hope regarding the upgradation in the plight of the psychologically entrapped persons like the person, who made the claim of getting ill treatment from the members of the navy. Using these trusts for the election purpose nullifies the hope and reflects the interplay with the humanitarian aspects. This motive contradicts the inner essence of rationality and questions the humanity of the personnel as a whole. Based on these facts, the behavior of the personnel can be easily judged. This is due to the absence of oriental approach towards the performance (Kor & Mesko, 2013). This absence nullifies the importance of evaluation for the personnel, which makes their performance stagnant. This stagnancy results in inappropriate decision making process projecting losses for the corporation as a whole.

Impact of Rational Behavior on Decision Making

Dissatisfaction is one of the other indicators, which helped the managers of ABC to assess the intensity of the biasness. Interview with the Prime Minister consisted of 523 complaints related to biasness. The intensity of the number questions the managerial role in terms of regulating the workplace environment (Montibeller & Winterfeldt, 2015).

Hiring politicians for advertising the issue projects the attempts to popularize the issue. However, this popularization attains a negative tone in terms of respecting the individuality of the employees irrespective of their socio-cultural background.

One of the other versions of biasness in ABC was in the publication of the financial budgets. Errors within these financial instruments occupied much less significance than the loss of individuality of the person, losing the battle of respect (Croskerry et al., 2013).

Conclusion

Execution of evaluation after each and every step would have helped the ABC personnel to avert this kind of situation.  As a matter of specification, evaluation would have highlighted the major drawbacks in the steps adopted for carrying out the business procedures. Exposure of spontaneity is a crucial aspect in this direction as it enhances the character of the business personnel. Instead of aligning with the outside agencies, if the personnel had indulged in meetings and conferences with the stakeholders and shareholders, it would have been a wise step in terms of maintaining the order, harmony and decorum of the workplace environment. Taking the help of materials such as checklists and templates would have supported the personnel to assess the effectiveness and feasibility of the steps undertaken for carrying out the business procedures. The segments of the tables would have enhanced the clarity of the personnel in terms of their performance towards the organizational success.

Apart from this, if the managers had organized training programs for the employees, then such instances of biasness would not have arisen inside the workplace premises of ABC. Training would have enhanced their preconceived skills, expertise and knowledge on the basic management skills. Inclusion of hospitality within the training programs would have broadened the perspective of the employees. If the managers had taken classes on organizational behavior, then the employees would have qualified for undertaking challenging and enduring tasks.  

Most importantly, frequent managerial visits in the workplace would have acted as an agent in improving the performance of the employees. Provision of motivation and encouragement to the employees of ABC by the managers would have enhanced their focus on efficient execution of the business activities, darkening the aspects of biasness, conflicts, harassments and discriminations. Along with this, if frequent open forums would have been organized, each and every member would have got a chance to voice out their opinions regarding the organizational events. Moreover, making these sessions interactive would have enhanced the stability in the relationship between the managers, employees and the other personnel. Involvement of the employees from different socio-cultural backgrounds in the group discussions would not have compelled the “asylum seeker” to make such claims. Rather, it would have instilled the thought of partnership working, taking the organization to new heights of success.

Conclusion

Adoption of means such as feedbacks and survey would have made the personnel aware of the customer approaches towards the organizational events. This would have prevented the degradation of ABC’s reputational status.

Taking a cue from the classes on organizational behavior, both cannot be placed in the same alignment for ABC. This is a shameful tag, which questions the glory that the organization has achieved till date. The incident of biasness adds an interrogative parameter to the role of the manager, which aligns with the requirements of the analysis. Capability, in terms of returning back to the proposed question, contradicts the capability of the managers in terms of controlling the organizational issues. This adds vulnerability to the glory of the organization.

References

Aph.gov.au (2017). About Australian Parliament. [online]. Retrieved 6^th June 2017 from https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1415/ABCoverview

Ben-David, I., Graham, J. R., & Harvey, C. R. (2013). Managerial miscalibration. The Quarterly Journal of Economics, qjt023.

Bohnet, I., Van Geen, A., & Bazerman, M. (2015). When Performance Trumps Gender Bias: Joint vs. Separate Evaluation. Management Science, 62(5), 1225-1234.

Bouyssou, D., Dubois, D., Prade, H., & Pirlot, M. (Eds.). (2013). Decision Making Process: Concepts and Methods. John Wiley & Sons.

Croskerry, P., Singhal, G., & Mamede, S. (2013). Cognitive debiasing 1: origins of bias and theory of debiasing. BMJ quality & safety, 22(Suppl 2), ii58-ii64.

Dane, E., & Sonenshein, S. (2015). On the role of experience in ethical decision making at work: An ethical expertise perspective. Organizational Psychology Review, 5(1), 74-96.

Drechsler, M., Katsikopoulos, K., & Gigerenzer, G. (2014). Axiomatizing bounded rationality: the priority heuristic. Theory and decision, 77(2), 183-196.

Felin, T., Kauffman, S., Koppl, R., & Longo, G. (2014). Economic opportunity and evolution: Beyond landscapes and bounded rationality. Strategic Entrepreneurship Journal, 8(4), 269-282.

Hahn, T., Preuss, L., Pinkse, J., & Figge, F. (2014). Cognitive frames in corporate sustainability: Managerial sensemaking with paradoxical and business case frames. Academy of Management Review, 39(4), 463-487.

Hardy, K., & Comfort, L. K. (2015). Dynamic decision processes in complex, high-risk operations: The Yarnell Hill Fire, June 30, 2013. Safety science, 71, 39-47.

Helfat, C. E., & Peteraf, M. A. (2015). Managerial cognitive capabilities and the microfoundations of dynamic capabilities. Strategic Management Journal, 36(6), 831-850.

Johnson, D. D., Blumstein, D. T., Fowler, J. H., & Haselton, M. G. (2013). The evolution of error: Error management, cognitive constraints, and adaptive decision-making biases. Trends in ecology & evolution, 28(8), 474-481.

Kor, Y. Y., & Mesko, A. (2013). Dynamic managerial capabilities: Configuration and orchestration of top executives' capabilities and the firm's dominant logic. Strategic Management Journal, 34(2), 233-244.

Kuhlmann, J. (2016). Clear enough to be proven wrong? Assessing the influence of the concept of bounded rationality within the multiple streams framework. Decision-Making under Ambiguity and Time Constraints. Assessing the Multiple-Streams Framework, 1, 35-50.

Montibeller, G., & Winterfeldt, D. (2015). Cognitive and motivational biases in decision and risk analysis. Risk Analysis, 35(7), 1230-1251.

Pettigrew, A. M. (2014). The politics of organizational decision-making. Routledge.

Puranam, P., Stieglitz, N., Osman, M., & Pillutla, M. M. (2015). Modelling bounded rationality in organizations: Progress and prospects. The Academy of Management Annals, 9(1), 337-392.

Reyna, V. F., Chick, C. F., Corbin, J. C., & Hsia, A. N. (2014). Developmental reversals in risky decision making: Intelligence agents show larger decision biases than college students. Psychological science, 25(1), 76-84.

Sharma, R., Mithas, S., & Kankanhalli, A. (2014). Transforming decision-making processes: a research agenda for understanding the impact of business analytics on organisations. European Journal of Information Systems, 23(4), 433-441.

Shepherd, D. A., Williams, T. A., & Patzelt, H. (2015). Thinking about entrepreneurial decision making: Review and research agenda. Journal of management, 41(1), 11-46.

Simon, Herbert A. (1957) Models of Man, Social and Rational: Mathematical Essays on Rational Human Behavior in a Social Setting, New York: John Wiley and Sons.

Taylor, D. W. (2013). Decision making and problem solving. Handbook of organizations, 48-86.

theguardian.com (2017) Is the ABC biased and effective? [online] Retrieved 6^th June 2017 from https://www.theguardian.com/media/datablog/2014/feb/06/australian-broadcasting-corporation-australia