Factors toward a New Decision-making Model - Essay Example

? Topic - Observation Review Rational decisions are not always made by people. Most of the time, the decisions are partially rational and partially irrational or emotional. Bounded decision making is a principle according to which a person makes a decision based on only few truths or facts with limited computational outcomes (Gigerenzer & Selten, 2008). In other words, such a decision maker has the tendency to deduce the most easily available and satisfactory solution instead of an optimal solution. By saying ‘the most satisfactory solution’, we mean the solution that is arrived at after simplifying the facts that are available due to lack of proper resources and many other factors. The decision made by Christopher Bale, who was the chief site engineer at a construction firm, where I have worked can be cited as exemplifying the concept of bounded rationality. The work contains my personal observation and experience regarding the decision making process of the organization. In the case, Mr. Bale had decided to increase the working hours of the construction workers to two hours in the morning shift. The normal routine shift usually started from 8 a.m. in the morning and continued till 5pm in the evening. The company had entered into a deal according to which it had to construct a multistoried building. Initially the contract was to be completed in a two years time. But later the contract had to be renewed and its duration was lessened by six months. This put pressure on the executives to complete the work fast. Therefore, the chief site engineer, Mr. Bale, decided to increase the working hours and, correspondingly, compensation of the employees. The decision was not favored by the employees as they felt their opinion was not considered. Secondly, a few of the employees who were more than 50 year old felt that it would affect their health if they were made to work beyond the routine hours. Assessment of the Example Using Simon’s Bounded Rationality Theory In the example mentioned above, Bale thought it would be feasible for the company to increase the working hours of the site workers so as to complete the work on time. This is a clear example of bounded rationality as the site engineer had taken the decision after examining the available choices only. He did not have knowledge about the resentment, if any, that would be prevailing among the workers due to the increase in the number of work hours. He was also unaware of the health conditions of the senior employees. The decision taken by Bale can be considered to be an example of decision making based on normative affective factors (Etzioni, 1988). It is more of a normative model because Bale made the decision assuming he had all the necessary information needed to make the choice. Thus it was more of a descriptive form of decision making instead of a prescriptive form (Holloway, 2003). This descriptive form of making decisions was termed as bounded rationality by Simon. Simon theorized that human beings often settle for solutions that are mostly satisfying in nature, which means that such solutions, though they are sufficient to cope with the situation, are not the best solutions (Turban, 2008). There are many factors that can affect a decision. These can be psychological, sociological, political, risk avoidance motives, etc. These can influence the choice of the decision made considerably. In the context of the case, it can be understood that the company executives were put under tremendous strain to complete the construction work six months ahead of the contracted time initially stipulated. They had to come up with a solution so as to complete the work fast as their commitment and their reputation were at stake. In such a situation it is possible that when the decisions were made, not all the crucial factors were considered. Two such factors were the workers’ opinions on the decision to increase work hours and the health condition of some workers. The chief site engineer had suggested the idea to increase the work day of the morning shift by two hours; he thought that the workers who were able to work for 8 to 9 hours daily would not face many problems if they were made to work two hours extra. Besides, they were also compensated for the extra hours. Bale had overseen the fact that most of them were married persons and that they would find it difficult to stay for extra hours at the construction site for six months. The case also highlights Simon’s observation that individuals in an organization tend to make the first available choice as the final decision, which, unfortunately, is devoid of cognitive thoughts (Tolbert & Hall, 2008). According to the theory of bounded rationality, an organization could achieve greater efficiency in its decisions if all the members in the company hierarchy participate in the decision making process (Simon, 1997). This would include all the factors, even the subdued ones, which could make considerable impact on the decision. In the case described in the paper, the responsibility of completing the work was put on the shoulders of the site engineer. He would have been held responsible for any delay in it. This applied strain on Bale, which made him choose the best possible and, at the same time, the most easily available solution, which was to increase the working hours. Because of the psychological constraint, Bale did not feel the importance to take into consideration the opinions of the workers union of the company. He held the notion that it would not be difficult for the workers to put in extra hours, especially on the grounds they would be paid for it. He underestimated the psychological and social needs of the workers. Secondly, to understand whether or not the workers will be able to endure the extra hours for such a long period, Bale had not considered it important to check the upper age limit of the workers and their physical condition. These factors show that the decision taken by Bale was not rational, i.e. was bounded, even though he considered it to be the best possible solution. Review of the Decision Made by Bale – a Personal Reflection The bounded rationality model suggested that the computational skills of humans are lower than the perceived difficulty level of the environment (Bianchi, 1990). This means that we are not able to understand the required efficiencies in decision making. In the context of the case, I would have firstly tried to understand the changes that would be required to complete the work within a new time period. This would have incorporated many aspects like introducing new working methods. This would have been a time-consuming work. Using the theories of bounded rationality, which suggest the involvement of the entire hierarchy, I would have sought help of other members of the organization. Bale had not understood the importance of involving the workers in his decisions. The decision taken by Bale was not received warmly by this section. There were also issues with the health condition of the elder workers. According to the bounded theory of rationality model, complex problems of this kind can be solved through the use of heuristic methods, recognizing the problem, and by pattern recognition along with extrapolation. These features would help the organization to arrive at the most adaptable solution optimizing the amounts of computation. Reflecting on the above discussion, it would be feasible to study the complexity of the problem instead of finding ways of solving it. Therefore, in the case the solution would be to study and understand the complexity of the problem. This would help devise appropriate measures to solve the problem. Simon has discussed the need to integrate different hierarchical levels to arrive at a solution (Simon, 1997). I would have ensured that the members of the organization actively participate in the decision making. Right from the top level to the front line managers, all would have had to contribute to the decision making process. This would have helped in arriving at the most feasible solution ensuring that the construction work is completed within the allotted time. This would have reduced the pressure on the site engineer considerably. Instead of arriving at a solution hastily, it would be better to think over and analyze the problem first. The problem here was the reduction of the amount of time required for the completion of the project. Instead of increasing the working hours, the management could have integrated their thoughts and resources for arriving at a better solution. They could have sought help of experienced professionals who had faced similar situations in their workplaces. A detailed investigated solution would have ensured the workers are heard, too. This plays a vital role as the company is run by all its workers. Incorporation of the hierarchy members would thus mean involving their opinions, too. Therefore, Simon’s bounded form of rationality helps understand the underlying weaknesses – the lack of cognitive factors, for instance – which can affect a decision making process. References Bainchi, Marine. (1990). The Unsatisfactoriness of satisficing: From bounded rationality to innovative rationality. Retrieved from http://cas.umkc.edu/econ/economics/faculty/Lee/courses/502/reading/pwm3.pdf 1990 Etzioni, Amitai. (1988). Normative-affective factors toward a new decision-making model”. Journal of Economic Psychology, 9, 125-150. Retrieved from http://www.amitaietzioni.org/documents/A186.pdf Gigerenzer, Gerd, & Sehten, Reinhard. (2008). Bounded rationality: The adaptive toolbox. The MIT press. Holloway, Stephen. (2003). Straight and level: Practical airline economics. Ash Gate Publishing. Simon, Herbert A. (1997). Models of Bounded Rationality, Vol. 3, MIT Press Turban, Efraim. (2008). Decision support and business intelligence systems, 8/E. Greenwood Publishing Group. Tolbert, Pamela, & Hall, Richard. (2008). Decision making in organizations: Structures, processes and outcomes. Pearson Education Inc. Read More