The Act Sabotage by the Chief Finance Officer and Chief IT Officer - Essay Example

Managing Under Uncertainty Name: Institution: Date: The observation The Chief Executive Officer an Information Technology Company decides to upgrade the operating system in order to increase the company’s competitiveness. A chief audit engineer observes the change of operating system will increase efficiency and lead to the company’s effectiveness in delivering to the needs of its clients. There will an increase in investors due to increase in the company’s performance. However, the Chief Financial Officer is not in good terms with the CEO and has been in constant conflict with CEO over budgets issues. He does not support this plan that could benefit the company. In collaboration with the Chief IT officer they plan to thwart the plan of upgrading the operating system. The Chief IT officer starts a rumor that the company is planning to lay off workers as it prepares to usher in the new operating system. On the other hand, the Chief Finance Officer is inciting other workers on how the company’s budget cannot support the proposed upgrading of the system, and if it succeeds; it will render some workers redundant. The workers are confused and in a panic mood they do not know who to believe. The effort by the CEO to assure workers of the safety of their jobs does not bear any fruits. The Chief Finance Officer denies inciting workers against the project when he is questioned in a one-on-one meeting with the CEO. Eventually there is a strike led by the union leaders who believe the rumor that there is a sinister motive in trying to introduce the new operating system. The Chief IT Officer confesses that he was instructed by the Chief Finance Officer to incite workers in order to sabotage the project. The Chief Finance Officer is sent on compulsory leave pending investigation into his actions. The Chief IT Officer asks for forgiveness and pledges to support the upgrading of the system the moment is rolled out. The board decides to summarily dismiss both the Chief Finance Officer and Chief IT Officer after investigations. The two sues the company for unlawful dismissal and they win a huge send off compensation package in an industrial court or an alternative of reinstatement. There is a dilemma whether to reinstate them or pay their compensation. Eventually they are reinstated with a stern warning against sabotage. The company needs their expertise and experience in rolling out the new system and other projects. The launch of the new operating system is long overdue. Bounded rationality theory in decision making The decision to reinstate the Chief Finance and the Chief IT Officer considered the perspective of bounded rationality theory. Bounded rationality acknowledges that it is not possible to analyze and comprehend all of the prospective useful information when making choices. The only possible manner of coping with the world’s complexities is through developing habits, techniques and standard operating procedures (SOP) to enable making of decisions. Widely shared Standard Operating Procedures are institutions (Gigerenzer & Selten, 2002).  Habits are routine responses as well as behaviors based on reinforcement such as brushing teeth every morning. Technique are ways to deal with the generalized situations like consumer reports when purchasing an appliance. The perspective of bounded rationality is not that human beings may decide differently if they had different or more information, or differently having different items in the utility function; but they cannot process all the information when they even possessed it. Consequently when predicting people’s actions, it will not be adequate to know the quality or amount of information available. People have to understand the cognitive process of choosing rules of slogans or thumb, or the information. Selective perception is part genetically programmed (certain frequencies cannot be heard) and part cognitive (learned whether conscious or not). Institutionalists advocate for additional items with regard to utility function, but this is not the position of bounded rationality (Kahneman, 2003). People cannot handle many items and the items considered in a given decision may be different from the items in the next setting which appear similar to the analyst. This is associated with subjectivity argument related to Austrian economics. In this case the company had the right to dismiss the two people who were opposed to the upgrading of the operating system. However, considering that it will take more time and resources to recruit new people and incorporate them in the plan, it was wise to let them stay. If they were to be dismissed, the company will lag behind in its quest for the new system, lose money in terms of their compensation, and spent more in recruiting new personnel and trying to fit them in the company. Technically the company could not afford to lose time in implementing the new system and spend more in recruiting other people to take over the vacant positions. The decision was constrained by time and available resources. The board of directors understood that the experience and expertise of the Chief Finance Officer could not be replaced in an instant. Furthermore it would take time and resource to recruit other people to take up the positions and develop a rapport with the rest of the workers. Rationality of individuals in decision making is bounded by the information being possessed, the mind’s cognitive limitations, and the amount of time at their disposal for making the decision. Bounded rationality theory was advanced by Herbert A. Simon as an alternative for mathematical modeling of decision making, as applied in economics and other related disciplines (Simon, 1955). It complements rationality as optimization that holds decision making as a rational process of trying to find optimal choice based on the information provided. Since decision makers do not have all the ability and required resources to get the optimal solution they instead use their rationality after simplifying greatly the available choices at hand (Strati, (2000). A satisfactory solution is sought instead of an optimal solution. Minds that have limited cognitive resources can get their breakthrough through taking advantage of the pre-existing structure and environmental regularity. The board of directors and the CEO should have known the consequences of their actions before dismissing the two people (Sternberg, 2009). Human behavior in the context of social science can be treated as rational entities. In economic models human beings are assumed to be averagely rational and can largely act following their preferences. Rationality of individuals and decision making is limited by the information that people possess and the time available. The decision maker understands the first alternative, the default alternative prior before getting the opportunity to begin searching and can end searching anytime (Patokorpi, 2008). A decision to terminate the services of the Chief Finance Officer and the Chief IT Officer would have meant that the company would lose money in terms of send off package compensation for the two. The urgency of the implementation of the new operating system would be delaying and would have taken another undefined duration before introduction. A Rational approach led to the reinstatement of the two officers since the company through its board of directors and the CEO did not want to lose more time and money. My decision As the person in charge of the company I would have made sure that the rest of the workers understand the motive behind the decision to install the new operating system. Management of change is crucial in any business and it takes time to build rapport with the entire organization into supporting the project (Strati, 2000). This is strategic decision that has to involve everyone in the organization. The reason why other workers were recruited into the sabotage scheme is because they were not adequately informed about the project within a good time. The chief finance officer and the Chief IT Officer were able to exploit this weakness and use it to accomplish their evil plans. However, I will not be quick to dismiss the two if I were in the position of the board of directors. The company’s time was wasted in legal battles in courts of laws in terms of legal fees for lawyers and constructive was used for pointless course. Bounded rational theory considers time and resources in settling for any alternatives in decision making. Firstly, I would do anything possible to avert industrial action to avoid investors’ apathy towards the company in terms of investment. The cost of industrial action is enormous and derails the both the short term and long term objective of the company (Hardman, 2009). In order to avert an industrial action I would let the union leaders know of the plan to upgrade the operating system and involve them from the beginning. I will make sure that there is no fear about being rendered redundant; there could be a signed memorandum of understanding to assure the workers of their security of tenure despite the implementation of the new operating system (Michel, 2007). It is important to discern all alternatives available against the resource and time constraint. Encouraging the workers not to down their tools and incorporate them in the change process would be my first priority. The moment the rumor about the workers being rendered redundant reached my office, I would call of an emergency meeting with the union workers and the IT expert to explain to them the importance of the new system and their role. The Chief Finance Officer and the Chief IT Officer took advantage of the breakdown in communication to sabotage the project. Dismissing the Chief Finance Officer or sending him on compulsory leave was ill-timed. A third party could be used to restore the dwindling relationship between me and him. The new operating system would not have required the recruitment of new people to take up the vacant positions. The recruitment process would have delaying the launch and the prospect of the company competing effectively with others in the market or industry. The workers had to be calmed down and taken through the change process to incorporate the new operating system. I would have found out the impact of dismissing the two fellows before suggesting it to the board of directors. The information available would have made it possible for me to know whether dismissing the two or retaining them would be costly to the company (Tsang, 2008). Whatever was required most was change of attitude towards the project by the staff of the organization. The members should have known the importance of the new operating system through a change sensitization program. You cannot please everyone but you have to arrive at an optimal position. Conclusion Bounded rationality theory emphasizes rationality and consideration of time and resource constraint when making decisions. Any management decision has to be bounded by rationality in order to save resources and time. Settling of conflicts in the organization has to consider the both the short term and long term impact of the decision. All effort has to be made to avert more damage. The act sabotage by the Chief Finance Officer and Chief IT Officer had to be deadly with without compromising the strategic plan of the company. The decision made derailed the implementation of the new operating system. Change in the organization has to be managed with caution. The management has to adequately inform everyone in the organization before embarking on any change process like was the case of implementing the new operating systems. Decisions have to be made rationally within a given time frame and considering resources available. References Gigerenzer, G. & Selten, R. (2002). Bounded Rationality. Cambridge: MIT Press. Hardman, D. (2009). Judgment and Decision Making, Blackwell: Oxford. Kahneman, D. (2003). Maps of bounded rationality: psychology for behavioral economics, The American Economic Review 93 (5): 1449–75. Michel, A. A. (2007). A distributed cognition perspective on newcomers' change processes: The management of cognitive uncertainty in two investment banks, Administrative Science Quarterly, 52(4): 507-557. Patokorpi, E. (2008). Simon's paradox: Bounded rationality and the computer metaphor of the mind, Human Systems Management, 27: 285-294. Simon, H.: A. (1955). Behavioral model of rational choice, Quarterly Journal of Economics 69: 99–118. Sternberg, R.J. (2009). Cognitive Psychology, Wadsworth: Belmont. Strati, A. (2000). Theory and Method in Organization Studies: Paradigms and Choices, London: SAGE. Tsang, E.P.K. (2008). "Computational intelligence determines effective rationality". International Journal on Automation and Control 5 (1): 63–6 Read More