The Concept of Rationality and Management Theories - Essay Example

Introduction

Under the circumstances of globalized and immensely competitive business world, organizations are forced to search for all possible ways of making their working processes as efficient as possible. Virtually any company today faces situations, which forces them to make hard decisions and choose from dozens of alternatives and options in terms of finances, human resources, and so forth. Considering such a complex business environment, it becomes clear why so much attention today is given to the concept of rationality and its possible application to different business cases and situation. As stated in the work of Jerry Zhang, being rational in business ‘can help the decision makers to deal with difficult problems in a complex environment’ (Zhang 2012). Hence, it becomes clear why rationalization as a concept as well as an approach to managing business should be studied in a detail and considered from different perspectives. Within a framework of this paper, the different aspects of the concept of rationality will be considered in detail, and their application to management theories and approaches will be discussed.

Necessary Definitions

At the outset, there is a need to clearly define what exactly should be understood by the term 'rationality' and what type of decisions can be considered as 'rational decisions'. According to the explanation provided by the Oxford Dictionary, the term rationality stands for the quality of being based on or in accordance with logic and reason' (Oxford Dicrionary 2016). In other words, rationality should be understood as the skill of being able to act and think logically, sensibly, and reasonably. One more definition that is necessary to be mentioned in this paper is 'rational decision making'. According to the Business Dictionary, by this term needs to be understood 'a method for systematically selecting among possible choices that is based on reason and facts' (Business Dictionary 2016). It also must be said that when it comes to a rational process of decision-making, a manager should employ a set of analytical steps in order to consider relevant facts, observations as well as some possible outcomes and results before actually making a choice of a certain course of actions. Speaking about rational decision-making, it also makes sense to mention the theory developed by Gabor, who stated that 'rationally based decisions are built on a foundation of measurable facts usually ordered in a systematic manner' (Gabor 1978). According to his opinion, processes involved in the rationally based decision-making can vary from a corporate planning to operations research, management by objectives, or systematic problem solving.

Different theories of rationality

Speaking of rationality and rational decision-making, it is necessary to understand that there are many different approaches and models of rationality developed by sociologists, psychologists, and other experts throughout the years. Among the most well-recognized people known for their contribution to the theory of nationality are such as Max Weber, Gerd Digerenzer, Herbert Simon, just to name a few. All of these people had their own understanding of rationality and provided their own typologies of rationality and rational decision-making.

When it comes to the topic of rationality, it is hardly possible not to mention the concept of rationality proposed by Max Weber. According to his point of view, there are four major types of rationality. The first type of rationality, a practical one, is based on the idea of systematically deciding on the best option to achieving a desired outcome on the basis of what is practical. The second type of rationality is a theoretical one, and it involves understanding the world through the abstract concepts. The third type of rationality is substantive one, and it involves deciding the best options of the means to the end as dictated by each and every of people's collective values. To put it differently, this type of rationality is about attempting to make the actions and decision congruent with the system of values. As for the last type of rationality, which is formal rationality, it involves making choices and decisions based on universal regulations, rules, and the larger structures of the society (Kalberg 1980). Speaking of the Weber's theory, it should be said that according to him, even the most primitive and daily actions of an average man can be considered rational. He believes that any type of business-like relations should be considered rational because it leads to the actions considered most efficient in terms of acquiring profit.

The other types of the concept of rationality to be considered are bounded rationality and procedural rationality, a division proposed by Herbert A. Simon. As for the bounded rationality, it is based on the idea that when individuals make their decisions, they rational thinking is always limited by the amount of information they have, by the cognitive abilities and limitations of their minds, and by the time they are provided with to make a particular decision. So, in this situation, decision makers seek not an optimal solution but a satisfactory one. As for the procedural rationality, it is based in psychology, and it usually refers to the type of behavior that can be in some way considered as 'the outcome of appropriate deliberation' (Barros 2010). Hence, we see some more versions of how rationality can be understood.

Aspects of rationality

Since it is clear enough what does the term 'rationality' means, what should be understood by the rational decision making, and what categories and types of rationality exist, it is time to consider the major aspects of rationality and see if any of them can be identified in management theories. The goal of this section of the paper is to define the key aspects of rationality.

According to the opinion of Nickerson, there is a significant difference between theoretical rationality and practical or applied one (Nickerson 2008). Considering that the goal of this paper is to demonstrate how the aspects of rationality can be applied to managerial theories, it makes sense to focus on the practical side of the question. Moreover, it makes sense to focus on the characteristics or aspects of rationality from the perspective of organizational management.

The most popular and probably well-though out theory of the characteristics of rationality belongs to Max Weber. In his studies, he claimed that there are seven major characteristics of rationality. The first aspect is about distinctive social institutions. According to Weber, newly emerged institutions should be considered as nothing else but a rational way of meeting human needs. Another aspect of the concept of rationality is a spread of so-called large-scale organizations. Such large-scale associations function due to the fact that there are some very specialized jobs, which is yet another characteristic of the concept of rationality. The following aspects are self-discipline and awareness of time. They are obviously interrelated and its link to the concept of rationality is evident as well. The last two aspects of the concept of rationality are technical competence and impersonality (Bryman 1984). Just like the previous five, they have they own ways of rationalizing our life by making it easier, faster, and fewer dependent on particular people. Now, as the major aspects of rationality have been considered in detail, it is time to move forward to the consideration of how all these aspects actually correlate with modern theories of management.

Aspects of rationality and management theories

Although today experts discern dozens of management theories including even such rare and strange ones as a chaos management theory, within a framework of this paper, I am going to focus on considering the link between rationality and probably most popular management theories. The focus of this paper is bureaucratic management and scientific management theories.

The first theory I would like to discuss in a relation to aspects of rationality if bureaucratic one. It is necessary to state that by bureaucratic management should be understood a formal system of a particular organization that is based on clearly defined roles and hierarchical levels with a purpose of maintaining effectiveness (Page 2003). Bureaucratic management presupposes that everything is done in its order, according to the standards established by those from the highest levels of hierarchy, and everything is organized and structured in a way to remain as efficient as possible. Usually, bureaucratic management theory is the one that is associated with the concept of rationality more than any other. This fact can be best explained by a real-life example. Probably, one of the most telling examples of how bureaucracy and rationalization can be used successfully in a real life is a case study of McDonald's. According to the opinion of world's best experts in the field of organizational management, the worldwide chain of fast food restaurants can be a bright example of a rationalization since the success of McDonald's is often associated with the four basic dimensions of rationalizations. First of all, this chain offers the optimum way of going from a feeling of hunger to a feeling of being full. Second of all, it provides service or product that can be easily calculated, which definitely attracts people. Third of all, it offers a feeling of predictability, and fourth of all, it is associated with a control since employees of McDonald's are trained and determined to do exactly what they are told (Wilson 2010). Proceeding from this, we can see that in order to cut costs and be as efficient as possible, the company started to focus on a rationalization of all major processes from which the whole business is formed. As soon as a certain level of rationalization had been achieved, the company found itself a bureaucratic one.

The next theory of management I would like to consider in a relation to the concept of rationality is a scientific management theory. According to this theory, which was developed by Frederick Taylor, in order to maximize a company’s efficiency and performance, it is necessary to divide work equally, simplify tasks as far as possible, and use monetary incentives as a major motivation tool. It needs to be pointed out that this type of management theory does apply to a certain extent to the management concept of McDonalds. However, it is possible to find some more telling examples. One of such examples is Gap, a company that opened a huge plant in Indonesia in order to cut costs on the production of its clothes. Since the price for labor in Indonesia is significantly lower compared to the price in any of the developed countries, the idea of using the cheaper labor force can definitely be considered a type of rationalization. However, the dark side of this situation is that people working for the Gap’s plant get so little money for their work that they cannot even afford to buy the buttons of a shirt they create with their own hands (Pilger 2001).

Conclusion

In order to make a conclusion to everything written above, it is necessary to point out that under the circumstances of the modern world, more and more companies, especially large corporations, are forced to use the tools of rationalization in order to remain competitive and successful in terms of either finance and competitive advantage. Such companies are also forced to switch their models of management, which needs to happen fast and not gradually, to meet the demands of the consumers. Rationalization and a change of managerial model are both refer to change management, which is a complicated topic for the most of the companies (Wilson 2004). However, it appears to be that exactly this type of skills is necessary for a successful company in the modern world. From all the stated in this paper, it should be pointed out that although in the majority of cases rationality appears to lead to such negative consequences as overcontrol, totalitarianism, or unbearable conditions of working in terms of comfort, amount of working hours, or anything less, still rationalization itself is a positive thing and can help companies achieve better results and maximize profit with no negative side effects if only applied wisely.

Reference List

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