We begin with a general and familiar description of how decision-making takes place, either in organizations or for individuals. Within the organizational context, decision-making is the process by which “courses of action are chosen (from among alternatives) in pursuit of organizational goals” (Murray, 1986, p. 10). From an individual perspective, decision-making can be expressed as a course of action chosen from among alternatives in pursuit of personal goals. Basically, when we think of decision-making, we tend to think of a process involving the following five phases (Elbing, 1970; Harrison, 1975; Murray, 1986; Pressman, 1973):
Pre-analysis phase. Situations are defined.
Analytic phase. Situations that affect goals are perceived, and information about them is gathered.
Design phase. Options are crystallized to deal with the situation.
Choice phase. Alternatives are evaluated, and the optimal choice is selected.
Implementation phase. The alternative that is chosen to meet the specific situation is implemented.
In the rational model, these phases for decision-making are performed deliberately and consciously, relying on the rationality of the decision-maker’s thoughts and behaviors. Allison (1971) proposed the rational model as the classical and dominant orientation to decision-making. This model assumes “human purposeness both in individual behavior and in the broader scope issues such as foreign policy” (p. 30). Moreover, it assumes that individuals and groups behave rationally in decision-making and when they take other actions. And to behave rationally generally is understood to mean that people try to maximize the value they receive in any situation. That is, they make value-maximizing choices.
There are several variations on the theme of rationality. The classic “economic man” argument suggests that people consider all available alternatives and then make choices that maximize the values they receive. For example, if you are buying a car, then you get complete information on all cars that meet certain minimum criteria and then make the choice that provides the best value—the best combination of price, features, and quality that you desire. But Herbert Simon (1976), in his classic Administrative Behavior, argued that real people cannot quite handle all of the information that is available and that they do not have the decision-making prowess required to fit the assumptions of economic man.
Instead, Simon (1976) suggested that, as humans, we have cognitive limits. Because we cannot deal with all of the possible aspects of a problem or process all of the information that might be available, we do the next best thing; we choose to tackle meaningful subsets thereof and make decisions that might not maximize value but are at least satisfactory. As Simon put it, we “satisfice.” In the example of buying a car, instead of searching out all of the information available and making a purely rational decision, you are more likely to look at different cars until you find one that meets your minimum criteria. Then you buy that car. However, note that you still are seeking a rational decision; you just are limited in your capacity to achieve such a decision in all cases. Although what Simon called “administrative man” cannot attain the same degree of rationality as can economic man, administrative man does the best with what he has. Simon considered decision-making the “true heart of administration” (Shafritz & Hyde, 2012, p. 75).
Allison also equated the “rational man” with the classic economic man or at least with its variant, administrative man. In either case, our goal is to make value-maximizing choices to the extent that we can. Also included in the rational model are the assumptions that decisions are orderly (not disorderly), intentional (not unintentional), purposeful (not random), deliberate (not chaotic), consistent (not inconsistent), responsible (not irresponsible), accountable (not unaccountable), explainable (not unexplainable), and rational (not irrational). The result is a decision model characterized by rational calculation of the costs and benefits of various alternatives. Both Allison and Charles Lindblom provided similar interpretations of the rational decision-making model. Allison (1971) viewed the process as having the following four steps:
Translate goals and objectives into payoffs and utility.
Choose among alternatives.
Consider the consequences.
Select the alternative whose consequences have the greatest utility. (pp. 29–30)
Similarly, Lindblom (1959, 1979) suggested that the rational decision-making process involves the following:
All related values are prioritized (e.g., full employment, healthy children, adults with health insurance).
All possible policy outcomes are rated as more or less efficient in achieving these goals.
All possible alternatives are outlined and require a systematic comparison to determine which one would result in the greatest value.
The choice that maximizes values is chosen.
Regardless of whether the assumptions of the rational model are carried out in practice, the model is attractive as a way of thinking about problems. Indeed, because it is so useful for explaining and predicting behavior, it is the model most familiar to us. Allison, along with Philip Zelikow (1971/1999), illustrated the pervasiveness of the model by asking individuals to react to another nation’s unexpected behavior. They specified three occasions: (1) the expansion into Eastern Europe by Hitler, (2) the transfer of missiles into Cuba by the Soviet Union, and (3) the invasion of Kuwait by Iraq. The overwhelming response of those questioned was to make sense of what happened, to develop reasons and motivations, to explore the intentions of various actors, and to assume a careful and deliberate calculation of the consequences of various outcomes. In other words, they tried to fit these aggressive and risky situations into the rational model and assumed that the government action was primarily the result of a single actor behaving under the assumptions of rational behavior. So even when other models might be more appropriate for explanation and prediction, we tend to rely on the rational model to make sense out of decisions. In a study of almost 400 nonroutine organizational decisions, Nutt (2005) found that “a rational, goal-directed approach was the most effective way to search” for solutions to problems. Setting goals clears ambiguity and increases the decision-makers’ chance of success. Conversely, “problem-directed searches were seldom successful, no matter what protocol was used to uncover a solution” (p. 870).
The modern rational choice models introduce the element of self-interest, which seeks to explain the inconsistencies between the rational goal of the organization and the individual interests of the actor (Glaser, Aristigueta, & Payton, 2000). The notion of self-interest acknowledges that rationality is just one of the many potential influences on the decision-making process. In the 2000 presidential election, a very close race left the final count of votes in the state of Florida critical to the election of Al Gore or George W. Bush as president of the United States. Both the Democrats and the Republicans made early accusations of self-interest. The Democrats blamed the Republican secretary of state, Katherine Harris, for acting out of self-interest in certifying the election before all avenues had been contested. The Republicans blamed the Democrats for not wanting to bring the election to closure, which they considered to be in the best interest of the American people (in this case, it also would be in the Republican candidate’s favor). The secretary of state, by imposing deadlines and requirements in the counties, believed that she was acting rationally in ruling that the votes could be certified. Was the secretary of state acting out of self-interest, or was she being rational? Or should we say that rationality and self-interest coexist?
Examples of other public decision debacles include the British Millennium Dome and Euro Disney. The Dome, which opened on January 1, 2000, was hyped as a futuristic, flashy, and high-tech project to usher in the new millennium. Within weeks of opening, the project became a national embarrassment with high admission fees and lower-than-forecast attendance. Politicians argued over who was to blame. The government put 785 million pounds into the project and 175 million more to keep it afloat. Now bidders plan to bulldoze the building and use its picturesque location on the river Thames to build something else (Nutt, 2001).
Euro Disney is another example of decision failure, resulting from the building of the Disney park in France without, among other things, taking culture into consideration. An American park in the United States made “Americana” accessible to Europeans; yet in Europe it was less appealing. Disney applied its old formulas, replete with historical and cultural assumptions. It limited its downside cost risk but did not consider how to adapt to European culture to ensure revenues would cover the cost. Warning signs were ignored, although expressed at the press conference. Estimates of park and hotel use were overly optimistic, which suppressed the true risk of the project (Nutt, 2001).
Susan G. Komen for the Cure, the nation’s largest breast cancer charity, faced a public relations onslaught in 2012 when it said it would stop giving money to Planned Parenthood for breast exams and related services, a decision that was later reversed.
How do decision debacles happen? Are they preventable? Can the risks and the magnitude of the losses be foreseen? Can a debacle be headed off with a midcourse correction? What lessons might we learn from experiences?
There is a growing wave of criticism of the rational model. One part of this criticism is the recognition that values and feelings also play an important role in decision-making (Etzioni, 1988). In addition, habits, moral feelings, and values that have nothing to do with rationality may guide our behavior (Camic, 1985). Finally, Irving Janis and Leon Mann (1977) criticized the rational approach for its disregard of a holistic picture of human nature, which for us would include culture. Assuming consistency, intentionality, purposefulness, and rationality on the part of individuals invariably leads to misunderstanding and possibly false.
Using the Unit 6 Assignment Template, write an expository paper of no less than 3 full pages and no more than 5 full pages following the outline below:
Define the key issue or problem facing the leader or the organization. (1 paragraph)
Identify and discuss at least three alternatives to addressing the organizational problem or issue. (Each alternative should be explored in a paragraph each)
Choose one alternative to implement and provide justification for your choice. (1–2 paragraphs)
Develop a means of evaluation. How will you define and measure results? (1 paragraph)
Finally, discuss how the concept of “power” factors into your scenario and your proposed solution. Explore how French and Raven’s bases of power may be pertinent in the decision making process. (1 paragraph)
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