Simon’s decision-making theory

Simon is one of the most influential social scientists and his role in shaping the 20th century social science was unparalleled. Simon published his doctoral dissertation as ‘administrative behaviour’ in 1947 and it is one of the 20th century’s ten top most influential works in political science, public administration and management.

Simon was influenced by Folett’s idea on group dynamics in organizations and the human relations approach pioneered by Elton Mayo and others. Barnard’s ‘functions of the executive’ had a positive influence on Simon’s thinking about administration. 

Simon sought to develop a science of administration and unlike classicists made human decision making as the central theme of his studies. He considered decision-making as a process of drawing conclusions from premises, therefore premise rather than whole decision is unit of analysis.

He equated ‘administration’ with decision-making and laid emphasis on how decisions are made and how they be made more effectively.

Based on the theories and methodology of logical positivism, Simon proposed a new concept of administration with focus on decision-making. He argued that decision-making is the core of administrative action.

Another reason for acceptance and popularity of Simon’s theory was due to its apparent subsuming of several administrative functions such as Fayol’s POCCC and Gulick’s POSDCoRB into a single all embracing concept of decision-making.

Simon disapproved policy-administration dichotomy both on descriptive and normative grounds and in its place proposed fact-value dichotomy based on his decision-making schema. To Simon, science of administration should be based on factual premises of decision-making. This should be based on systematic, empirical investigation and analysis, inductive and descriptive methods.

Simon believed that science of administration is applicable to both private and public organisation as they have more similarities than differences.

Simon criticized narrowness of the traditional approach and the ‘principles’ of administration and calls them proverbs and myths. Simons says that when research has been done, when a basic vocabulary to the satisfaction of many scholars has been developed, when decision making has been analysed, when limits to rationality imposed by restricting abilities, habits, values and knowledge have been explored fully – then and only then – it may be possible to have valid principles of administration and know-how to apply them.

Decision-making:

An organisation is viewed by Simon as structure of decision makers. To him decisions are made at all levels of the org, some of them affecting many members, while others are relatively less important decisions about detail.

Each decision is based on a number of premises and Simon focuses his attention on how these premises are determined. Some of these premises pertain to the decision-makers preference, some to his social conditioning and others to the communications he receives from organization units.

As per Simon, decision-making process involves three phases – 

1. Intelligence activity – finding occasion for decision-making. The executive tries to understand the organizational environment and identifies conditions which need fresh action.

2. Design activity – identifying, developing and analyzing all possible courses of action

3. Choice activity – choosing among courses of action

Simon says that those 3 stages appear to be simple and one preceding the other, in practice the sequence is more complex. Each stage may involve all the 3 stages in itself.

Fact and value in decision-making:

Simon maintains that to be scientific one must exclude value judgements and concentrate on facts, adopt precise definition of terms and apply rigorous analysis. An administrative science, like any science, is concerned purely with factual statements. There is no place for ethical (value) statements in the study of science.

Simon explains that decision-making basically involves choice between alternative plans of action, and choice in turn, between facts and values. To him, every decision consists of a logical combination of fact and value propositions.

A fact is a statement of reality indicating the existing deeds, act or state of things. A factual premise can be proved by observable and measurable means.

A value is an expression of preference. A value premise can only subjectively asserted to be valid. Simon, however, is aware that most premises have both factual and value elements.

He clarifies fact-value as – so far as decision lead to selection of final goals, they may be treated as ‘value judgements’, and decisions those are related to implementation of such goals may be treated as ‘factual judgements’. In administration both value and factual premises are interwined.

Rationality in Decision Making:

Simon expounds the necessity of being rational in making a choice. He defines rationality as one concerned with evaluation of consequences while selecting an alternative action. To him, it requires a total knowledge and anticipation of consequences that will follow on each choice.

Simon disputes the concept of ‘total rationality’ in administrative behavior and observes that human behavior is neither totally rational nor totally non-rational. It involves, what he calls, ‘bounded rationality’. Though it is simple concept, it has revolutionary implications.

Total rationality is based on the assumption that the decision-makers know all the alternatives, they know the utilities (values) of all the alternatives, and they have an ordered preference among all alternatives. Simon finds these assumptions to be ‘fundamentally wrong’.  He rejects the theory of total rationality.

In place of optimizing decisions based on total rationality, he advances the idea of ‘satisficing’ – a word derived from satisfaction and sufficing. Satisficing involves the choice of a course of action, which is satisfactory or at least good enough.

Models of decision-making behavior:

There are various models of decision-making behaviour ranging from complete rationality of economic man to complete irrationality of social man. Simon develops the model of ‘administrative man’ who stands next to the economic man.

As the economic man cannot perceive all possible alternatives nor can predict all possible consequences, he instead of attempting to arrive at ‘optimal solutions’, is satisfied with ‘good enough’ or ‘some-how muddling through’.

Administrative man perceives simplified version of real world. He makes his choices without examining all possible alternatives.

In a sense, Simon’s administrative man tries to rationalize man, but does not have the ability to maximize or satisfice. To Simon, resistance to change, desire for status quo, dysfunctional conflicts caused by specialization etc are the obstacles which impedes maximization.

Programmed and non-programmed decisions:
Repetitive and routine in nature, definite procedures can be worked out and each decision need not to be dealt separately. Decisions are based on established practices.

Non-programmed decisions are those which are novel, unstructured and have to be tackled independently as no well tried methods are available for handling them. Selection and training of executives, higher skills, judgement, innovative ability etc are the techniques to deal with non-programmed decisions.

He suggests that mathematical tools, operations research, electronic data processing, systems analysis, computer simulation etc can profitably used to make decisions. Use of such techniques will reduce dependency on middle level management and lead to centralization in decision making.

Authority – zone of acceptance:

The general impression that authority flows from top to bottom is flawed. Authority might operate at various levels and not necessarily downwards. Exercise of authority ultimately depends on the willingness of those who accept it. If exercise of authority is attempted beyond zone of acceptance, the subordinate disobeys it. The magnitude of this ZoA depends upon the sanctions available to enforce the authority. It is comparable to Barnard’s zone of indifference.

Evaluation:

While concentrating on the processes and the role of decision-making, Simon relegates social, political, economic, cultural factors into the background although their role is no less significant in the analysis of administrative decision-making and behavior.

Similarly exclusion of value premises which are essential and integral component of policy making, would steer the study of pub ad to mechanical, routine and less important aspects. It is argued that Simon’s idea of fact-based administrative theory is more relevant to business administration than pub ad.

Simon’s efforts to construct a value-free science of administration was criticized on the ground that bureaucracy is not, and cannot be, a neutral instrument solely devoted to the presentation of facts and the docile execution of orders from political superiors.

Simon’s concept of efficiency is subject to frequent criticism. Efficiency is not, and cannot be, the only goal of administration because there is whole range of other major categories of organizational purposes, such as, satisfaction of various interests, production of goods and services, mobilizing resources, conforming with certain organized codes. 

Simon’s theory of decision making is criticized as being extremely general. Though it provides framework, it does not provide details to guide the organizational planners. His concept of rationality is also criticized. Argyris opines that Simon, by insisting on rationality, has not recognized the role of intuition, tradition and faith in decision-making. Simon’s theory focuses on status-quo-ante. It uses satisficing to rationalize incompetence.

Some Appreciation Please!



  Posted on Monday, September 28th, 2015 at 11:37 AM under   Polity