Herbert Simon attacked the classical theory of organisation based mainly on structural approach. He said that the so called principles of organisation were mere proverbs, and often lead to contradictory and inconsistent results. He, therefore, tried to study the question in another way, viz., by observing the behaviour of the managers in the organisations. He found in his analysis that the main job of the managers is to take decisions. So much so that Simon went to the extent of using ‘decision-making’ as synonymous with ‘managing’. He felt that in an organisation the managers, who are in senior positions, have to perform the crucial decision-making functions. Actually decisions are being taken at lower levels, middle level and the senior levels. At lower levels only about basic work processes decisions are taken while at the middle level, major operating decisions are taken.
The top level managers take decisions to provide purpose and objective to the organisation and to monitor its performance. Simon said that decision-making is mainly concerned with making choices out of the available courses of action. However, he felt that only the final act of making the choice is often taken as decision-making. But, according to him decision-making is a whole (and quite complex) process comprising several activities culminating in the final choice. Simon classified these activities into three main heads – viz., finding occasions for making a decision; finding possible courses of action; and choosing among courses of action. He called these phases as Intelligence activity; Design activity and Choice activity respectively. He found that time devoted to these activities varied considerably. Managers and Executives spend a large part of their time surveying economic, social, political and technical environment to identify new opportunities for the organisation. They probably spend still more time in developing designs and possible courses of action where a decision is required. Finally they spend a small part of their time in choosing among alternative actions already developed to meet an identified problem and already analysed for their consequences. Thus a major part of the time of the executives and managers is spent in Intelligence activity and Design activity while only a small part is spent on choice activity which is mistaken as the decision-making’.
In his famous book “Administrative Behaviour” Herbert Simon developed his ideas on the decision-making process. A very brief account of his ideas is attempted below:
- In first point made by Simon is that every decision consists of a logical combination of facts and values. Facts means existence or occurrence of something tangible and concrete which can be verified by anyone. On the other hand value is a matter of preference. For example, when one says he likes classical music, he is making a value statement. More statement of facts does not constitute a decision. It does involve a question of preference. Hence a decision involves a number of fact statements and value statements.
- Taking a cue from economists, Simon started with the assumption that decision- making, which meant making choices, was intended to be a rational process. This rationality implies three characteristics. First of all the decision-maker should know the problem and various alternative solutions. This is an important precondition, for, what will one choose if he is not even aware of the alternatives. Secondly, all the consequences of each alternative must be known: And thirdly, the criteria for making a choice must also be predetermined. When all the alternatives and their consequences are known, a rational choice can be made by applying the pre-determined criteria. Simon, however, around that such a rationality is not visible in actual human behaviour and appears to be inconsistent with human capacity of processing and analysing information. The theories of rational choice had already pointed out that the choice is constrained by several factors like time, cost, technology, etc. The distinctive contribution of Simon is that, in addition to these external factors in the environment, the constraints on choice also come from some properties of human beings as problem solvers and processors of Information. He said that human memory and computing power were limited. His resources stimulated many others. They collectively developed the idea of what has come to be known as the theory of ‘bounded rationality’.
Simon brought to bear the behavioural approach to the concept of bounded rationality. He focussed on the three main aspects:
- In the traditional theories of rationality, the alternative choices were supposed to be given. On the other hand, Simon said that alternatives were to be discovered through search and usually only a limited number of alternatives were considered.
- Similarly, the consequences of the various alternative choices were also taken as given by the traditional theories. Simon said that even the consequences of the alternative choices had to be found through some kind of a search.
- Traditional theories assumed that the decision-makers, while, making a choice, optimised. It means that they waited until they found the best alternative according to the choice criteria laid down by them. Simon, however, suggested that most of the decision-makers only ‘satisfied’. The alternatives are considered sequentially. The decision-maker chooses the first alternative, that is good enough.
PROGRAMMED AND NON-PROGRAMMED DECISIONS
Simon also made a classification of decisions. He distinguished between programmed decisions and unprogrammed decisions. A programmed decision is one in which a programme i. e. a set of rules, regulations, formulae exist in the mind of the decisionmaker or on paper which gives the solution as soon as it is applied to a problem. For example, relief may have to be granted to a citizen when his income falls below a certain level. All that is to be done to take a decision is to find out the income of the applicant. This is a simple case. There may be a more complicated set of conditions. But, the decision can be programmed if the fulfillment of concrete conditions completes the decision-making process. However, there may be decisions which cannot be taken according to set rules and regulations. The decision-maker has to add his own judgement before a decision can be arrived at. For example, taking an investment decision requires exercise of individual judgement although there is a lot of data supplied to help the decision-maker. How much force to use in a law and order situation? Looking to the circumstances, the magistrate has to make a judgement. Although there are some guidelines on the subject, but they are never sufficient to complete the decision-making process. Usually there are very few decisions which can be classified as completely programmed or completely unprogrammed. Most of the real life situations require decisions which are a mixture of the two. It is obvious that the programmed decisions are amenable to mechanical analysis on computers while unprogrammed decisions are not. In case of the mixed decisions, that part can be taken over by computers which is programmable.