Using both head and heart in managerial decision making.

Author:Holloman, Charles R.
Position:Managerial Behavior

The work of a manager has been described as one decision after another. To introduce a new product or not, to open for business on Sunday or not, to hire this person or another -- these and a myriad of other decisions, complex and simple, important and routine, are the core and substance of a manager's job. Some of the decisions managers must make are highly structured, deliberative and quantitative, others are ill-defined, loosely structured and qualitative. Still others involve subjective preferences and aversions.

Needing and wanting to make good decisions in all these areas, managers generally try to use a single decision-making process, a textbook approach that is best described by the words rational, logical and analytical. Managers seem to believe that to the extent their decisions are rational they contribute directly to the objectives of the organization; and to the extent their decisions deviate from the rational model they detract from the organization's objectives. Although many new systems and techniques have been developed to make decisions both more simple and more rational, they are basically just tools -- they do not remove the risk from decision making nor do they eliminate the need for a judgment. When all the available information has been considered and all the known alternatives have been evaluated, there still remains the need for a decision to be made. Whether it is made by a single person or a group, it has been contended that it is often a tortuous process.

One of the reasons why the making of decisions is such a tortuous process for managers is the credibility gap that exists in the way they approach decisions. A sense of disbelief occurs when managers purport to make all decisions using the rational model while most observers and participants know that personalities and politics play a significant, if not overriding, role. Where does the error lie? In the management attitude that all decisions must be rational and impersonal? In the unwillingness of managers to admit that many decisions cannot and need not be based on detailed reasoning and quantitative analysis?

Theories of organization behavior and management range on a continuum from prescriptive to descriptive. The theory of decision making is mostly prescriptive and offers the rational model as its mainstay. Because of the many myths and taboos associated with any discussion of decision making, there has inevitably resulted an excessive emphasis on the rational model. While the need to help managers make better decisions perhaps justifies the emphasis, there is a persistent need to address this imbalance, both in research and teaching. This imbalance will not be corrected simply by pointing out the limitations and constraints of the rational model; what is needed is a better understanding of how decisions are actually made, i.e., the descriptive theories.

Domains of decision making

A necessary first step in correcting the imbalance of emphasis on the rational model is a recognition of the semantic difficulties associated with the labels used to identify the various domains of decision making. One of these, the rational model, is firmly established in the literature and has its adherents in all areas of organizational activity. Because the identity of the two other domains has been established by contrasting them with the rational domain, they have been labeled the nonrational (intuitive, experience-based) and the irrational (personalized, psychological). Cognitive definitions and understandings of these three terms -- rational, nonrational and irrational -- vary widely. Not only do they invite varied cognitive definitions, they also elicit strong emotional responses. A definition used by one theorist is invariably disputed by a second theorist from a different discipline or theoretical persuasion.

Writers in the disciplines of economics and statistics, for example, judge a decision to be rational if the decision maker evaluated all relevant alternatives and chose the one that maximized the satisfaction or utility of the decision maker. Rational, in this domain, refers both to a process (analysis) and to a goal (maximization). The efficacy of this model has been questioned on both informational and motivational grounds. Decision makers, according to H.A. Simon in Administrative Behavior, have neither the time nor the ability to analyze all possible alternatives. Because of their limited information-processing ability, decision makers do not -- they cannot -- maximize. Instead, the analysis is made only to the point of producing a "good-enough" decision. Assuming the validity of Simon's argument, does not the limitation of imperfect information and the substitution of satisfying for maximizing as a goal cause the rational domain to seem really less than rational?

The behaviorists provide the most persuasive answer to this question. The essential element in determining whether a decision or behavior is rational is: Did the decision maker have a conscious goal and did the decision maker behave in ways that had the promise of reaching the goal? Whether the decision was a result of analysis or one of the descriptive processes does not add to or detract from the rationality of the decision.

In the intuitive domain, decisions are based upon experience and...

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