Task 1 - Decision Making Typologies

In considering Simon’s (1960) normative model of decision-making, I have done some extra research by reading chapter one of the Teale et al. (2003) text Management decision making: towards an integrative approach.  The chapter entitled “Management decision-making in context” provided a concise review of Simon’s life and contribution to the professional discipline of decision-making in “business administration”.  I also reviewed Pomerol and Adam’s (2004) academic article “Practical decision making: from the legacy of Herbert Simon to decision support systems”.  This was an easy to read piece that focused on Simon’s work and how it has been developed to form the foundations of Decision Support Systems (DSS) that are utilised by many managers today. 

Key themes of Simon’s work focus on the way decisions are rationally made by identifying all the possible alternatives; determining all the possible consequences of the these alternatives; and evaluating all the possible consequences.  His other key argument was that if the individual is making a decision in an organisation, the structure and the ‘influence’ of the organisation plays a key role.  This places Simon’s research and work in the framework of ‘social psychology’, a well-established field of study today, but one that has its foundations in the work of Herbert Simon. 

In 1960, Simon presented his model of decision making which he is most famous.  It is made up of four stages: Intelligence; Design; Choice and Implementation (Review).

In considering a decision I have made within this framework, I am drawn to a situation in my last job.  I was the WA Operations Manager of a residential service for young people with very high needs.  I was asked by the Board to research and decide if the organisation should open operations in South Australia, with the understanding that I would manage the service if it were to open. 

I started by collecting as much information as possible about the out-of-home care sector in Adelaide, this included the amount of young people in care; relevant legislation and Acts, competitors presently in the market place, the possible pool of potential employees, rental costs, and government funding structures that would be able to utilise our services.  In looking for potential issues, I recognised a number of opportunities in opening services in Adelaide, namely the limited amount of services presently providing high needs care and the high number of young people waiting for suitable placements.  Potential issues (problems) was that we would be the high cost of our service and the difficulties we could potentially have in recruiting suitably qualified, experienced and resilient local staff. 

I conceived a number of possible service development models, which included organically building the service one house at a time, transporting current staff from either WA or Queensland to open and establish the business; or developing a partnership with an established service in Adelaide and training some of their current staff to work specially with more challenging clients.  I also thought about moving to Adelaide myself to manage the start up and work towards sustainability of the business and the employment of a SA State Manager.  The Board and the CEO provided me with defining criteria, namely a deadline for the proposal of two months, projected start up of the new business within a year and a projected operational budget for the first year of opening. 

Using these criteria, I evaluated the alternatives and decided to present the option of growing the new Adelaide operation one house at a time, allowing us to employ and train staff as we needed them, more tightly control the budget and minimise risk.  The Board supported this model and I produced a business plan that focused on building relationships with key stakeholders and employing a local coordinator to obtain suitable resources including the first property in Adelaide.  I left the organisation shortly after the SA coordinator was employed.

On reflection, this model could break down in the first stage, as you can only choose from alternatives you know about.  I was acting on a combination of tacit and explicit knowledge, which led to bounded rationality as I had limited time, knowledge, data and the authority to make the final decision.  I was also bias due to that not wishing to move to Adelaide, which seriously affected my ability to judge all the alternatives the same.

I believe the model is useful because it provides a framework for capturing possibilities and considering consequences.  I personally like ordered ways of approaching decisions and Simon’s provides a rational model that allows you to take into account a number of alternatives for reaching similar goals.  He also makes us question our limitations and bias that underpin our decisions. 

The main issue however is how we are usually time poor, which in turn undermines the amount of information that can be collected and considered as well as how much time can be spent in utilising this model.  I suppose this model is only as good as the information and knowledge that is fed into it, which again is a serious constraint for most of today’s time poor managers.