Public Administration is a key discipline for a country’s economy,

without it, the State could not function properly.

The State, like any organization, must adequately manage its

resources and this it does with the public administration.

As an entrepreneur, administrator or citizen, it is important that

you know various aspects of this type of administration that
should benefit society.

Therefore, today I will explain it to you in an easy way, with the

following points:

 What is Public Administration?

 Characteristics of the Public Administration.
 Aims of the Public Administration.
 Elements of Public Administration.
 Administrative functions.
 Principles of Public Administration.
 Conclusions.
Public management aims to satisfy the needs of society

What is Public Administration?

Public companies are created by the State to benefit society. They
can be found at the national, state or municipal level.

For example, in the health area we find hospitals; in the education

sector, schools; in the security area, the police, the fire
department, among others.
 Like private companies, these companies need to manage their
resources.

Well, both sectors need to chart their course of action, make

decisions, organize, distribute resources, and manage personnel.

The Public Administration can be understood from two different

perspectives:

 The first focuses on the legal nature of all the organs of the
legal entities that make up the state, for example, the Presidency.
 The second point of view refers more to the material and has
to do with the functions of all these institutions. We focus on this
approach in this article.
Public Administration is defined as:

“An organization that is in charge of continuous action aimed at

satisfying the needs of the public interest, with elements such as
trained technical staff, an adequate patrimony and through
suitable administrative procedures or with the use, if necessary, of
prerogatives of public power that ensure the state interest and the
rights of individuals »

In essence, it is the one that is in charge of managing the

processes in State organizations, not for profit and whose interest
is focused on the benefit of society.

Characteristics of the Public Administration

 The application of public management is linked to the
political ideas of the current government.
 It does not pursue a profit, but the satisfaction of social
needs.
 The public administration supports the private administration
to carry out its functions. For example, terminology.
 Establishes the rules of coexistence between society
 Provides means for compliance with public policies.
 It performs administrative functions and activities of the
State.
 Handles taxes from other sectors of the economy and the
state.
 The government has a budget, marketing and has the same
elements as a private company, but the state or public ones are
very large.

Aims of the Public Administration

Meeting the needs and expectations of the population is the basis
of public administration

The fundamental purpose of public management is focused on

society and the satisfaction of its needs.

However, below I detail the fundamental purposes:

 Satisfy the needs and expectations of the population.

 Guarantee the rights of people.
 Maintain internal order.
 Control national and international trade.
 Manage public policies that respond to the needs of society.
 Regulate the conduct of society.
Elements of Public Administration
The public administration is made up of the following elements:

Personal resources: as in any company there is a human resource

that must fulfil functions within the state agencies.

As a whole, the workers of the state entities are called public

officials.

Unlike private companies, the recruitment and selection process is

carried out through open competitions or tests.

Economic means: income is obtained through taxes that are

distributed to the bodies according to national planning.

Here a cash flow is managed, forecasts are made and a budget is

kept.

Purposes: The purpose of all public management is the common

welfare, however public policies must be evaluated separately.

Administrative functions
In the Public Administration, the administrative process of any
type of administration is followed.

Planning: It is the process where plans, projects, national, state

and municipal public policies are created, framed within the legal
system.
Organization: It consists of ordering the activities to be carried
out, determining the entities in charge of this purpose and
distributing the assigned budget.

The budget is assigned taking into account the estimates of each

agency and public entity.

Control: This is where it is supervised that the policies or actions

taken are being carried out correctly; If not, corrective actions are
applied.

These control procedures are carried out by the designated

official or by the competent executive levels.

Evaluation: It is the process where the planned public policies

and actions are valued, estimating the degree of compliance with
them.

The evaluation of the results must be expressed in the

accountability report.

Principles of Public Administration

Did you know that there are a series of principles on which actions
are based on public management?

Well, today I will explain what they are and how they govern
administrative activities.

Principle of Efficacy
It is to comply with the provisions of the plans, public policies and
commitments of the national, governmental or municipal
management.
This principle indicates that entities must have the skills to achieve
the purposes of Public Administration.

But, one must go beyond the fulfilment of the services provided

to society; it must be guaranteed that this is achieved with quality
standards.

Principle of Efficiency
It consists of using the financial, material and human resources
correctly to achieve the plans and meet the expectations of
society.

For this, we always seek to minimize costs in the execution of

public policies.

Hierarchy Principle
There is a hierarchy within the public administration and a large
number of duly hierarchical bodies. This contributes to inspection
and control in order to achieve the established plans.

Principle of Accountability
This refers to the fact that public administrators have a duty to
report on the results of their actions; they must also indicate how
and in what they used the resources assigned by the State.

By applying this principle, the continuous improvement of the

services provided by the public entity is promoted.

Conclusions …
The Public Administration is in charge of managing State
resources and seeks to satisfy the needs of society.
 To do it correctly, you must follow the administrative process:
plan, organize, execute, control, evaluate.

The actions of public officials are governed by the principles of

efficiency, effectiveness and accountability.

For this reason, officials must not only meet the objectives with
the assigned resources but must also indicate what they were
spent on.

Do you already know what are the differences between Public and
Private Administration? Public and private companies are the
essence of a country’s economy and each one manages its
resources differently.

As an entrepreneur, you need to understand the differences

between the two steps and what their scope is in companies.

For this reason, today I will describe the differences between

public and private administration, taking into account certain
aspects.

For this, I present the following points:

 What is Public Administration?

 What is Private Administration?
 Differences between Public and Private Administration.
 In summary
To start, I want us to see together 4 basic things you should know
about public and private administration. Notice:

Differences between Public and Private Administration

Private administration, unlike public administration, seeks to
maximize benefits

The differences between these types of management are not

absolute, since there are companies whose capital is mixed and
therefore also their management.

On the other hand, a public company may become private

through a privatization process; and a private company may go
public through nationalization.

To better explain the differences between public and private

administration, we will take into account certain aspects.

The resources they manage:

Private administration is going to focus on managing capital that

belongs to owners, private investors and shareholders.

In case of any economic problem, the state is not obliged to solve

it, since those responsible are private individuals.

The main way to earn income in private administration is through

the sales of your product or service.

On the other hand, the public administration manages the capital

that belongs to the state, therefore, it should be governed by the
principle of accountability. This means that the administrator must
indicate in which games he used the assigned monetary
resources.
The resources in the public administration come from the taxes of
the citizens of the country, distributed by the organs according to
national planning.

An example of public administration is EMASESA, located in

Seville, which is dedicated to supplying water.

According to its objectives:

Private companies seek to maximize their profits and minimize

their costs, since this translates into greater benefits for the
owners of the company.

In addition, the private administration is oriented to satisfy the

needs and expectations of people (a target market), through the
products or services for sale.

Contrary case of public companies, whose fundamental objective

is to benefit society.

Apart from this, it seeks to guarantee the rights of people and

regulate the conduct of society.

An example of public administration is that carried out in customs

companies, whose purpose is to control the entry and exit of
goods into the country, that is, it establishes regulations.

Decision making:

In private companies, decision-making is the responsibility of the

company’s board, administrators and shareholders. These will be
in charge of enforcing strategic planning, in order to guarantee
the success of the organization.
In public administration, decision-making is closely linked to the
current government. The decision-making of public administrators
is of low impact, since the great changes will have to go through
the government and its legislative power.

Scope:

Public administration affects the entire country, since its functions

are oriented to benefit or regulate the conduct of the entire
society. Without it, public policies would not be properly
executed.

On the other hand, the private administration has as its field of

application the private capital company but will rely on the public
administration to carry out its activities. For example, permits,
inspections, payment of taxes, among others.

Let make it simple:

Public and private administration have different structures, an

example is in terms of personnel.

Public administration meets community service goals, while

specific government meets profit goals.

Public administration acts according to privacy protection because

it is a system that requires public administration to be privately
sustainable, on the contrary it is a system that includes the whole
community.

Public administration has characters that distinguish the scope of

its field of action and the political content of the actions it
performs, from those that are not taken into account by the
private administration.

Private administration, unlike the public, uses management

science methods and techniques correctly because it does not
accept change.

Workers of the public administration are generally subject to

changes and political influences, with little occurrence within the
special administration.

The public administrator also differs from the legal tendency,

since the law gives you what you think is appropriate at the same
time you are in charge, but the private law administrator tells you
what you should not do.

Innovation:

Because private companies need to increase their level of

competitiveness, they need to promote innovation in the
processes at each level.

This is one of the great differences between public and private

administration, since innovation in the public administration is
almost nil, since decision-making lies with the State.

In this sense, since public management does not seek to generate

competition, it is not common for them to focus on improving
their services, therefore they are less innovative.

Conclusion on Difference Between Public and Private

Administration
The administration applied in the public and private companies is
not the same, although both use the functional process in their
operations.

The most notable difference between public and private

management is the way of obtaining its resources. In the private
one they are obtained from the sales generated by the
organization, but in the public one they come from the taxes of
the citizens.

enri Fayol created Administrative Theory or 14 principles of management

on the management. His Administrative Theory or 14 principles of
management following are:

1. Division of Work: This principle the same as Adam Smith’s ‘division

of labor.’
2. Authority: Manager must be able to give the order. Authority gives
this right.
3. Discipline: Employees must obey and respect the rules and
regulations which govern the organization.
4. Unity of Command: Every employee should receive order or
direction from only one upward or superior.
5. Unity of Direction: Each group of the organization should be
directed by one manager using one plan.
6. Subordination of Individual Interests to the General Interest: The
management must see that its aims are always supreme.
7. Remuneration of Personnel: The laborers must be paid a reasonable
salary for their work.
8. Centralization: The process of transforming assigning decision-
making authority to a higher level of an organizational hierarchy; it is the
centralization that should follow this.
9. Scalar Chain: The line of authority from top management to the
lower ranks represents the hierarchy or scalar chain. This chain should
follow.
10. Order: people and materials should be in the right place at the right
time.
11. Equity: In running a business, a combination of kindness and justice
needs.
12. Stability of Tenure of Personnel: Staff work is well if job safety and
career improvement are guarantees to the team.
13. Initiative: Allowing all personnel to show their initiative in some way
is a source of stretch for the organization.
14. Esprit de Corps: Promoting team spirit will build unity and harmony
within the organization.
criticism of Administrative Theory (14 Principles of
Management):

 The administrative theory is strategic management-oriented. It is not

suitable for another worker.
 The administrative theory is essential only to the formal organization
structure, not for informal organization structure.
 Henri Fayol some concepts borrowed from Military Science. Such as
commanding.
 The administrative theory has a mechanical approach. It does not
sound ideal with some of the crucial aspects of management.
 Such as motivation, communication, and leading.

The public sector includes any part of the economy that is

controlled by government entities and public enterprises. When
making a public administration vs. political science comparison, it
is necessary to acknowledge that the two disciplines are closely
related, as public administration is a subfield of political science.
The coursework featured in a Master of Public Administration
program can help students understand the subtle differences
between public administration and political science while allowing
students to develop the professional competencies they need to
excel in either field.

What Is Public Administration?

Public administration is a professional and academic discipline
that studies the application of government policy and public
services to advance the interests of society. It is central to the
process of implementing and managing public programs. Using
the framework of public administration, government leaders and
other public servants create policies that define broad objectives
for their institutions. These policies often suggest programs and
services that can be implemented to solve societal issues.
In addition to formulating policy, public administrators also dictate
how to invest resources in implementing those policies. This is
where the management aspect of public administration comes
into play. An administration must effectively coordinate the actors
responsible for carrying out policy directives. This requires
administering complex budgets, navigating and coordinating
human resources on a grand scale, and constantly making
improvements to maximize the performance of the public policy.

What Is Political Science?

Political science is a focused field of study that evaluates the
theory and practice of governments at the local, state, national,
and international levels. This discipline involves researching
political events to theorize the source of societal outcomes and to
predict how political activities may impact future events. Using this
information, political scientists provide public administrators with
the information they need to optimize their political strategies and
policies.
Political science can be used to understand a variety of different
political concepts, such as political behaviors and thoughts. By
studying the political sentiments of government leaders, political
scientists can articulate the reasons why a political organization
would act in a certain way. Similarly, analyzing the political
behaviors of government institutions offers a perspective on the
feelings of the inhabitants of particular nations. This information is
valuable to a public administration because government leaders
can use it to create policies and accords that serve the interests
of the people they will affect.

Public Administration vs. Political Science: Similarities

Professional fields in the public sector often share the broad
directive of improving the quality of life for residents of a given
community. In this sense, public administration and political
science are complementary subjects. Public administrators make
decisions that lead to success in the societies they govern.
Political scientists work alongside those administrators to ensure
that their understanding of the political landscape is consistent
with reality. This holds true at all levels of government, as the
knowledge derived from political science informs domestic and
interstate policy decisions.

Public Administration vs. Political Science: Differences

The key difference between the two disciplines is that public
administration is a subfield of the much broader field of political
science. While political science focuses on analyzing the
influence political figures and events have on societal outcomes,
public administration implements the processes responsible for
producing those outcomes. In that regard, political science is a
more comprehensive study of politics as a whole, while public
administration focuses specifically on shaping societies through
direct intervention.
Public Administration vs. Political Science:
Consolidated Career Paths
Those who pursue a career in public service benefit from an
educational background in both political science and public
administration. In fact, individuals can obtain jobs in political
science with relevant experience and a Master of Public
Administration. In a professional sense, political scientists study
the effects of policies and legislation on governments,
businesses, and people. Their duties include conducting surveys
to gather public opinions and evaluating empirical data to identify
political trends.
In some instances, political scientists can transition into jobs as
policy analysts. The role of a policy analyst is suitable for
someone with a background in public administration because it
involves investigating the effectiveness of public policies. A
detailed grasp of the concepts taught in a public administration
degree program can be essential in this line of work since
policymaking is a component of Master of Public Administration
coursework.
Professionals who are interested in public administration or
political science can complete a Master of Public Administration to
enhance their understanding of both fields. In doing so, they can
determine which career path suits them best: working on the front
lines, providing leadership to the public, or providing support from
the trenches, performing vital research and analysis of political
factors.
oodrow Wilson was the 28th President of USA (1913-1921) and is often addressed as
the father of American Public Administration. Wilson and his contribution to the subject
of public administration is widely read and referred to. He was one of the first political
leaders who emphasized the need to increase the efficiency of the Government.

Wilson argued that administration is the most obvious part of the Government
and the least discussions happen around it. He further says that despite being the
executive, the operative and the most visible side of the Government and being as old
as the Government itself it has remain hidden from the scrutiny and inspection of writer,
authors and subject matter experts where it should have been the centre of debates and
researches. He shows little appreciation towards the obsession regarding the
constitution of Government, the philosophical approach towards the existence of State,
the sovereignty or some greater meaning lying at the heart of the Government. Basically
what he meant was the know-how of the actual business of Governing people and how
that can be made more efficient.

In the context of the early 20th century USA and the world in general, Wilson and his
ideas regarding administration made sense. Life had changed much since the good old
days of farms and cattle and now there were complexities of trade and commerce,
stocks and bonds and financers and then the national debts, the ever increasing
conflicts between the capitalist class and the workers. In the light of these
developments, ways the Government can function also needed a change which
unfortunately was not assessed adequately resulting in inefficiency and wastage of
resources.

In addition to above aspects, the Government’s sphere of work was expanding, like the
postal service in America and rail-road lines in Europe. So, if the transition was
happening at the grass root level say for example to manage rail-road, national
commissioners were made in addition to older state commissioners, the resulting
extension of administrative function became a matter which needed to be delicately
handled and not carried out in haste.

Wilson also clarified that the studies conducted in the field of public
administration were mostly carried out by French and German academicians and
were therefore not entirely relevant and suited to the needs of the American
people and State in its original form. He suggested that any principle adopted from
Europe would have to be Americanized and modified for the complex and multiform
state and a highly decentralized form of Government in the USA.

Wilson had carefully studied the administrative practices of not just France and England
but a small nation like Prussia and praised the ruler Frederick the Great who regarded
himself as the chief servant of the people and his office as a public trust. He also wrote
favorably of Napoleon and his recasting of French administration after ending the
monarchial rule. He however; wrote harshly about the ways of English administrators
and those of his own country; pointing out that their history was not of administrative
development but of legislative oversight. There were little progress made in Government
organizations but vast leaps taken in law making and political criticism.

While reading Wilson one cannot help but wonder that whether enthroning public
opinion in the matters of Government a wise decision at all? The dark side of it is that it
becomes a larger obstacle to manage; since any change or reform proposed needs to
get pass veto at so many levels. To sum up, Wilson proposed a very no-nonsense and
businesslike approach to administration which should be free of shackles of political
doctrines.
e have read about the dichotomy between the politics and administration. Subsequently,
we also read about how the later authors and subject matter experts opposed the earlier
dichotomy and insisted that politics and administration cannot be viewed in isolation. In
this section let us try to understand the relationship between the politics and
administration.

According to the political scientist James Pfiffner, the politics and administration are
so closely knit together that it becomes difficult to draw the line where one ends
and the other begins. Politics is the study of power which is the latest definition of the
term. According to Raymond Aron, politics is the study of authority relations between
the individual and groups and the hierarchy power which establishes itself within all
numerous and complex communities. As per this definition, since, power is kind of
omnipresent, it is safe to assume that it has an important say in the matters of public
administration as well.

Another important figure in the field was Dwight Waldo, an American political scientist
and a prominent figure in the area of modern public administration. In his book: The
administrative state: a study of the political theory of American public administration, he
explains an interesting phenomenon regarding the evolution of reforms in civil services
in USA. The principal concern of early civil service reformers was not greater
administrative efficiency but was cleansing and promoting democracy. The primary
issue was not increasing efficiency but was protecting and building moral.

There is no argument regarding the fact that public administration emerged as a

discipline of political science, the former deals with the output of the Government
machinery and the latter with the input. It can also be put as such that, political science
provides the framework within which public administration functions. From the academic
perspective, both these subjects share a number of common areas of study like
constitutional law, administrative law, delegated legislation, government budgeting and
local governments amongst many other. So, a comprehensive understanding of both
the subjects is mutually inclusive to each other, to learn one, the other has to be
mastered as well.

Another important academic field from which public administration heavily borrows and
is deeply influenced is the Sociology. It is a branch of study which deals with social
order, change, class, conflict, problems, associations and institutions. According to
Marshal Edward Dimock, administration takes place in a social setting and it is the
society which determines the pattern of administration. He goes ahead and adds that
through an administrative leadership however, the society itself can be changed for
good. He says that the job of a public administrator is not mere administration but that of
a social engineer who can bring about desirable changes in the society.

In the modern times, the various activities which the society governed and administered
itself like community welfare, health, security etc have been taken over by the
Government and public administration departments. The social control has been
replaced by administrative controls and hence, it makes sense for the public
administrators to be in sync with societal goals.
We have constantly been referring to diverse subjects to understand public
administration better; the reader is now in a position to understand the relevance,
importance and vastness of this subject which has an immediate and direct interaction
with us in our everyday lives.

Public administration is like any other administration which is carried out in public
interest. Before we dwell deeper into understanding public administration it would be
beneficial to try and see how different authors have tried to define what administration
is.

Marx defines administration as - Administration is determined action taken in

pursuit of a conscious purpose. It is the systematic ordering of affairs and the
calculated use of resources aimed at making those happen which one wants to
happen.

Frederic k Lane defines administration as organizing and maintaining human and fiscal
resources to attain a group’s goals.

A complete definition for public administration however is difficult to arrive at due to the
sheer number of tasks that fall under it. Some academicians argue that all the
government related work falls into this category while other choose to argue that only
the executive aspect of government functioning comprises of public administration.

We can also see how different authors have defined public administration:

According to L D White, Public administration consists of all those operations

having for their purpose the fulfillment or enforcement of public policy. On the
other hand as per Woodrow Wilson public administration is a detailed and systematic
application of law. One can also say that public administration is nothing but the
policies, practices, rules and regulation etc, in action.

Now can public administration be divorced from social and political systems; certainly
not and therefore emerged another definition provided by F A Nigro who argues that
public administration is essentially a cooperative group effort in public setting. Secondly,
it covers all the three branches of government machinery, the executive, the legislative
and the judicial. He further added that since public administration plays a crucial role
in formulation of policies therefore it is a part of the political process as well (for
e.g. Bills and Acts). Negro also said that public administration is different from private
administration in numerous ways and that it interacts with various private groups and
individuals in providing services to the community.

Also, on the nature of public administration there have been two popular views, one
being the Integral view and the other one is the Managerial view. The Integral view is all
encompassing and consists of sum total of all managerial, clerical, technical and
manual activities and employees form all levels. This view was endorsed by L D White
and Dimock. It may differ from one agency to another depending on their sphere of
work.
On the other hand the Managerial view, as the name suggests says that the public
administration involves only the managerial activities. This view was supported by
Simon, Smithburg, Thompson and Luther Gulick.

After having said that; the word administration itself is highly contextual, and may vary in
meaning and definition from one organization to another.

So if you want to understand it from the context and setting of an organization, it can be
roughly explained that; the top leadership or the Board decides the vision, mission,
short and long term goals and the business unit heads then draw out action plans and
create or reform processes, allot responsibilities, direct planning, get people on board
and start working towards achieving those set goals as per defined guidelines. So, the
Board can be the Government and the Business Unit Heads and their teams can be the
public administrators who are the implementers and actually the people who run the
show.

In the next section we shall make an effort to understand whether public and private
administrations are similar, different or are there any overlaps between the two.

ureaucracy is not an obstacle to democracy but an inevitable complement to it.

Joseph A. Schumpeter

The above quote by Schumpeter can call for a heated debate on its relevance and
credence. However there is no denying that bureaucracy; since a couple of centuries or
so; has been an integral part of the Government, the State the people and the way they
function with each other.

Public administration is the single most important aspect of bureaucracies

across the world; be it a democratic, socialist or a capitalist state, more so in a
socialist state, as all aspects of the citizen life are influenced and decided by the
government.

There has been considerable shift in the way the public administration was carried out
in ancient and medieval times when the initiatives were nothing more than sporadic
administrative functions like maintaining law and order and collecting revenues with little
or no welfare activities. The people who carried out those activities were selected by the
monarchs and were no better than their personal servants.

With changing times, the objective of public administration also underwent a change
and by the nineteenth century; an organized approach to public servants and public
administration was adopted. This approach was based on an exhaustive legal
framework replacing the patriarchal and hereditary function with bureaucracy.

The advent of this new approach to public administration happened due to many
reasons. The foremost being the Industrial revolution. With Industrial Revolution, the
Government forayed into trade and commerce; which was followed by Imperialism,
Nationalism and Internationalism which added on to the widening avenues of
Government duties and responsibilities.

The times today are again vastly different from what existed a century ago and
once again the scope of public administration has also undergone a shift, it’s
difficult to decide whether it is paradigm or not. However, the increasing awareness
amongst people especially in the developing countries [for e.g. The Right to Information
Act or RTI act in India] and an acquired knowledge of rights, privileges and laws
amongst the people of developed countries[for e.g. the debates on The Health Care and
Education Reconciliation Act of 2010] have thrown new challenges for the public
administrators and policy makers.

The demand for unified national services, the conflicting interests between the various
economic sections of the society and with global migration and subsequently
globalization; the protection of the interests of the multi-ethnic groups of the society
have kept the public administrators occupied.

Administration matters so much because it is not enough to make policies and laws on
paper. The interpretation and translation of those policies and laws into actions and
carrying them out is the difficult part. The public administrators therefore have to play an
important role in running the government as machinery. Bureaucracy has often been
sneered and ridiculed at but if the administrative work is stopped, nothing really would
be happening.

In almost all the countries the number of people employed in public administration work
is appalling like in USA the figure roughly stands at 2036000 civilians excluding the
employees of Congress and Federal courts, in England the figure runs into several
thousands and in India the civil services exam itself draws lakhs and lakhs of applicants
while the selection percentage is meager [for e.g the 2006 numbers for selection in the
UPSC was 383983 applicants and 474 actually recommended for posts.]

The various important roles that public administration plays, the most important one are
implementing laws and policies and acting as their adjudicators. It is therefore important
that the reader approaches the study of public administration with an open mind and
without prejudices to appreciate the full nature, role, importance and relevance of the
bureaucracy.

The term new public management was coined by scholars from UK

and Australia (Hood 1991 and Hood and Jackson 1991), who were working in the
in the areas of public administration. Now, the origin of this new term was to propose
a new point of view towards the organizational design in the public sector, however after
a decade, the meaning of this term in discussions and debates became many. Some
scholars choose to define it as the introduction of new institutional economics to public
management and some used it to refer to pattern changes in policy making. Before we
make an effort to further understand the various aspects of New Public Management, let
us see how it is different from the traditional public administration.
The new public management which emerged in the 1980s represented an attempt to
make the public sector more businesslike and to improve the efficiency of the
Government borrowed ideas and management models from the private sector. It
emphasized the centrality of citizens who were the recipient of the services or
customers to the public sector.

New public management system also proposed a more decentralized control of

resources and exploring other service delivery models to achieve better results,
including a quasi-market structure where public and private service providers competed
with each other in an attempt to provide better and faster services. [For e.g. In UK the
purchase and provision of healthcare was split up between National Health Services or
NHS and Government funded GP fund holders, this increased efficiency as the
hospitals now needed to provide low cost procedures to win both patients and funds.)

The core themes for the New Public Management were:

 A strong focus on financial control, value for money and increasing efficiency
 A command and control mode of functioning, identifying and setting targets and
continuance monitoring of performance, handing over the power to the senior
management
 Introducing audits at both financial and professional levels, using transparent
means to review performances, setting benchmarks, using protocols to
ameliorate professional behavior
 Greater customer orientation and responsiveness and increasing the scope of
roles played by non public sector providers
 Deregulating the labor market, replacing collective agreements to individual
rewards packages at senior levels combined with short term contracts
 Discouraging the self regulatory power of the professionals and handing over the
power from individuals to management
 Encouraging more entrepreneurial management than beurocracy with high
retrospective accountability requirements upwards
 Introducing new forms of corporate governance, introducing a board model of
functioning and concentrating the power to the strategic core of the organization

With changing times newer aspects were included in the NPM model mentioned above
as well and what the scholars term as NPM model 2 was brought in. The critical aspects
of this new model were:

 Introduction of a more elaborate and evolved quasi-market system

 Creation of more fragmented or loosely contracted public sector organizations at
the local level setting in a change from management of hierarchy to management
of contract
 Distinguishing between the small strategic core and the large organizational
periphery, market testing and contracting out the non strategic functions
 Delayering and downsizing
  Introduction of new managerial concepts like Management by Influence, creating
network for of organizations, creating strategic alliances between the
organizations
 Moving away from standardized service forms to more flexible and varied service
forms

Now, as more and more work was done in the areas of Human Resources and
Relations and popular texts which stressed on the need of excellence, the importance of
organizational culture, values, vision and the concept of Learning Organization
introduced by Peter Senge (1990) influenced the new public management as well and
therefore suitable changed were also suggested in the theory by the scholars.

 In a bottom up form of organization- Organizational development and learning

was gaining importance. Organizational culture was seen as a glue which holds
the organization together, judging the performance by results etc were the new
point of views
 In the top down form of organization- Securing changes in organizational culture
was cited as important, clarifying and projecting the vision and leadership from
top to down was asked for, private sector emerged as a role model for the neo
style public sector, training, corporate logos, communication strategies, assertive
HR and all the other aspects that are characteristic jargon of private sector were
encouraged to be adopted So, basically the new public management was a
radical movement to change not just the way a public sector functions but also
the entire perception about it.

approaches to public administration 

We have come across a number of times during our exploration of the topic, that it is
somewhat difficult to define public administration in concrete terms. It has close
association, interaction and influences from several fields of studies like law, political
and social science administrative science and human relations and even behavioral
science for that matter. One can easily infer that the approaches to study this field
would also be as varied and as vast as the subject matter itself. And indeed so,
that there are many approaches to public administration as we shall read about in
consecutive articles. For the moment, we would take a step back and try and
understand the reason behind so many approaches to this field of study and why were
they required.

Public administration as a serious subject which required scientific attention was first
promulgated by Woodrow Wilson and as we read in the Wilsonian vision of Public
Administration he fiercely recommended that there should be more scrutiny and debate
and studies carried out in this area to make it more efficient and robust.

However, it was only during the beginning of the twentieth century that American
Universities introduced Public Administration as a subject of academic study influenced
by L.D White’s important book called Introduction to the Study of Public Administration.
There were also attempts made by scholars to differentiate between politics and
administration, hence comparative study of two to understand Public Administration
better came into existence.

Sometime later the Principles approach to public administration was introduced. This
approach was influenced by W. F. Willoughby’s work called Principles of Public
Administration in 1927. His work emphasized that scientific study and research of
administration can help derive fundamental principles regarding the same. This
approach was championed by other authors and scholars like Fayol, Mooney, Lyndall,
Urwick etc. So, resorting to scientific method of exploring, researching, observing,
recording, classifying etc was used to study Public Administration.

By this time, some important work had started happening in the areas of Human
Relations by the likes of Elton Mayo, his Hawthorne experiment threw interesting light
on social and psychological forces in work situations. So the importance of attitudes,
feeling, sentiments and social relations, work group dynamics etc started influencing the
vey formal structure and way of working; present and preferred by the public
organizations.

After the Second World War, behavioral sciences were quite a hot debate in the
academics with a lot of research and work carried out in the field. Herbert Simon’s
Administrative Behavior and Robert Dahl’s, The Science of Public Administration: Three
Problems; critically questioned the inadequacies and limitations of the orthodox public
administration of the pre war days. Simon focused on the aspect of decision making in
Public Administration and stressed on the need to develop a robust and relevant
administrative theory based on precise and logical study of human behavior.

And recently with the advent of technology in every walk of life and a common
consensus amongst authors and scholars that both public and private administration are
similar in many manner, the management science approach to public management
came into existence.

The newest approach is that of policy analysis approach since the Government is
venturing into new areas and different activities with increased involvement in welfare
programs, the process of making public policies and its analysis, the measurement of
the output etc became the new areas of study for the scholars and subject matter
experts.

In the subsequent articles we shall dwell deeper into some of these approaches
described above and see how they shaped and influenced the study of Public
Administration.

The Historical approach to public administration

he study of History is often cited as important to understand the present as well as the future. The study
of public administration also cannot be complete without understanding the evolution and progress of
civilizations.

The Historical approach to public administration focuses on the administrative systems, process
and policies practiced in the past and then try to interpret them relevantly in the context of
present times. There are two sides of the coin which the scholars have argued, while this approach may
provide rich details regarding what worked and what not in the past but authors like John Pierre and B
Guy Peters say that the study of history cannot provide any usable information which can be used now
and the students of public administration should not have such misconceived notions. The important point
to note is that scholars should know when to revisit the past and when to disassociate from it to draw
pertinent theories and conclusions.

The study of history of administration does not become any lesser important even in the light of above
contrasting argument. It remains important because developments in society over time and ages have a
lasting effect on the quality and quantity of public services delivered.

This approach helps the scholars and students to understand that how the Government adjusted its
administration and functioning with changing times and what ramifications it had. The study of the past
also provides crucial information regarding why some methods, policies, systems etc were adopted and
which needs did they address.

With the importance of historical approach established in studies of public administration, we shall now
see what the legal approach to public administration was. Taking the legal route to public administration
would venture into the formidable legal structure and organization of public bodies. As the name
suggests, this approach associated itself with laws, rules, regulations, codes, official duties etc. It also
described the power, limitations and discretionary powers of the authority and judicial decisions. Many
countries especially in Europe like Germany, France, Belgium and others have adopted the legal route to
study public administration.

It works well for these countries as they have two distinct divisions of laws, the constitutional and the
other administrative. The constitutional law mainly dealt with the interrelation of power between the
legislative, executive and judicial branches of the Government while the administrative part concerns itself
with the functioning of the public organizations.

The legal approach throws light on the legal framework in which the public administration
operates but excludes other important and informal aspects like sociological and psychological
dynamics at play and therefore is considered an incomplete approach by many scholars. However
there were many other takers for it and in USA, Frank J Goodnow, was an important advocate of this
legal approach. In his book Politics and Administration he challenges Montesquieu’s theory of separation
of power in the book Esprit De Lois which proposed three branches of power; legislative, executive and
judiciary but highlighted the independence of judiciary from administrative as the sole recognition of
judicial power. According to Goodnow, this in itself was not sufficient and that extreme form of this theory
was incapable of application to any concrete political organization. Goodnow and his further work have
greatly influenced the way the American Public Administration shaped up in the later years.

instructional approach

The instructional approach to the study of public administration concerns itself with the
institutions and organizations of the State. The core area of this method lies in detailed study of the
structure, the functioning, rules, and regulations of the executives, legislatures and the departments of the
Government. The scholars who practice this approach consider administration to be an apolitical and
technical function which lies only in the aspect of policy implementation.

Now, there were many authors like L D White and Luther Gulick who concentrated their effort in
describing what an institutional structure was and did little to build any theory actually. The reader may be
intrigued as to why this special attention was paid to define institutions. The present day definition of
institution encompassing all kinds of rules, regulations and organizations is argued as inaccurate by many
authors like B Guy Peters and Jon Pierre. Institutionalization of an organization takes time.

An organization keeps getting complex by adding informal norms and practices which happens through its
interaction with the external environment and they are in a sense independent of the individuals who
make an organization at a given point of time. However, according to Selznick (1957), any organization
which is complex needs to be infused with value which is beyond the technical requirement of the tasks
that are performed by that organization. This means that an organization has a distinctive sense of self
and identity and its way and its beliefs become important for the society as well. It also starts representing
the aspiration of the community and in turn influences the community with their own values and beliefs. A
real institution becomes a symbol for the community in many ways, like the very building in which it is
housed. It can be interestingly explained and seen all through the History that the revolting group often
occupy the presidential palace or offices or the parliamentary buildings or pose a threat to the powerful
and symbolic structures like the terrorist threat on the Pentagon during 9/11 and the 26/11 Taj Hotel
attack in India.

The above discussion becomes relevant with respect to the study of public administration
because Government organizations are institutional in many ways and represent the needs and
aspirations of the community. Therefore, studying and understanding their administration becomes
important to make them more efficient and result oriented.

The traditional study of public administration emphasized on the knowledge of History and Law but this
institutional approach focuses on the organizational structure, goals and principles as primary. So, a lot of
attention was given to the problems related to the functioning of an organization like delegation,
coordination & control and bureaucratic structure.

The main drawback to this approach was that little or no attention was given to the external sociological
and psychological factors. These factors affect the organization in ways which are not always subtle, but
have strong ramifications on the health and well being of an organization.

With this new approach the older approach and theories to the study of public administration also
underwent a few changes. There were serious questions raised on the politics- administration bifurcation.
The premise that the basic principles of administration can be applied universally was also challenged
with the emergence of diverse administrative environments. The administrative goals of economy and
efficiency were supplemented with social and economic progress. And also, a lot of management
principles came into the field of public administration. We shall explore a couple of more approaches to
the study of administration in subsequent articles.

behavioral approach
The behavioral approach to public administration owes its genesis to the Human Relations Movement of
the 1930s. The movement started off as a protest to the traditional approaches to public administration
that focused on organizations, institutionalization, rules, and code of conducts etc with absolutely no
mention of people who are the center of all these activities.

The pioneering work done by Taylor and the emergence of Scientific Management created quite stir not
just in the industrial sector but also in management and study of public administration. Henry Fayol
worked on his Fayolism at around the same time as Taylor and came up with different set of functions
and principles for the management bringing in terms like discipline, unity of command, equity and team
spirit.

Herbort Sumon was one of the torch bearers of this moment and stated that administrative
behavior is part of behavioral sciences and the study of public administration cannot be complete
without the study of individual and collective human behavior in administrative situations. The
behavioral approach has certain salient features like:

 The literature that has been written on the topic stays away from being prescriptive. It follows a
descriptive course with an exception to the studies carried out in the areas of motivation
 Individuals were paid attention to and aspects like motivation, decision making, authority and
control were brought into focus
  The informal aspects of an organization and communication patterns amongst the members were
emphasized
 The effort was to identify operational definition of terms and a lot of empirical study like field
study, laboratory study and statistical methods were conducted
 It borrows a lot from other social sciences, social psychology and cultural anthropology

This approach made more sense and had greater relevance than earlier approaches as it took into
consideration the fact that the political, social, economical and psychological environments have an effect
on human motivation and which ultimately has an effect on the work output of an individual. It also helped
to develop an understanding of what, how and why of the way the public administrators act. It showed
that the way administration is conducted is influenced by human sentiments, presumptions biases and
perception, which many of us may have experienced firsthand during our interaction with government
organizations and public administrators.

Behavioral approach has contributed to the study of public administration in many ways like the
scholars started studying cross-structural and cross-cultural administrative behaviors and which
further paved the way for the comparative study of public administration.

Like all new things, this approach too has its fair share of criticism and the critics have ruthlessly
questioned the utility of this approach in the analysis of administrative problems. They find it limited in
scope and of little use. The study of public administration goes beyond small social groups and deals with
large communities and therefore the behavioral approach falls short.

The modern behavioral approach is leaning towards becoming more action oriented and prescription
format nevertheless. Roscoe Martin and his Craft Perspective define the shift better. It concerns itself with
the decisions, outcomes and the political skill needed to perform a particular managerial job.

The Human Relations Theory

The Human Relations Theory has human beings at its center as can be understood by the name,
but it also had more to it. It viewed human beings not as machine models but as individuals with
differing psychological motivations and with distinct and dynamic group behavior affecting performances.

There was an experiment conducted on the workers of the Hawthorne Works of the Western Electricals in
the spring of 1927 in Chicago. The experiment was being conducted by Elton Mayo and Fritz
Roethlisberger, the former being an Australian organizational theorist and the latter was his employee.
The experiment was later known as the Hawthorne experiment and the findings were called the
Hawthorne effect. Elton Mayo is often coveted as the father of the Human Relations Movement and his
experiment and studies are the most referenced piece of work not just in public administration but also in
people management in organizations.

The Hawthorne experiment set out to find the relationship between the work conditions, the general
fatigue and resulting monotony in the employees. It was believed that the relationship can be gauged by
studying the effect of temperature, humidity lighting and hours of sleep.

The findings of the Hawthorne experiment shocked the social scientists in many ways. The experiment
was carried out on a piece rate wage system for the participant workers. It was seen that the workers
were motivated to work for money only till the time when they would ensure an adequate income and
refused to work more than that. This simple but startling revelation created quite a shakeup for the
scientists as it clearly challenged the Taylorian principle of scientific management. At the next level, some
female workers were separated from the rest of the workers and were put under observation. It was
observed that with time and changed in the working conditions like lighting, humidity etc, their productivity
kept raising. This puzzled the scientists even more, it was later discovered that the girls were aware of the
experiment being conducted on them and therefore displayed their best performance.

The experiment conducted for over a year ended in some new understanding regarding people and
performance. It was understood that human beings are motivated by several factors and not alone
economic. They are greatly influenced by their social environment, form groups, have goals, beliefs,
conducts and ethics which might not be in sync with that of the organization. So, for all practical purposes
they were thinking, acting, conscious individuals who needed to be treated like one.

This was a theory which made the thinkers move away from the earlier popular classical theory which
proposed and emphasized on the structure, organizational planning etc as its core. It became very clear
after the Hawthorne experiments that the informal relationships, the group dynamics and day to day
functions of an organization are no less complex than the study of the mechanism of the organization. At
the end of the day, it becomes important that the employees perform and their performance is sometimes
far removed from the parameters and motivators understood by the organization.

beurocratic theory of PA
he bureaucratic theory of public administration owes its existence to Max Weber and his magnum
opus Economy and Society published in 1922. It was Weber who popularized the term and in his book
gave a glimpse of the extensive research he had carried out by studying ancient and modern states to
understand the working of the bureaucracies in different eras. Before we dive into the details regarding
Weber’s ideas of bureaucracy, it would be interesting to understand his background and education to
appreciate his philosophy and thoughts that run like a common thread all through his work.

Max Weber was a German political economist, philosopher and a social scientist who along with Emile
Durkheim and Karl Marx is considered to be one of the three founding pillars of sociology. Weber was a
student of law and history throughout his career and later joined the Berlin University as a faculty and
lectured and consulted for the Government. Weber was greatly influenced by the Neo-Kantianism wave
that swept Germany during the 1860s. Heinrich Rickert the foremost scholars of Neo-Kantianism in
Germany was a professional colleague of Weber in the University of Freiburg.

The Neo-Kantianism or the Back to Kant movement of 1860s was to revisit the theories of Immanual Kant
the most important and influential of German philosophers and scholars of the 18th century. The scope of
this article is limited to throw light on Kant and his philosophies however it is advisable to the readers to
read a little about Kant and his work to get a better understanding regarding Neo-Kantianism.

Influenced by Heinrich Rickert and Kant, Weber came to a central core of his theories and that was
Rationalization. Weber promulgated rationalization in all areas of life like economy, politics, society,
culture and even religion. He went on further to say that Rationalization was the basis of the modern
western society. Having said that, let us now make an effort to understand Weber’s work in the areas of
social sciences.

In his seminal work Economy and Society, Weber goes to extreme lengths to trace the evolution of
bureaucracy and the State and their relations with each other. He cites the Chinese and the African
empires that degenerated because of the lack of bureaucracy and methods of administration and the
ancient Roam Empire which disintegrated because of increasing bureaucratization.

According to Weber, the need for bureaucratization in the ancient empire state arises from the
maintenance of armies, public finances and most importantly power and politics. In the modern
times however, the complexity within the civilization is ever increasing and therefore the demands from
the administration are also getting complex.

Weber also emphasizes the importance of communication in running the bureaucracy of a State and adds
that they act as pacemakers and are the prerequisites of the possibility of bureaucratic administration.
Trained bureaucracy is superior to other kinds of administration in many ways like efficiency, accuracy or
precision, unity, discretion, continuation, cost and reducing overall friction in the government functioning.
Weber went on to characterize a bureaucratic state by certain behavioral and structural features like:

 Division of Labor
 Hierarchy
 Rules and Rationality
 Impersonality
 Rules Orientation
 Neutrality

Weber also came up with the term called Rational-Legal authority which characterizes the modern liberal
states. The tripartite classification of authority proposed by Weber explains that the states travel from
Charismatic Authority to Traditional Authority and finally arrive at Rational-Legal Authority. The Rational-
Legal Authority upholds that an individual or an institution has powers emanating from the legal offices
that they hold. Once they leave, the power is lost as the power is associated with the office and not the
office holder.

The above Rational-Legal power lies at the core of the modern bureaucracies and is practiced widely
across the world. The writing of constitutions and documents, establishing offices and institutions and
holding elections are all in conformity to this kind of authority practiced by political systems in mature
states.

decision making

ey Points

 Decision making is a process of choosing between alternatives.

 Problem solving and decision making are distinct but related activities.
 Time pressure and personal emotions can affect the quality of decision-making
outcomes.

Key Terms

 Problem: A difficulty that has to be resolved or dealt with.

Decision making is the mental process of choosing from a set of alternatives. Every
decision-making process produces an outcome that might be an action, a
recommendation, or an opinion. Since doing nothing or remaining neutral is usually
among the set of options one chooses from, selecting that course is also making a
decision.

Difference Between Problem Analysis and Decision Making

While they are related, problem analysis and decision making are distinct activities.
Decisions are commonly focused on a problem or challenge. Decision makers must
gather and consider data before making a choice. Problem analysis involves framing
the issue by defining its boundaries, establishing criteria with which to select from
alternatives, and developing conclusions based on available information. Analyzing a
problem may not result in a decision, although the results are an important ingredient in
all decision making.

Steps in Decision Making

Decision making comprises a series of sequential activities that together structure the
process and facilitate its conclusion. These steps are:

 Establishing objectives
 Classifying and prioritizing objectives
 Developing selection criteria
 Identifying alternatives
 Evaluating alternatives against the selection criteria
 Choosing the alternative that best satisfies the selection criteria
 Implementing the decision

analysis of alternatives
A major part of decision making involves the analysis of a defined set of alternatives against
selection criteria. These criteria usually include costs and benefits, advantages and
disadvantages, and alignment with preferences. For example, when choosing a place to
establish a new business, the criteria might include rental costs, availability of skilled labor,
access to transportation and means of distribution, and proximity to customers. Based on the
relative importance of these factors, a business owner makes a decision that best meets the
criteria.

The decision maker may face a problem when trying to evaluate alternatives in terms of
their strengths and weaknesses. This can be especially challenging when there are
many factors to consider. Time limits and personal emotions also play a role in the
process of choosing between alternatives. Greater deliberation and information
gathering often takes additional time, and decision makers often must choose before
they feel fully prepared. In addition, the more that is at stake the more emotions are
likely to come into play, and this can distort one’s judgment.

Decision-Making Styles

Decisions are driven by psychological, cognitive, and normative styles, each of which
take into account varying influences on the final decision.
ey Points

 The ability to make effective decisions that are rational, informed, and collaborative can
greatly reduce opportunity costs while building a strong organizational focus.
 A psychological style to decision-making favors individual values, desires, and needs to
determine the best course of action.
 A cognitive style to decision-making is heavily influenced by external factors and
repercussions, such as how a given course of action will impact the broader environment
in which the organization functions.
 Normative decision-making relies on logic and communicative rationality, aligning people
based upon a logical progression from premises to conclusion.
 Regardless of the style or perspective, managers, and leaders must create
organizational alignment in decision-making through building consensus.

Key Terms

 communicative rationality: A theory or set of theories which describes human

rationality as a necessary outcome of successful communication.

Why Decision-making Matters

Decision-making is a truly fascinating science, incorporating organizational behavior,

psychology, sociology, neurology, strategy, management, philosophy, and logic. The
ability to make effective decisions that are rational, informed, and collaborative can
greatly reduce opportunity costs while building a strong organizational focus. As a
prospective manager, effective decision-making is a central skill necessary for success.
This requires the capacity to weigh various paths and determine the optimal trajectory of
action.

Decision-making Styles

There are countless perspectives and tactics to effective decision-making. However,

there are a few key points in decision-making theory that are central to understanding
how different styles may impact organizational trajectories. Decision-making styles can
be divided into three broad categories:

 Psychological: Decisions derived from the needs, desires, preferences, and/or values of
the individual making the decision. This type of decision-making is centered on the
individual deciding.
 Cognitive: This is an integrated feedback system between the individual/organization
making a decision, and the broader environment’s reactions to those decisions. This type
of decision-making process involves iterative cycles and constant assessment of the
reactions and impacts of the decision.
  Normative: In many ways, decision making (particularly in groups, such as within an
organization) is about communicative rationality. This is to say that decisions are derived
based on the ability to communicate and share logic, using firms premises and
conclusions to drive behavior.

Cognitive Theories

While the above styles give a general sense of the logic that drives choices, it is more
useful to recognize that each of these three styles can play a role in any individual’s
decision-making process. From the cognitive perspective, there are a few specific
stylistic models that are useful to keep in mind:

Optimizing vs. Satisficing

Decision-making is limited to the finite amount of information an individual has access

to. With limitations on information, true objectivity is impossible. Decisions are therefore
intrinsically flawed. A satisficer will recognize this necessary imperfection, and prefer
faster but less perfect decisions while a maximizer will take a longer time trying to find
the optimal choice. This can be viewed as a spectrum, and each decision (depending
on the risk of a mistake) can be viewed with varying levels of perfection.

Intuitive vs. Rational

Daniel Kahneman puts forward the idea of two separate minds that compete for
influence within each of us. One way to describe this is a conscious and a subconscious
perspective. The subconscious mind (referred to as System 1) is automatic and
intuitive, rapidly consolidating data and producing a decision almost immediately. The
conscious mind (referred to as System 2) requires more effort and input, utilizing logic
and rationale to make an explicit choice.

Combinatorial vs. Positional

This relationship was put forward by Aron Katsenelinboigen based on how the game of
chess is played, and an individual’s relationship with uncertainty. A combinatorial player
has a final outcome, making a series of decisions that try to link the initial position with
the final outcome in a firm, narrow, and concrete way (i.e. certainty). The positional
decision-making approach is ‘looser’, with a sense of setting up for an uncertain future
as opposed to pursuing a concrete object. Each move from this type of player would
maximize options as opposed to pursue an outcome.
Consensus Flowchart: Regardless of perspective or style, all leaders must make decisions that create
consensus. This model underlines how a manager or leader can discuss various options within a group setting,
make proposals for action, and iterate until agreement is reached.

Types of Decisions

Three approaches to decision making are avoiding, problem solving and problem
seeking.

LEARNING OBJECTIVES

Differentiate between the three primary decision-making approaches: avoiding, problem solving,
and problem seeking

KEY TAKEAWAYS

Key Points

 One approach to decision making is to not make a choice—that is, to avoid making a
decision altogether.
  Identifying and selecting a solution to a problem is a frequent type of decision outcome.
 Sometimes decision making results in the need to restate the purpose and subject of the
choice; this is known as problem seeking.

Key Terms

 problem seeking: The process of clarifying, understanding, and restating the problem.
 problem solving: Problem solving involves using generic or ad hoc methods, in an
orderly manner, for finding solutions to specific problems.

Every decision-making process reaches a conclusion, which can be a choice to act or

not to act, a decision on what course of action to take and how, or even an opinion or
recommendation. Sometimes decision making leads to redefining the issue or
challenge. Accordingly, three decision-making processes are known as avoiding,
problem solving, and problem seeking.

Avoiding

One decision-making option is to make no choice at all. There are several reasons why
the decision maker might do this:

1. There is insufficient information to make a reasoned choice between alternatives.

2. The potential negative consequences of selecting any alternative outweigh the benefits
of selecting one.
3. No pressing need for a choice exists and the status quo can continue without harm.
4. The person considering the alternatives does not have the authority to make a decision.

One example of avoiding a decision occurs routinely at the Supreme Court of the United
States (as well as other appellate courts). The Supreme Court will decline to hear a
case because, in their judgment, the issues have not been sufficiently considered in
lower courts.

Problem Solving

Most decisions consists of problem-solving activities that end when a satisfactory

solution is reached. In psychology, problem solving refers to the desire to reach a
definite goal from a present condition. Problem solving requires problem definition,
information analysis and evaluation, and alternative selection.

Problem Seeking

On occasion, the process of problem solving brings the focus or scope of the problem
itself into question. It may be found to be poorly defined, of too large or small a scope,
or missing a key dimension. Decision makers must then step back and reconsider the
information and analysis they have brought to bear so far. We can regard this activity as
problem seeking because decision makers must return to the starting point and
respecify the issue or problem they want to address.

Rational Decision Making

Rational decision making is a multi-step process, from problem identification through

solution, for making logically sound decisions.

LEARNING OBJECTIVES

Explain the characteristics of the rational decision-making process

KEY TAKEAWAYS

Key Points

 Rational decision making favors objective data and a formal process of analysis over
subjectivity and intuition.
 The model of rational decision making assumes that the decision maker has full or
perfect information about alternatives; it also assumes they have the time, cognitive
ability, and resources to evaluate each choice against the others.
 This model assumes that people will make choices that will maximize benefits for
themselves and minimize any cost.

Key Terms

 Rational decision making: A logical, multi-step model for choosing between

alternatives that follows an orderly path from problem identification through solution.
 perfect information: A situation in which all data that is relevant to a particular decision
is known and available to the decision maker.

The Process of Rational Decision Making

Rational decision making is a multi-step process for making choices between

alternatives. The process of rational decision making favors logic, objectivity, and
analysis over subjectivity and insight. The word “rational” in this context does not mean
sane or clear-headed as it does in the colloquial sense.

The approach follows a sequential and formal path of activities. This path includes:

1. Formulating a goal(s)
 2. Identifying the criteria for making the decision
3. Identifying alternatives
4. Performing analysis
5. Making a final decision.

Rational-decision-making model: This flowchart illustrates the process of rational decision making.

Assumptions of the Rational Decision-Making Model

The rational model of decision making assumes that people will make choices that
maximize benefits and minimize any costs. The idea of rational choice is easy to see in
economic theory. For example, most people want to get the most useful products at the
lowest price; because of this, they will judge the benefits of a certain object (for
example, how useful is it or how attractive is it) compared to those of similar objects.
They will then compare prices (or costs). In general, people will choose the object that
provides the greatest reward at the lowest cost.

The rational model also assumes:

 An individual has full and perfect information on which to base a choice.

 Measurable criteria exist for which data can be collected and analyzed.
 An individual has the cognitive ability, time, and resources to evaluate each alternative
against the others.
The rational-decision-making model does not consider factors that cannot be quantified,
such as ethical concerns or the value of altruism. It leaves out consideration of personal
feelings, loyalties, or sense of obligation. Its objectivity creates a bias toward the
preference for facts, data and analysis over intuition or desires.

Problems with the Rational Decision-Making Model

Critics of the rational model argue that it makes unrealistic assumptions in order to
simplify possible choices and predictions.

LEARNING OBJECTIVES

Summarize the inherent flaws and arguments against the rational model of decision-making
within a business context

KEY TAKEAWAYS

Key Points

 Critics of the rational decision -making model say that the model makes unrealistic
assumptions, particularly about the amount of information available and an individual’s
ability to processes this information when making decisions.
 Bounded rationality is the idea that an individual’s ability to act rationally is constrained
by the information they have, the cognitive limitations of their minds, and the finite amount
of time and resources they have to make a decision.
 Because decision-makers lack the ability and resources to arrive at optimal solutions,
they often seek a satisfactory solution rather than the optimal one.

Key Terms

 Rational choice theory: A framework for understanding and often formally modeling
social and economic behavior.
 bounded rationality: The idea that decision-making is limited by the information
available, the decision-maker’s cognitive limitations, and the finite amount of time
available to make a decision.
 satisficer: One who seeks a satisfactory solution rather than an optimal one.

Critiques of the Rational Model

Critics of rational choice theory —or the rational model of decision-making—claim that
this model makes unrealistic and over-simplified assumptions. Their objections to the
rational model include:
  People rarely have full (or perfect) information. For example, the information might not
be available, the person might not be able to access it, or it might take too much time or
too many resources to acquire. More complex models rely on probability in order to
describe outcomes rather than the assumption that a person will always know all
outcomes.
 Individual rationality is limited by their ability to conduct analysis and think through
competing alternatives. The more complex a decision, the greater the limits are to making
completely rational choices.
 Rather than always seeking to optimize benefits while minimizing costs, people are often
willing to choose an acceptable option rather than the optimal one. This is especially true
when it is difficult to precisely measure and assess factors among the selection criteria.

Alternative Theories of Decision-Making

Prospect Theory

Alternative theories of how people make decisions include Amos Tversky’s and Daniel
Kahneman’s prospect theory. Prospect theory reflects the empirical finding that,
contrary to rational choice theory, people fear losses more than they value gains, so
they weigh the probabilities of negative outcomes more heavily than their actual
potential cost. For instance, Tversky’s and Kahneman’s studies suggest that people
would rather accept a deal that offers a 50% probability of gaining $2 over one that has
a 50% probability of losing $1.

Bounded Rationality

Other researchers in the field of behavioral economics have also tried to explain why
human behavior often goes against pure economic rationality. The theory of bounded
rationality holds that an individual’s rationality is limited by the information they have,
the cognitive limitations of their minds, and the finite amount of time they have to make
a decision. This theory was proposed by Herbert A. Simon as a more holistic way of
understanding decision-making. Bounded rationality shares the view that decision-
making is a fully rational process; however, it adds the condition that people act on the
basis of limited information. Because decision-makers lack the ability and resources to
arrive at the optimal solution, they instead apply their rationality to a set of choices that
have already been narrowed down by the absence of complete information and
resources.

Non-Rational Decision Making

People frequently employ alternative, non-rational techniques in their decision making

processes.
 LEARNING OBJECTIVES

Examine alternative perspectives on decision making, such as that of Herbert Simon and Gerd
Gigerenzer, which outline non-rational decision-making factors

KEY TAKEAWAYS

Key Points

 The rationality of individuals is limited by the information they have, the cognitive
limitations of their minds, and the finite amount of time they have to make a decision.
 Simon defined two cognitive styles: maximizers and satisficers. Maximizers try to make
an optimal decision, whereas satisficers simply try to find a solution that is “good enough”
for the situation.
 Some research has shown that simple heuristics frequently lead to better decisions than
the theoretically optimal procedure.
 Emotion appears to aid the decision-making process; decisions often occur in the face of
uncertainty about whether one’s choices will lead to benefit or harm.
 Robust Decision Making (RDM) is a particular set of methods and tools that is designed
to support decision making under conditions of uncertainty.

Key Terms

 rational: Logically sound; not contradictory or otherwise absurd.

 heuristic: An experience-based technique for problem solving, learning, and discovery;
examples include using a rule of thumb, an educated guess, an intuitive judgment, or
common sense.
 cognitive: The part of mental functions that deals with logic, as opposed to affective
functions, which deal with emotion.

The rational model of decision making holds that people have complete information and
can objectively evaluate alternatives to select the optimal choice. The rationality of
individuals is limited, however, by the information they have, the cognitive limitations of
their minds, and the finite amount of time they have to make a decision. To account for
these limitations, alternative models of decision making offer different views of how
people make choices.

Herbert A. Simon

American psychology and economics researcher Herbert A. Simon defined two

cognitive styles: maximizers and satisficers. Maximizers try to make an optimal
decision, whereas satisficers simply try to find a solution that is “good enough.”
Maximizers tend to take longer making decisions due to the need to maximize
performance across all variables and make trade-offs carefully. They also tend to regret
their decisions more often (perhaps because they are more able than satisficers to
recognize when a decision has turned out to be sub-optimal). On the other hand,
satisficers recognize that decision makers lack the ability and resources to arrive at an
optimal solution. They instead apply their rationality only after they greatly simplify the
choices available. Thus, a satisficer seeks a satisfactory solution rather than an optimal
one.

Gerd Gigerenzer

German psychologist Gerd Gigerenzer goes beyond Simon in dismissing the

importance of optimization in decision making. He argues that simple heuristics—
experience-based techniques for problem-solving—can lead to better decision
outcomes than more thorough, theoretically optimal processes that consider vast
amounts of information. Where an exhaustive search is impractical, heuristic methods
are used to speed up the process of finding a satisfactory solution.

The Role of Emotion

Emotion is a factor that is typically left out of the rational model; however, it has been
shown to have an influential role in the decision-making process. Because decisions
often involve uncertainty, individual tolerance for risk becomes a factor. Thus, fear of a
negative outcome might prohibit a choice whose benefits far outweigh the chances of
something going wrong.

obust Decision Making

Robust decision making (RDM) is a particular set of methods and tools developed over
the last decade—primarily by researchers associated with the RAND Corporation—that
is designed to support decision making and policy analysis under conditions of deep
uncertainty. RDM focuses on helping decision makers identify and develop alternatives
through an iterative process. This process takes into account new information and
considers multiple scenarios of how the future will evolve.