Decision Making Approach:

Herbert A Simon
Dr. Haokam Vaiphei
 Introduction Herbert A Simon
1916-2001
● Herbert Alexander Simon (June 15, 1916 - February 9, 2001) was an
American economist, political scientist and cognitive psychologist. He
was born in Milwaukee, Wisconsin, entered the University of Chicago in
1033 and studied social sciences and mathematics.
● He obtained BA in 1936 and PhD in 1943 in Political Science with a
major field in public administration from the University of Chicago.
● He received the Nobel Prize in Economics in 1978 and the Turing Award
in 1975. His research was noted for its interdisciplinary nature and
spanned across the fields of cognitive science, computer science, public
administration, management, and political science.
● He was at Carnegie Mellon University (Professor) for most of his
career, from 1949 to 2001.
● His primary research interest was decision-making within organizations
and is best known for the theories of "bounded rationality" and
"satisficing".
● Administrative Behaviour (1947), Public Administration (1950),
Fundamental Research in Administration (1953), The New Science
of Management Decision (1960), Shape of Automation (1960),
Science of the Artificial (1969) and Human Problem Solving
(1972).
 Administrative Science
● He considered the decision-making as a process of drawing conclusions from premises and
therefore the premise than the whole decision serves as the unit of analysis.
● He equated ‘administration’ with decision-making and laid emphasis on how decisions are made
and how they be made more effectively.
● Simon recommended an empirical approach to the study of administration. He offers a series
of hypothetical propositions of empirical relevance. He considered the concepts of ‘efficiency’
and ‘economy’ as serviceable criteria of administrative effectiveness in the context of
theoretically demonstrable ‘means-ends chain constructs’.
● Based on theories and methodology of logical positivism, Simon proposed a new concept of
administration with focus on decision-making.
● He argued that decision-making is the core of administrative action. He proposed, based on
his decision-making schema, fact-value dichotomy, which he believed provides a better basis
for a science of administration.
● To Simon, a science of administration should be based on factual premises of administrative
decisions. This is important for the development of a science of administration.
● This should be based on systematic, empirical investigation and analysis, inductive and
descriptive methods. He talks of two kinds of administrative sciences - pure and
practical - and observes that the latter assists the administration in decision-making.
● Simon believed that the science of administration is applicable to both private and
public organisations as they have more similarities than differences.
● He argued that the first task to develop an administrative theory is to develop
concepts that permit the description of administrative situations, which provide the
basis for prescription.
● To Simon ‘until administrative description reaches a higher level of sophistication, there
is little reason to hope that rapid progress will be made toward the identification and
verification of valid administrative principles’.
 Classical Theory: An Indictment
● He calls the traditional approach and their principals as proverbs and myths.
● He argued that only when the limits to rationality have been explored, it may be possible to have valid
principles of administration and know-how to apply them.
● The traditionalist principles were ambiguous due to inadequate diagnosis of situations and definition
of terms and lack of detailed research into real situations.
● He says that these principles are more like a series of orderly cubicles contrived according to an
abstract architectural logic than of a house designed to be inhabited by the human being.
● He finds no compatibility between the perfection of administrative processes as conceived in the
POSDCORB formula, and their utility in the attainment of objectives.
● Through these attacks, Simon points to the gap between the principles and practice. The missing
actor, according to him, is correct decision-making, by which he meant the optimum rational choice
between alternative courses of action.
● Thus begins his search for rational decision-making models from which guides to real world
decision-making might be derived.
 Decision Making
● An organisation is viewed by Simon as a structure of decision-makers. To him decisions are made at all levels
of the organisation, some of them affecting many members, while others are relatively less important
decisions about detail. Each decision is based on a number of premises and Simon focuses his attention on how
these premises are determined. Some of these premises pertain to the decision-maker’s preferences; some to
his social conditioning, and others to the communications he receives from component units of the
organisation.
● Simon asserts that the top management cannot dictate to every member of the organisation what each
decision must be, but it can influence some, perhaps the most important premises on which the decisions are
based. It can also create a structure which will permit and stimulate the transmission of necessary
information.
● Decision-making process, according to Simon, involves three phases viz., intelligence activity- finding occasions
for decision-making, design activity - finding possible courses of action, and choice activity - choosing among
courses of action.
● The first stage involves finding occasions calling for decision. The executive tries to understand the
organisational environment and identifies conditions which need fresh action.
● The second stage involves identifying, developing and analysing all possible alternative courses of action
involving more time and energy than the first stage.
● Finally, the executive selects one of the alternative courses of action available to him. Simon says that though
these three stages appear to be simple and one preceding the other, in practice the sequence is more
complex. Each stage may involve all the three stages in itself.
 Fact and Value in Decision Making
● An administration science, like any science, is concerned purely with factual statements. Simon
explains that decision-making basically involves choice between alternative plans of action, and choice
in turn, involves facts and values. To him, every decision consists of a logical combination of fact and
value propositions.
● A fact is a statement of reality indicating the existing deed, act or state of things. A factual premise
can be proved by observable and measurable means. A value is an expression of preference. A value
premise canonly be subjectively asserted to be valid.
● Simon, however, is aware that most premises have both factual and value elements and his purpose of
stressing this distinction is only to clarify the different criteria of correctness that may be applied
in analysing the ethical and factual elements present in a ‘decision’.
● Most value premises involve intermediate facts and they are open to segregation only for purposes
of illustrative analyses. To bring out the difference between fact and value, the means-ends
distinction is sometimes used.
● Simon considers this phenomenon as significant because of the amenability of facts to rational
decision as against values, whose base, hetraces out to non-rational cause such as faith.
● Mixed issues of fact and value impinge on administration complicating the decision process.
The relevance of this impingement on administration is to be seen in the purposive character
of organisation, which develops groups of individuals to achieve goals ordinarily beyond their
individual reach.
● The continuum of purposiveness includes the concept of a ‘hierarchy of decisions’.
● Simon concludes that behaviour in an organisation - a complex network of decision
process-Simon says that ‘each decision involves the selection of a goal and a behaviour relevant
to it this goal may in turn be mediate to a somewhat more distant goal; and so on, until a
relatively final aim is reached’.
● The ambiguous synonym between means-ends and fact-value, is clarified through a definition
that insofar as decisions lead to the selection of final goals, they may be treated as ‘value
judgments’-i.e., value component predominates, and in so far as the decisions relate to
implementation of such goals, they may be treated as ‘factual judgments’- i.e., the factual
component predominates.
● The relationship of a decision to a set of ends remains a factual proposition.
● Simon does not refer to ‘value decisions’ and ‘factual decisions’. For, there are only value or
factual premises and components and in administration both value and factual premises are
intertwined.
 Rationality in Decision Making
● Simon delves into the dynamics of decision on a different plane - the plane of rationality.He expounds
the necessity of being rational in making a choice. He defines rationality as one concerned with the
selection of preferred behaviour alternatives in terms of some system of values whereby the
consequences of behaviour can be evaluated.
● To him it requires a total knowledge and anticipation of the consequences that will follow on each
choice. It also requires a choice from among all possible alternative behaviours.
● He explains rationality in terms of means-ends construct. The term ‘ends’- ultimate purpose– refers
to any state or situation, which is later in a purpose chain or set of chains. The same state or situation
may always be a means from one point of view and an ultimate objective from another. If
appropriate means are chosen to reach desired ends, the decision is rational.
● However, there are many complications to this simple test of rationality. For, it is difficult to
separate means from ends because an apparent end may only be a means for some future end. This
is commonly referred to as the means-ends chain hierarchy.
● Simon points out that “the means-end hierarchy is seldom an integrated and connected chain. Often
the connection between organisation activities and ultimate objectives is obscure, or they are
incompletely formulated or there are internal conflicts and contradictions among the ultimate
objectives, or among the means selected to attain them.”
● Besides, seemingly rational decisions based on inaccurate conclusions, may produce undesirable, sometimes,
even unanticipated results. Finally, the inherent problems of means-ends analysis are summed up by Simon
as follows:
○ First, the ends to be attained by the choice of particular behaviour alternative are often incompletely
or incorrectly stated through failure to consider the alternative ends that could be reached by
selection of another behaviour….” “
○ Second, in actual situations a complete separation of means from ends is usually impossible….” “
○ Third, the means-end terminology tends to obscure the role of the time element in decision-making….”
● Simon differentiates between different types of rationality. A decision is:
○ 1. Objectively rational where itis correct behaviour for maximising given values in a given situation;
○ 2. Subjectively rational if the decision maximises attainment relative to knowledge of the subject;
○ 3. Consciously rational where adjustment of means to ends is a conscious process;
○ 4. Deliberately rational to the degree that the adjustment of means to ends has been deliberately
brought about;
○ 5. Organisationally rational if it is oriented to the organisation’s goals;and
○ 6. Personallyrational if the decision is directed to the individual’s goals.
 Models of Decision Making
● The models range from complete rationality to complete irrationality of the economic man and the
social man respectively.
● Simon develops the model of ‘administrative man’ who stands next to the economic man. As the
administrative man cannot perceive all possible alternatives nor can predict all possible consequences,
he instead of attempting to arrive at ‘optimal solutions’, is satisfied with ‘good enough’ or ‘some-how
muddling through’.
● Again as the administrative man recognises that the world he perceives is the simplified version of
the real world, he makes his choices using a simple picture of the situation that takes into account
just a few of the factors he regards as most relevant and crucial. Thus the administrative man makes
his choice without ‘examining all possible alternatives’, ‘with relatively simple rule-of-thumb that do
not make impossible demands upon his capacity for thought’.
● In a sense Simon’s administrative man tries to rationalise man, but he does not have the ability to
maximise and satisfice. However, the difference between maximising and satisficing is relative. Under
certain conditions satisficing and maximising are far apart.
● The construct of a model depicting the administrative man is followed by attempts at understanding
the impediments and obstacles that come in the way of maximisation. To Simon resistance to change,
desire for status quo, or dysfunctional conflicts caused by specialisation, etc., may impede
maximisation.
 Programmed and Non-programmed Decisions
● Programmed-Decisions are programmed to the extent that they are repetitive and routine in nature. In such
cases definite procedures can be worked out and each decision need not be dealt with separately. Decisions
are made based on established practices.
● Non-programmed decisions are those which are novel, unstructured and have to be tackled independently as
no cut-and-dried methods are available for handling them. In all such cases the executives have to work out
new decisions in each case.
● Simon identifies characteristics common to both kinds of decisions. They include definition of the situation,
analysis of means and ends to link actions to the organisational objectives, division of problems into
independent parts, choosing the alternatives based on ‘satisficing’ than ‘optimising’ criteria, uncertainty
absorption and routinisation of the process.
● The major difference between these two types is that in case of the former the organisation provides the
alternatives through routines or strategy and in case of the latter the organisation only provides the
parameters for the search procedures.
● Simon suggests that it is possible to construct mathematical models to make a rational choice.
● Therefore, he thinks it most desirable to computerise as much of the decision-making process as possible.
Such automation and rationalisation of decision-making will alter the climate of organisations in many
important ways. It will also make the executive’s work easier and satisfying.
 Modes of Organisational Influence
● The behaviour of organisation man is subject to two types of influences - internal and
external.
● The former involves establishing in the employee, attitudes and habits, which lead him
to reach the desired decisions. This is achieved through organisation loyalty, concern
with efficiencyand training.
● The latter involves imposing on the employee decisions reached elsewhere in the
organisation. This is achieved through authority and advisory and informational services.
● The individuals accept these influences as the organisation objectives also indirectly
become personal objectives of the individuals and acceptance of influences satisfying
personal motives.
 Evaluation
● While concentrating on the processes and the role of decision-making, Simon relegates social, political,
economic and cultural factors into the background although their role is no less significant in the analysis of
administrative decision-making and behaviour.
● Manuscript contained both positive aspects as well as criticisms. Barnard’s criticism on Simon’s manuscript
boils down to four aspects viz., it was inconsistent in its use of the terms rational and efficient; did not take
into account the enormous amount of uncertainty involved in most decisions; did not pay sufficient attention
to the processes of communication within organisations and did not take a politically neutral stance.
● Simon’s critics mainly contend that although the decision-making process is an important aspect in the
organisational situation, it alone is not adequate to explain the totality.
● Simon’s efforts to construct a value-free science of administration was criticised.
● Simon’s analysis assumes that administration plays a similar role in all societies. But it is observed from
experience that administrative systems in developing countries do not have similar role orientation as their
counterparts in developed countries.
● Mechanical concept of administration - Efficiency is not, and cannot be, the only goal of administration.
● Too general - Though it provides a framework, it does not provide details to guide the organisation planners.
● Despite criticism- Simon’s contribution is undoubtedly a major breakthrough in the evolution of administrative
theory despite criticisms on several of his propositions.
● Organisational Loyalties: It is generally observed that members in an organisation identify
themselves with it. Such type of loyalty is fundamental for an organisation. Organisation
loyalty fulfils a most important function of making individuals in the organisation confine
themselves to their tasks instead of probing into the basics of the problems. However, narrow
loyalties lead to friction and over competition for the resources. Nevertheless organisation
loyalty renders group effort possible. Internal influences are equally important.
● Advice and Information: Continuous flow of information downwards, upwards and sideways
is essential for effective functioning of an organisation. However, the nature of information
and advice to be tendered may change from situation to situation. Therefore, collecting
dependable information and proper utilisation of it ensures greater effectiveness in the
decision-making and provides adequate lines of communication and persuasion.
● Training: Training is a vital device through which organisation man is equipped to face
challenges. An efficient training programme would facilitate greater discretion to the
individual in decision-making. Training is applicable to the process of decision whenever the
same elements are involved in a number of decisions. Further, training supplies facts,
provides frame of reference and indoctrinate desirable values. Thus, it can be used for
developing effective decision-making.
 Administrative Efficiency
● The administrator must be guided by the criterion of efficiency of the complicated nature of its application
in governmental organisations, which are not commercial in nature.
● The criterion of efficiency ‘dictates’ that choice of alternative, which produces the largest results for the
given application of resources.
● It demands, of the two alternatives having the same cost, the one that leads to the greater attainment of the
organisation objective to be chosen; and of the twoalternatives leading to the samedegree of attainment that
one which entails lesser cost should be chosen.
● The criterion of efficiency is closely related to both organisation and conservation of objectives. It is related
to the organisation objectives in so far as it is concerned with the maximisation of output. It relates to the
conservation of objectives in so far as it is concerned with the maintenance of a positive balance of output
over input. Where resources, costs and objectives are variable, decisions cannot be taken purely on the basis
of efficiency criteria.
● However, when these are given, efficiency becomes the controlling factor of administrative choice. Simon in
his later writings, however, downgrades the efficiency criteria. He applies it only to the lower level decisions,
as higher-level decisions do not lend themselves to measurement and comparability.
● While authority and organisational loyalty influence the value premise of the individual, the criterion of
efficiency influences his capacity to handle the facts.
● Efficiency implies adoption of shortest path and cheapest means in achieving the desired goals. “Be efficient”
is one of the major influences on organisational man. This leads to rational behaviour.