The Psychology of Administrative Decisions: Knowledge and behavior

What managers know they should do, whether by analysis or intuition, is very often different from what they actually do. One common failing of managers, which all of us have observed (sometimes in ourselves), is the postponement of difficult decisions. What is it that makes decisions diffi- cult and hence tends to cause postponement? Often, the problem is that all of the alternatives have undesired consequences. When people have to choose the lesser of two evils, they do not simply behave like Bayesian statisticians, weighing the bad against the worse in the light of their respective possibilities. Instead, they postpone the decision, searching for new alternatives that do not have negative outcomes. If such alternatives

avoided or evaded. “Disutility” minimization turns out not to be an acceptable answer.

In other cases, uncertainty is the cause for postponement of choice. Each choice may have a good outcome under one set of environmental contingencies, but a bad outcome under another. When this occurs, we also do not usually observe classically rational behavior; the situation is again treated as a dilemma. An alternative is sought that will have at least tolerable outcomes under all prospective conditions.

There is a third common reason for temporizing. The bad consequences that lead a manager to postpone a decision are often bad for other people. Managers sometimes have to dismiss employees or, even more frequently, have to speak to them about unsatisfactory work. Dealing with such matters face to face is stressful to many, perhaps most, executives. The stress is magnified if the employee is a close associate or friend. If the unpleasant task cannot be delegated, it may be postponed.

Finally, the manager who has made a mistake (as all of us do at one time or another) also finds himself or herself in a stressful situation. The matter must be dealt with sooner or later, but why not later instead of sooner? Moreover, when it is addressed, it can be approached in different ways. A manager may try to avoid blame: “It wasn’t my fault!” A different path is to propose a remedy to the situation. I know of no systematic data on how often the one or the other course is taken, but most of us could probably agree that blame-avoiding behavior is far more common than problem-solving behavior after a serious error has been made.

The Consequences of Stress

What all of these unpleasant decision-making situations have in common is stress, a powerful emotional force that can divert behavior from the urgings of reason. They are examples of a much broader class of situations in which managers frequently behave in clearly nonproductive ways. Nonproductive responses are especially common when actions have to be made under time pressure. The need to allay feelings of guilt, anxiety, and embarrassment may lead to behavior that produces temporary personal comfort at the expense of bad long-run consequences for the organization.

Behavior of these kinds is “intuitive” in a very different sense from the intuitive action we discussed earlier. It is “intuitive” in the sense that it represents response without careful analysis and calculation. Lying, for example, is probably more often the result of panic than of Machiavel-

latter’s behavior is the product of learning and experience, and is largely adaptive; the former’s behavior is a response to more primitive urges and an emotion-narrowed span of attention, and is more often than hot inappropriate. We must not confuse the “nonrational” decisions of the experts—the decisions that derive from expert intuition and judgment— with the irrational decisions that stressful emotions may produce.

I will not attempt to produce a comprehensive taxonomy of the pathologies of organizational decision-making. I have simply given some examples of the ways that stress interacts with cognition to elicit counter- productive behavior. Such responses can become so habitual for individuals or even for organizations that they represent a recognizable managerial “style.” A bit more will be said about these matters in the commentary to the next chapter.

In conclusion, it is a fallacy to contrast “analytic” and “intuitive” styles of management. Intuition and judgment—at least good judgment— are simply analyses frozen into habit and into the capacity for rapid response through recognition of familiar kinds of situations. Every manager needs to be able to analyze problems systematically (and with the aid of the modem arsenal of analytical tools provided by management science and artificial intelligence). Every manager needs also to be able to respond to situations rapidly, a skill that requires the cultivation of intuition and judgment over many years of experience and training. The effective manager does not have the luxury of choosing between “analytic” and “intuitive” approaches to problems. Behaving like a manager means having command of the whole range of management skills and applying them whenever they become appropriate.

Source: Simon Herbert A. (1997), Administrative Behavior, Free Press; Subsequent edition.

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