Page 92 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes Bounded rationality assumes that managers satisfice; that is, they select the first alternative
that is "good enough", because the costs of optimizing in terms of time and effort are too
great. Further, the theory assumes that managers develop shortcuts called heuristics, to
make decisions in order to save mental activity. Heuristics are rules of thumb that allow
manager to make decisions based on what has worked in past experiences. According to
March and Simon, it is often too inefficient or too costly to make optimal decisions in
organisations.

Example: While selecting a new employee, the organisation can just hire the first
applicant who meets all the minimum requirements instead of wasting time and effort looking
for an ideal personality. According to Hitt, Middlemist and Mathis, satisficing can occur for
various reasons:
(a) Time pressure.
(b) A desire to sit through a problem quickly and switch to other matters.

(c) A dislike for detailed analysis that demands more refined techniques.
(d) To avoid failure and mistakes that could affect their future in a negative way.
Figure 5.2: The Satisficing Model

Problem
Ascertain the need for
a decision

A 1
Prob. Minimum
A 2
standards
Simplify X
problem Y A 3
Z Identify a limited
set of alternatives
Set Satisficing criteria

1.
A 1
2. A 2
Satisficing
3. A 3 ? choice
Yes
Does a Select the first
Compare alternatives satisficing "good enough"
one at a time, against alternative choice
the satisficing criteria exist?

A 4
A 5

Expand search
for alternatives

Source: Stephen P Robbins "Organisational Behaviour – Concepts, Controversies, Application", Prentice Hall,
Englewood Cliffs, NJ 07632 (Seventh Edition) 1996 page 151.

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