Page 93 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Unit 5: Decision-making

Satisficing decisions make progress toward objectives, and this progress can be made Notes
while continuing to search for the better decision. In other words, satisficing, by recognizing
the internal as well as external limitations under which decision-makers operate, provides
a flexible approach where objectives can be achieved more easily. The Figure 5.3 below
indicates the factors leading to bounded rationality and satisficing decisions.
Figure 5.3: Factors Leading to Bounded Rationality and Satisficing Decisions

Information External Factors Time and
Processing Cost Limits
Abilities (Internal)

Organizational Personal
DECISION MAKER
Objectives Factors

Satisficing Decisions

Evaluation: Does the bounded rationality model more realistically portray the managerial
decision process? Research indicates that it does. One of the reasons that managers face
limits to their rationality is because they must make decisions under risk and time pressure.
The situation they find themselves in is highly uncertain and the probability of success is
not known. The model also highlights the importance of looking into the behavioural
aspects in the decision-making process. This knowledge certainly helps in understanding
how and why managerial decisions have been made.

Case Study Mr. Sharma's Decision

r. C.S. Sharma joined in 1970 in Indian Institute of Technology – a premier
educational institution in the country imparting higher level education in
Mtechnology. His job demanded higher level and latest knowledge, higher level
teaching skill, and other skills in introducing and practising different teaching methods
and bringing coordination between the institute and industry. The institute implemented
the pay scales in 1976 recommended by the University Grants Commission which were at
par with the pay scales of teachers in Universities and Colleges. The demands of the jobs
in Universities and Colleges are quite low compared to those of the Institute.
The pay of Mr. Sharma has been fixed at that level of Mr. Singh, who joined the Institute in
1974 as the University Grants Commission did not recommend any weightages for the
teachers who put up less than five year's experience. Mr. Sharma was quite unhappy over
the parity of salary of the teachers of the institute with those of university teachers and
College teachers on the one hand and equalising his pay with his junior Mr. Singh on the
other hand.
The Institute again revised the pay scales of the teachers in 1987 based on the pay scales
recommended by the University Grants Commission in 1986. University Grants
Commission again maintained parity in pay scales of Institute teachers, University teachers
and College teachers. The pay scale of Mr. Sharma was revised and it was fixed at ` 3,700
which was equal to the pay of Mr. Singh, Mr. Kulkarni, who joined the institute in 1984 and
Contd...

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