Theories of the Decision-Making Process: Risk and Cost Benefits Analysis

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  • Topic: Decision making, Decision theory, Decision making software
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Reading 1.3 Jackall, R. (1988)

Theories of decision-making process deliver to managers many essential tools such as risk and cost/benefits analysis, etc. which in tern routinizes administration. These tools cannot be used appropriately to manage of incalculable entities. The functional rationality approach is when activities precisely planned and estimated to reach some goal. This method is unlikely to be used by top managers because another important factors are involved such as ego or personal altitude. If there is no special procedure for a particular problem, manager should focus on how to turn a situation into the right way in accordance with expectations from their boss.

Some managerial people cannot make their own judgments. Instead, they are looking up and looking around for someone else’s opinion and finally they rely on it because of personal fears or inexperience. Another example of it is the mid-level decision-making paralysis in many American companies when a manager is trying to avoid of making a decision. In the case of inevitable decision, he or she would engage as many colleagues as possible for self-protection.

Many examples of recent administrative and economic problems within American companies have showed the tendency that managers are oriented to the short-term period when making decisions. This is due to the fact that MBA programs provide tools which are focuses mostly on a short-term attitude. The second reason would be that managers are under pressure for annual, quarterly, monthly and daily results and these factors push they out of thinking about the future, even though they realise that today’s minor difficulties could be tomorrow’s big crises.

Managers are also aware of blame time and when things go wrong it is necessary to be protected from consequences. This is the reason why they gravitate towards this fear being punished rather than reflecting critically. Bureaucracy disrupts working processes into parts and the results of the work therefore disconnected with the decisions, which had been made. Manager’s productivity depends on the position within management circle or their supervisors. There is no codes or systems for tracking personal responsibilities to be established.

To be successful manager means to move quickly within the levels of managerial hierarchy. It protects from going into problems too deeply at every level.

Example

I worked for four years as an instrument engineer in the Natural gas industry in Russia. I was involved into the decision making process associated with planning resources and finances for further projects and discussions about engineering-related difficulties. Firstly, when the question was complicated and involves financial resources, I checked the parameters of equipment many times and sent the results to my boss. When I received the confirmation from him, I printed it out and managed the necessary signatures on it. I did not want to be responsible for any inconvenience because my boss has to carry out this kind of responsibility. It was extremely important for me as a lower-level manager to have the document that proves that all things are done in time and approved by middle-level manager. In case of inconveniences such as the late commissioning phase of facilities I showed the documents that all the steps were completed by me on time.

Reading 4.2  Reason, J. (1990)

The general view on accident’s causes within complex technological systems includes theoretical framework which is not only provides the data on how dangerous factors could be combined themselves, but also where and how to predict these tendencies and take necessary measures beforehand.

There are many elements of production, which are also involved into accident causation. Fallible high-level manager’s decisions are a major contributing factor to an increase in risk, followed by the lack of line management, which in turn causes dangerous preconditions and unsafe...
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