by Frank Olaniyi Fafiyebi
DECISION MAKING IN PLACE: GUT FEELING OR EVIDENCE?
When making decisions most managers look up and look around, relying on their support structures i.e. people close to them, not because of lack of experience but for the fear of not getting their decisions right. This act of looking up and looking around is important and it is the use of “Gut-feeling” when managers are faced with making decisions that (1) involve large capital, (2) have significant impact on the long-term plan of their organisations and (3) involves public exposure. Place managers like their counterparts in other managerial areas make decisions daily. In place management, managers make decisions about places, particularly the public realm such as town and city centres, ensuring effective collaboration with all stakeholders, policing the centres and improving infrastructural outlook of the places they manage. Place managers by their decisions make a critical contribution to the thriving of places, and those decision impacts on people’s everyday lives in places.
There are several factors that affects decision-making process. According to the seminal paper of Simon (1956) on organisational decision-making, there are cognitive hindrances on decision-making process of individuals particularly managers. He opposed the idea that managers are expected to be very rational in the process of making decisions. According to Simon, cognitive barriers makes it difficult to achieve perfect rationality, as proposed by the neo-classical economic school of thought on decision-making. Then there is the problem of incomplete information, which often results to uncertainty. There is also complexity challenges due to involvement of several stakeholders in the decision-making process in place management. Power relations also make a difference – the tastes of the chief decision maker in a group may persuade others. There are organisational culture challenges, because place managers are affected by institutional factors at play in the public-private schemes they manage. However, each of these challenges are surmountable if we understand how place managers makes decisions.
It is well established from a variety of studies, that managers rely on their experience and intuition or gut-feeling to make decisions. This is common in place management, since most managers react to time pressured situations. There are three major decision making models:
- Rational Model
- Bounded Rationality Model
- Garbage Can Model
The rational decision-making model derives its roots from the normative theory, which advocates consistency in the logic applied by decision makers in the course of making decisions. The basic assumption of this model is that a decision-maker must engage in a logical thought process, carry out in-depth analysis of options or alternatives available and weigh the outcomes of each alternative before reaching a final decision. In addition, the following are the assumptions applied in the model:
- The output of the decision-making process must be logical (rational).
- The decision maker knows all possible alternatives.
- The chances of success or failure of each alternative can be pre-determined by the decision-maker.
Of course, these assumptions are not realistic in many, if not all, place management decisions.
Decisions in place management are influenced by a plethora of factors such as high level of uncertainties, knowledge, time pressure, stress, experience and complex interactions within different organisational environment. However, consistency of logic in decisions remains an ideal.
Bounded Rationality Model
The perceived shortfalls of the Rational Model led to the formation of another model by a prominent researcher in the field of organisational decision-making. Simon (1947) argued that the underlying philosophy of the rational model is defective, due to lack of consideration for external factors that might influence or affect the decision-maker. The bounded rationality model argues that decision outcomes do not often represent the best decisions available to decision-makers, since perfect rationality in unattainable by decision-makers. Assumptions in the Bounded Rationality Model are:
- Decision makers are looking out for alternatives that satisfices, instead of perfect alternative that maximizes the output.
- Decision makers acknowledge their limited cognitive capability.
- Decision makers can select an alternative without defining all alternatives.
- Decisions are made based on experience or heuristic.
It is worth noting that the bounded rational model takes into consideration preferences of decision makers. The idea of satisficing in the model is based on what the decision maker perceives to be a satisfactory decision, considering the trade-off between time and effort put into collecting information from different sources and making decisions using heuristics or intuition.
Garbage Can Model
The garbage model of decision-making is commonly applicable within organisations that are characterised as having unclear technology, fluid participation from members, and have problematic goals. These organisations according to the model developed are referred to as organised anarchies, due to the lack of organised processes within such organisations. The model is grounded in the work of Cohen, March and Olsen (1972), and applied to organisations with high level of complexity in its choice making. We can probably safely say that place management as an activity falls into this category: (1) such organisations make organisational decisions based on the past actions or experiences of their decision-makers, (2) such organisations determine their preferences through actions and (3) there is unequal participation and commitment of their stakeholders. This last point seems very relevant to place management, given the need to consult stakeholders who vary in their ability and opportunity to input into the decision. Cohen and his colleagues argued that making decisions within organised anarchies differs from other organisations and likened decision-making in these organisations to a garbage can where problems, solutions, alternative opportunities and decision participants are mixed together so that the decision can play out naturally.
In the case of organised anarchies, the quality of the final decision is often dependent on whether the solution is mixed with the right problem and the right participants at the right time.
Fundamentally, this model fits the place management context due to the complexity of place management, and the somewhat fluid participation of stakeholders in managing a place. The participation of citizens can be variable depending on circumstances – in BIDs, they may not participate in formal decision making at all, whereas town centre managers might be very sensitive to public opinion. We are currently carrying out research into decision making in place management, focusing particularly on BIDs. We would be delighted to hear from you your responses to this blog piece, and whether it tallies with your own experience. What are we missing? Tell us! We’d be even more delighted if you would consider taking part in our study. We can promise you a copy of the results, and the opportunity to reflect on how we can make better decisions in BIDs. If you are interested, please contact email@example.com. Thanks for reading!