Your organization hires a consultant to analyze its decision-making practices, and the consultant determines that most decisions are made according to the administrative model. What does this tell you about decisions at your organization?

Question:

Your organization hires a consultant to analyze its decision-making practices, and the consultant determines that most decisions are made according to the administrative model. What does this tell you about decisions at your organization?

A- Managers usually seek out the best possible solution to problems

B- Before making a decision, managers usually have clear criteria in mind to evaluate alternatives

C- The soundness of decisions is often limited because managers are unaware of problems or opportunities that exist in the organization

D- Decisions are not constrained by limitations of human ability, information, or resources

The correct answer is  C

Explanation:

The basis of the administrative model of decision making (also known as the bounded rationality model) lies the understanding that decision makers often settle for a less than perfect solution because of  the scarcity of time and motivation. Instead of seeking the best solution that maximizes the value of the decision, the decision maker under this model, accepts the first available option (which is good enough) thus creating value above the minimally acceptable criteria. This practice of settling for a less than perfect solution is called satisficing.

An example of how an administrative model decision can occur is:

One has a wedding anniversary and has forgotten all about it until just about close of business. He dashes out to the store just 2 minutes down the block to purchase a flower and a card for his wife.

This might look excellent, but had he taken time to plan his gifts, he would have thought about taking her out to dinner, or gotten a more intersting gift that a flower and a complimentary card.

One of the key demerits of this model is that the decisions made are just enough for the organization to get by but are not very quality and thus may impact negatively on the bottom-line of the organization when compared to  the Economic model (also known as the Rational/Classical Model).

Some benefits of the administrative model are:

1. It compensates for quality by saving time. Less time is required to make decisions under this model;

2. It requires less resources. An Ideal solution will often require more resources. It is therefore cheaper.

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