"Administrative Behavior"

(A Study of Decision-Making Processes in Administrative Organization)

"Administrative Behavior" is one most significant book which shaped my thinking around decision making, information processing, Organizations and Rationality.

It asserts that "decision-making is the heart of the administration, and that the vocabulary of administrative theory must be derived from the logic and psychology of human choice", and it attempts to describe administrative organizations "in a way that will provide the basis for scientific analysis".

The first edition was published in 1947; the second, in 1957; the third, in 1976; and the fourth, in 1997.

This book "rejected the notion of an omniscient 'economic man' capable of making decisions that bring the greatest benefit possible instead proposed the idea of 'administrative man' who 'satisfices'—looks for a course of action that is satisfactory'".

Administrative Behavior laid the foundation for the economic movement known as the Carnegie School.

If we recognize the forays made by the Chester I. Barnard upon the conceptualization of the Organizational framework as the first meaningful scratches; then the Administrative Behavior written by Herbert A. Simon in 1947 can be described as the first real attempt to build upon the dent made by Barnard. This book is a real structural explanation of organization. This explanation is the first behavioral framework of organization which deviated from Gullick, Waldo and likes who were more concerned with the mechanical designing of the Organizational structure and its principles.  

The framework of Organization given by Barnard stops after philosophizing the need for cooperation, the system of the communication process, the theory of authority and concepts of executive functions and processes. Simon moved a step ahead of Barnard, taking off from the place where Barnard landed his thoughts of Organizations. 

If cooperation is the key around which Barnard moved his concepts of organizations, Administrative Behavior anchored around the decision making process and oiled by the logical positivism. Simon tries to move away from Barnard in the sense that he moves more towards an empirical base from the philosophical base. 

While reading Administrative Behavior, it is worth keeping "Functions of Executive" written by Barnard nearby. Administrative Behavior can be classified into two segments: 

I. Concepts of Functions of Executive extended


II.Limitations of 'Functions of Executive'Concepts and New Proposed Alternatives 

I. Concepts of Functions of Executive Extended

In the first segment come the following Two Concepts: 

a) The equilibrium of the organization

Administrative Behavior agrees with the Barnard in nearly all aspect while discussing the need for the maintenance of the equilibrium between the goals of various stakeholders of the organization. Simon is, however, much more elaborate here, and he takes this concept further from the simple equilibrium talked by Baranrd.

Contribution = Inducements + (Advantages – Disadvantages) of organizing

Administrative Behavior takes this equation further and deals into concepts of multiple criteria of decision making, Role Behavior, Interpersonal Differences, Automation and alienation, Size and Growth of the Organization.  

Simon was very right in recognizing that there is always going to be one or other stakeholder who controls the maximum power of the organization, in other words, the power does not rest equally divided amongst the stakeholders. He postulates that this controlling group will be opportunistic and will be guided by conservation motive and the above equilibrium will look like 

Contribution = Inducements + C + (Advantages – Disadvantages) of organizing 

Where C is the balance of contribution conserved 

This amount 'C' conserved gives the basis for the continuance of the organizations.

b) Loyalties and Identification

Simon was completely unambiguous in his approach while discussing the concept of Social value and Organizational value. The conflict which could arise in organization due to differences in alternatives which could result from these two bases was rightly discussed in this book. This gives rise to the importance of the "Impersonality of Organization Decisions". Here comes the significance of inducement in substituting the organizational value scale for personal value scale as the correctness of the decision. The zone of acceptance plays a significant role here.

II. Limitations of 'Functions of Executive' Concepts and New Proposed Alternatives

In the second segment, Simon at times differs from the Barnard and gives completely different postulates. He proposes new thoughts in the following seven areas: 

a) Limitations of Administrative theory

b) Decision Making

c) Bounded Rationality

d) Communication

e) Role of Authority

f) Efficiency

g) Anatomy of Organization

a) Limitations of Administrative theory

Administrative Behavior is very much critical of classical Administrative theory and just stops sort of rejecting them altogether. The book dwelt upon the conflicts inherent into the principles of the Specialization, Unity of Command and Span of Control concepts at a great length.

The one-paragraph where Simon describes the defects of the principles of administration as fatal summarizes the criticality of Simon's approach towards those principles: 

"It is a fatal defect of the current principles of administration that, 
like proverbs, they occur in pair. For almost every principle, one can 
find an equally plausible and acceptable contradictory principle. Although 
the two principles of the pair will lead to exactly opposite organizational
recommendations, there is nothing in the theory to indicate which is the 
proper one to apply." 

This criticism is much more based upon the mechanical approach taken by the classical administrative theorists than upon the concepts per se. The book accepts the usefulness of the principles of administrative theory as the proverbs but refuses to recognize them as principles.  

Here Simon recognizes the role of various limits of the individuals and organizations which limits the usefulness of the principles postulated by the classical administration theorists. The concept of free will, purpose and power of choice proposed by Barnard seems to be the basis from where Simon draws his thoughts and says that there is the limit upon the rationality of the individuals. Hence, they cannot behave as per the rationality principles of classical administrative theorists.  

b) Decision Making

Suppose the "Purpose" was the element which gelled together with the various concepts of "Functions of Executives". In that case, it is the "Decision Making" which gelled together with the concepts of "Administrative Behavior". Simon talked about two elements of Decision Making, i.e. Factual and Value Element. Simon seems to postulate that administration is concerned with a higher degree of 'Factual Element' and Policy is concerned with a higher degree of 'Value Element'. Further, he seemed to link legislator with value element and administrator with the factual element.

Nevertheless, he was extremely pertinent in accepting the inseparability of these two elements. He discussed the value element as ethical questions. It is this inseparability of two elements which puts a different kind of limits and demands upon organizations, its members and systems. 

However his theory is criticized for this same inseparability factor, Waldo and Argyris have criticized him for taking a very idealistic stand. They said that Simon seems to live in a very narrow world and the mere fact of the inseparability of the two elements nullifies the distinction put forward by Simon and hence the applicability of his concepts objectively is doubtful. 

While Barnard said that Every individual hates "decision making"; Simon seems to differ from Barnard when he says that "Decision Making" is "Satisficing Experience".  

c) Bounded Rationality

This is the most powerful concept which can be said to be the core of this book. It looks similar to the concept of free will, purpose and power of choice postulated by Barnard. However, it is quite a different approach in terms of its explanation based upon the logical positivism. The book talks about the triangle of limits which bounds the area of rationality. The three limits are:

i) The individual is limited by skills, habits, and reflexes, 
    which are no longer in the realm of consciousness.

ii) The individual is limited by his values and those conceptions of purpose,
    which influence him in making his decisions.

iii)The individual is limited by the extent of his knowledge of things relevant
    to his job.

Further, he says that these are not the only limits which bound the rational Behavior. The limits of rationality are variable limits and consciousness of the limits may in itself alter them.  

Further, while discussing the psychology of administrative behavior Simon states that it is impossible for the behavior of a single isolated individual to attain a high degree of rationality. He postulates that actual behavior falls short of objective rationality in three ways:

i)  Incompleteness of knowledge 

ii) Difficulties of Anticipation
iii)The Scope of Behavioral possibilities

d) Communication

This is one concept where Simon seems to differ comprehensively from Barnard. The concept is much more comprehensive and includes not only top-down and bottom-up approach but also parallel channels of communication. The concept of information, information sources, and their importance in communication channel design are dealt at a great length. The book is very much pertinent when it recognizes that there is hardly any need for communication when information source and decision making authority is the same, and there is really no need for organization in that case.

The book also recognizes the well documented and researched concept of "Importance of Motivation" and "Importance of Power" on the communication process. The book describes that individual will pass on the information through a communication channel or withhold the same depending upon his motives which is quite an interesting observation. Few more contributions of this book which are of great importance to Organizations are: 

i)  Organization of Decision Centers

ii) Organization Memory

iii)Investigatory Facilities

Of these, the concept of "Organizational Memory" was revolutionary from that point of time when very little was said and researched about the same. This is one area where a whole lot of research has been carried out since then, and still, the organizations are grappling with the problem of improving and building a system of Organizational Memory. Simon makes an interesting point when he recognized human resources turnover as the greatest enemy of organizational memory.  

The book is exceptionally elaborate in its approach while discussing the impact of communication on Organizational Learning. The ways organizations learn, the structure of roles, and Innovations are discussed at great length. These thoughts have developed an entirely new set of areas upon which a significant no. of books and articles have been written to date. They still provide the framework for organizational innovations, organizational learning research, whether in business organizations or academic world. 

e) Role of Authority

Simon is entirely in sync with Barnard on this concept while defining authority as being delegated by the subordinated to superior. Still, at the same time, he seems to differ also when he recognized a few other reasons which lead to acceptance of authority. These other reasons are:

i)	Social Sanctions

ii)	Psychological differences between individuals


iii)Joint Purpose

Of the above three reasons, the second was of extremely high importance when Simon recognized the importance of personality traits in the determination of an individual's behavior. He postulated that there are a group of people who like to be lead, and there are others who like to lead. 

Further, he postulated that use of authority decreases the authority of the position, and one should try to make use of persuasion and influence to the maximum. The book rightly points out three functions of the authority, namely, enforcement of responsibility of the individual using authority, secures expertise in making of decisions, and coordination of activity. 

Simon gave broader meaning to the concept of Unity of Command. He seemed to be taking this concept away from the narrower meaning attached to it by the classical administrative theorist. 

The question of the hierarchy of authority and division of authority discussed is encyclopedic in its treatment of the concept. It included the concept of rank, emergence of conflicts, handling of conflicts, and application of sanctions. Simon suggested the use of positive incentives to enforce authority instead of the use of authority itself. He seems to be agreeing with the zone of indifference concept postulated by Barnard when discussing limitations of authority. However, Simon gave a different name to this, i.e. 'Zone of Acceptance' 

f) Efficiency

Simon describes his man as the satisficing man who works with the limited alternatives and rationality and not as the economic man postulated by economists, which is quite explanatory of limits of decision-making behaviour. He described the use of the budget as the efficiency criterion in detail. He emphasized upon the factual elements of decision making along with the value elements of the same as efficiency criterion. 

To me, the book does not seem to be taking any position on this. He seems to be vacillating between economic efficiency criterion and his philosophy of satisficing man and value element of decision making. At this point, however, the motives and explanations seem to be different, but examples are similar to that of economic efficiency criterion. However, the future writings of Simon have cleared this air, but in this book, he has not come out with the alternative efficiency criterion. 

The book seems to be overly biased when it seems to neglect any other efficiency criterion for a commercial organization other than profit. Research suggests that profit is a criterion to judge the commercial organizations. However, they are affected by other stakeholders criterion also, and many commercial organizations have doomed by taking a single efficiency criterion of profit.  

g) Anatomy of Organization

This part of the book also suffers from the same lacunae as the efficiency criterion. The book discusses various bits and pieces of the organization, its mechanisms and processes but fails to come up with any concrete shape of the organization.

However, this criticism is also accepted in a sense by Simon when he said that this book is not prescribing any particular theory but rather is a way of thinking and an approach. 

The book talked about half a century of development of organizational theories, Individual and Group Rationality, the importance of Organizational Location, Planning Process, Centralization vs Decentralization, and Influence etc. but somehow fails to come up with any "Next Step".   

References:

1. Thomas H. Hammond; "In Defence of Luther Gulick's Notes on the Theory of Organization"; Public Administration, Vol 68, Summer 1990,143-173

2. H. George Frederickson; "Herbert Simon and Dwight Waldo – Truly the Giants of Public Administration"; PA Times, March 2001

3. Mie Augier & James G. March; "Remembering Herbert A. Simon"; Public Administration Review, July/August 2001, Vol 61, No. 4

4. Herbert A. Simon; "Bounded Rationality and Organizational Learning"; Reflections, Volume 1, No. 2

5. Wen-Shien Peng; "A critique on H.A. Simon's Administrative Theory"; Sun Yat-Sen Institute of Social Science and Philosophy, PAQ Summer 1992

6. Nicholas P. Lovrich; "The Simon/Argyris Debate: Bounded Rationality vs Self Actualization conception of Human Nature"; PAQ Winter 1989

7. Dalmer D. Dunn; "The Impact of Administrative Behavior on Public Administration Text Books"; PAQ Fall 1988

8. Terence R. Mitchell & William G. Scott; "The Barnard-Simon Contribution: A Vanished Legacy"; PAQ Fall 1988

9. Robert T. Golembiewski; "Perspective on Simon's Administrative Behavior: Stock Taking on the Fortieth Anniversary – A Symposium, Part-I"; PAQ Fall 1988

10. Robert T. Golembiewski; "Perspective on Simon's Administrative Behavior: Stock Taking on the Fortieth Anniversary – A Symposium, Part-II"; PAQ Winter 1989