The paper “ Managing under Uncertainty and Use of Bounded Rationality and Heuristics in Decision Making Process” is a spectacular example of an essay on the management. During my internship, I observed a decision being made by the company manager. The firm manager made a decision to lay off the workforce in three departments which were; technical, sales and marketing. This is a decision that was aimed at helping the firm save salary costs for approximately 1000 of the staff. The manager wanted the decision to be taken within the following month so that formal dismissal procedures could be used.
The manager explained that the firm was experiencing tough economic times and stiff competition. There were also claims that the departments affected were having more employees that the available tasks which were costing a lot to the company. According to the management, the downsizing would help the firm save a lot of revenue. The company had also been criticized by the shareholders due to their high costs of operation which had reduced the profits. The decision was thus supposed to act as a sign that the firm was working on managing and reducing their operations costs.
According to the manager, the firm operating costs could not be maintained and a fast decision was needed. After the downsizing was done, the firm ran into problems. The company started losing business due to a reduction in salespeople, the departure of the technical staff lead to the firm having technical issues. Another area that suffered was the research and development sector. There were a few new products due to fewer members. The company had lost a lot of staff who were high performers leading to problems.
The overall effect was a loss to the firm as the decision turned out to be wrong. The company continued to struggle with reduced output and high costs. The many anticipated benefits of employee downsizing did not materialize. Use of bounded rationality and heuristics in the decision-making process in this situationDecision making is a process that is guided by aspiration levels. When making a decision, there are always alternatives and one has to undertake a search process until a satisfactory alternative is found.
The level of aspiration in decision making is not fixed, but keep changing according to the situation. In making a decision such as downsizing in a firm, the manager's cognitive capabilities are limited. Rational decision making is not possible since it is hard to know all solutions to the problems within a limited time (Yeung & Soman 323). Human beings cannot make rational decisions due to environmental constraints. The decision that human beings make is affected by other deliberations such as emotions. The manager could thus not have come up with a rational decision (West, Toplak & Stanovich 935). The manager utilized non-optimizing procedures in coming up with the decision.
The pressure to solve the problem of high operating costs within a limited time faced the manager. There were complaints from the stakeholder which could have pressurized the manager into coming with the decision fast. This implies that the time to make a decision was scarce and the manager had to make the best use of the available time. The problem was also new to the manager, the firm had not undertaken downsizing measures before and this was the first time.
This may have made the manager has undergone two processes (Conlisk 692). One of the processes is looking for the alternative while the second process is looking for methods for choosing alternatives. Making a decision is affected by heuristics. Due to time constraints and limited information, the rationality of human beings is affected. The time for processing the information becomes limited and one is forced to use short cuts. These shortcuts in decision making are known as heuristics.
The fact that the manager had limited time exposed him to heuristics (West, Toplak & Stanovich 935).