Model Answer
0 min readIntroduction
Herbert Simon, a Nobel laureate in Economics, revolutionized the study of organizational decision-making. He proposed a two-dimensional taxonomy to categorize decisions based on two key characteristics: novelty and ambiguity. This taxonomy distinguishes between ‘programmed’ and ‘non-programmed’ decisions, offering a framework for understanding how organizations respond to different types of problems. Understanding this distinction is crucial for effective administrative practice, as it influences the processes and structures employed in decision-making. This framework helps in designing appropriate organizational structures and procedures for efficient problem-solving.
Herbert Simon’s Two-Dimensional Taxonomy
Simon’s taxonomy classifies decisions along a spectrum defined by the degree of structure and the novelty of the problem. The two dimensions are:
1. Programmed Decisions
- Definition: These are routine, repetitive decisions that are well-structured and have established procedures for handling them. They involve choosing from a set of pre-defined alternatives.
- Characteristics:
- High degree of structure
- Clear goals and objectives
- Established rules, procedures, and policies
- Low ambiguity
- Often automated or delegated to lower levels
- Examples:
- Processing salary payments
- Approving routine purchase requisitions
- Handling customer complaints based on a pre-defined script
2. Non-Programmed Decisions
- Definition: These are novel, complex decisions that are unstructured and require unique solutions. They deal with unusual or exceptional problems.
- Characteristics:
- Low degree of structure
- Ambiguous goals and objectives
- Lack of established rules or procedures
- High ambiguity
- Require judgment, creativity, and intuition
- Typically made by higher levels of management
- Examples:
- Deciding whether to launch a new product
- Responding to a major economic crisis
- Mergers and acquisitions
The Continuum
It’s important to note that Simon’s taxonomy isn’t a strict dichotomy. Most decisions fall somewhere along a continuum between fully programmed and fully non-programmed. A decision might be partially programmed, with some aspects covered by existing procedures while others require novel solutions. For instance, a decision to grant a loan (generally programmed) might become non-programmed if the applicant has a unique financial history.
| Feature | Programmed Decisions | Non-Programmed Decisions |
|---|---|---|
| Structure | High | Low |
| Novelty | Low | High |
| Ambiguity | Low | High |
| Rules/Procedures | Established | Absent/Limited |
| Decision-Maker | Lower Levels | Higher Levels |
The increasing complexity of modern organizations often necessitates a blend of both programmed and non-programmed decision-making approaches. Organizations strive to automate routine tasks through programmed decisions, freeing up managerial resources to focus on more complex, non-programmed issues.
Conclusion
Herbert Simon’s two-dimensional taxonomy provides a valuable framework for understanding the nature of organizational decision-making. By recognizing the distinction between programmed and non-programmed decisions, administrators can design more effective processes and structures. The continuum nature of this taxonomy highlights the need for flexibility and adaptability in decision-making, allowing organizations to respond effectively to both routine and novel challenges. Ultimately, a balanced approach leveraging both types of decisions is crucial for organizational success.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.