CHAPTER I: DECISION MAKING AND THE ADMINISTRATIVE ORG

Administration: “the art of getting things done.” Importance is given to processes and methods aimed at
ensuring expeditious action. The focus is not on the choice that precedes each action but rather on the
determination of what has to be done. Simon deals with the process of choice that leads to action. The
decision-making process does not end when the general purpose of the organization is determined. The task of
deciding extends to the total administrative organization.
THE MAKING OF DECISIONS AND THE EXECUTION OF THE SAME .
Non-operational staff (higher hierarchy) participates in the fulfillment of the organization's objectives as it
influences the operational staff, for which, between the highest hierarchy and the operational level there may be
many levels. So building an effective administrative organization is a problem of social psychology. The term
influence is used instead of direction since the latter is only one way of affecting the decisions of operational
personnel that arises from the formal structure. It should focus on the operator: how he decides and how he is
influenced
Choice and behavior
All behavior implies a conscious or unconscious selection of certain actions for those who act and for whom
they influence (selective process), not necessarily due to the presence of rationality (it may not exist) but due to
the fact that the choice implies taking a course of action, abandoning side all the remaining possible ones. In
many cases the selective process is nothing more than a reflex conditioned by the environment or experience
while in others, it is the product of a complex chain of activities.
VALUE AND FACT IN THE DECISION .
In organizations in general, behavior is intentional (goal-oriented); this intended purpose is the first criterion to
determine what needs to be done. Each decision includes the selection of a goal and a behavior related to it,
this goal can be a means to a more distant goal and so on. When decisions lead to the choice of ultimate goals,
they are called “ value judgments” and all subsequent “judgments of fact .” It is possible to combine evaluative
and factual elements into a single objective, which is integration.
Decision hierarchy : each lower step meets the goals of the one immediately above it.
Finalist behavior: guided by general goals and objectives.
Rational behavior: choose alternatives that lead to the fulfillment of the already selected goals.
It should not be concluded that this hierarchy or pyramid of purposes is perfectly organized or integrated into
actual behavior, but, even when conscious or deliberate integration of these purposes does not take place in
the decision, it should be noted that, for Generally, an integration is actually carried out.
The relative element in the decision : the chosen alternative does not allow a complete realization of
objectives, it is only the best solution available in the given circumstances. The environment limits the
alternatives and therefore establishes the maximum level of achievement of an objective. There is always a
conflict between value judgments and factual judgments; the final decision will depend on the relative
importance (weighting) given to the different objectives and the judgment on the extent to which a given plan
will achieve each of them. To balance one goal with the other and try to find a common denominator, it would
be necessary to stop thinking about conflicting objectives, subordinating them to a higher-ranking objective, that
is, transforming them into means. It could be said that the end justifies the means if the end is weighted more
than the means and vice versa.
DECISION MAKING IN THE ADMINISTRATIVE PROCESS .
Administrative activity is group activity. The “ administrative processes ” group together techniques that facilitate
the development of processes for applying organized effort that basically consist of segregating elements
between the decisions of each individual. Thus, the organization takes away a part of the individual's decision-
making autonomy and replaces it with an organizational decision-making process, tending to have a Weberian
organization. These decisions that the organization makes for its individuals consist of
1) specification of your role: scope and nature of your duties.
2) Assignment of authority.
3) Establishment of limits for your decision-making power.

The administrative organization is characterized by specialization : assignment of tasks to each part.

Although there are various studies on horizontal specialization (division of tasks), little is said about vertical
specialization: division of decision-making functions between operational personnel, supervisors, etc.
Reasons for vertical specialization
1- Coordination : not only the correct decisions but also that all members of the group make the same
decisions. It is achieved through different forms of influence, such as authority.
There are two types of coordination: procedural and essential. The first refer to the organization's
organizational chart, that is, the generalized description of the behaviors and relationships between its
members. Delineates the sphere of activity and lines of authority. Essential coordination, however, will
strictly refer to the content of each member's activity.
2- Expertise: The response is distributed so that tasks that require special skills are done by those who
possess them. But subdividing decisions is not easy since multidisciplinary knowledge can be added
but not the skills of different individuals.
3- Accountability : When maintaining accountability is a central concern, the purpose of vertical
specialization is to assure the director of legislative control, leaving administrative staff with adequate
discretion to address technical matters that a legislative body is not qualified to decide. .

FORMS OF ORGANIZATIONAL INFLUENCE .

How to influence the operator?

1- Formation of attitudes, habits and a state of spirit in the operator that makes him make decisions that
are advantageous to the Company. organizational rules are included.
2- Imposition of decisions already made. It depends on the authority and the advisory and information
services.

Authority : When a subordinate accepts and complies with another's decision (from his superior) without
evaluating it . The superior does not try to convince him, but rather to obtain his agreement. In practice it is
mixed with suggestions and persuasion. Exaggerating the arbitrary aspect of authority can cause the
subordinate's acceptance threshold to be exceeded => he disobeys.
The magnitude of the acceptance zone depends on the sanctions, although commonality of purpose, habit and
superiority are also very important. Although authority not only goes down but up and to the sides, lines of
authority are used to end a debate.

Organizational loyalties : members of an organized group tend to identify with that group. When making a
decision, the consequences for the group are assessed. When an administrator makes a decision, he thinks
about the organization and not about the consequences for each of its members in particular. This is vitally
important when judging your actions (responsibilities).
This phenomenon of identification or loyalty to the organization plays an important function which consists of
reducing the set of values under which a decision must be subordinated: it will only be subordinated to the
values of the organization.
The main defect of organizational loyalty is that when a decision is made in one area and this decision has to be
weighed with values from another area, conflicts will be generated, which generates rivalry between areas.
Another problem arises when it comes to balancing financial needs, which is why it is decentralized .

The efficiency criterion Questions of fact that serve as a basis for your decisions: the shortest path, the
cheapest means. This is a neutral criterion regarding the goals that have to be achieved.

Advice and information . This is a less formal means of influence than the previous ones. Internal PR flows in
all directions, not just from the top to operational levels. For example, when something changes suddenly it is
generally the operator who sees it first and this is something that should not be left aside.

BALANCE IN THE ORGANIZATION .

Why does the individual accept these influences?

There are three participants from the organizations. 1) businessman 2) clients 3) employees . Each group has
its reasons for participating in the organization in relation to the need that they believe it will satisfy. But the
organization's own purposes also arise that are, ultimately, personal objectives of all the members.
participants and are the means by which their organizational attitudes are linked to satisfy their various personal
motives. The businessman achieves his objective by obtaining a profit for which he employs workers who
accept authority in exchange for receiving a salary and the customer is satisfied when consuming the
manufactured product.

Client objective : organizational objectives are related.

Entrepreneur's objective : it is related to the survival of the organization.
Objective of the operators: it is not related to anything specific to the
organization but they have an exhaustion threshold.

CHAPTER VII – THE ROLE OF AUTHORITY

It analyzes how the organization fits the individual's behavior into a general model, how it influences their
decisions.

-External aspect of influence : Stimuli with which the organization seeks to influence.
-Internal aspect of the influence : “Psychological Game” of the individual, how he reacts.

Since the decision is the result of factual premises (factual judgments) plus value premises (ethical judgments),
the influence of the organization on the individual is not on the decision itself but on the premises on which it
must be based. in their decisions.
Authority is the form of influence that distinguishes the behavior of individuals inside the organization from their
behavior outside: Authority provides the organization with its formal structure.

Coordination of the 'administrative group': Action Plan + Acceptance € AUTHORITY.

THE AUTHORITY
It is defined as the power to make decisions that guide the actions of others. There is authority only if there is
consistent hierarchical-subordinate behavior; otherwise, there is no authority regardless of what emerges from
the organization chart.

-Behavior model of the superior : Orders, imperatively affirms an alternative behavior for the subordinate.
-Model of behavior of the subordinate : His choice (decision) is based solely on the criteria of the superior.

Not at all times or in all situations there is a relationship of authority between two subjects, it is a requirement
for its existence: Expectation of Obedience + Disposition to Obey.

I NFLUENCIA V S .
AUTHORITY The difference between authority and other forms of influence is that the
subordinate keeps his own empowered judgments of choice in suspense,
Influence when with the other two forms he depends on his conviction to act. Many
times the 3 situations coexist, it is even common practice for a superior to
prefer to “suggest” rather than “impose”.

Suggestion Persuasion Conviction: Belief in a factual or value premise that is important for a given
decision; Belief in a factual proposition can be deduced in several ways, one
being proof, but it generally arises from the social transmission of factual
statements.
Authority Claims can convince without being proven thanks to status or
situation of the people who make them.

Authority situations are defined as those situations in which suggestions are accepted without critical review or
consideration, so superior-subordinate roles can be reversed depending on the situation. (boss and secretary)

AUTHORITY AND THE LAST WORD

When there is opposition between 2 individuals, it is resolved with authority through what is commonly called
“Lines of Authority.” Authority can take place not by ordering but in reviewing the subordinate's actions: “How
would my boss want me to do it?” The more obedient the subordinate is, the less tangible the evidence of
authority will be; it will only be used to change an incorrect decision: “Rule of Anticipated Relations.”

THE S ANTIONS OF THE AUTHORITY

In most cases human behavior is governed by the adoption of 'roles' in society. A common role is that of
'employee' and whoever exercises it has a zone of acceptance like any other role. This area will vary depending
on the type of employee (that is, according to their bargaining power). What greatly affects the acceptance of
authority are the “sanctions” understood not only as punishments but as rewards. They can be classified:

1- Social Sanctions : Social disapproval for not fulfilling a 'role' adequately.

2- Psychological Differences : Leader personality versus submissive personalities.
3- Purpose: Orders are obeyed because it is understood that with them coordination is achieved and thus the
joint purpose is fulfilled. For this to work the subordinate must believe that
a-The order was given to fulfill A certain purpose. b-
The order was given for THAT purpose.
4- Status : Obeyed to maintain a position or ascend the pyramid.
5- Lack of Will: Not wanting to make a decision.

Limits of Authority
The superior-subordinate relationship governs only within the area of acceptance. This area depends on the type
of organization (NGO vs Army), the moderation of the superior and the obedience of the subordinate.

USES OF AUTHORITY .
Authority: Relationship that ensures coordinated behavior within a group, subordinating decisions of the
individual to those of others. Specific decisions are subordinated to special ones: Vertical specialization of
decision making. This relationship does not necessarily imply membership in the line.

Authority functions:
a-Imposes responsibility of the superior before his subordinates
and vc. b-Ensures expertise in decision making.
c-Allows the coordination of the activity.

a- Responsibility.
It imposes on the individual conformity to norms established by the group or those of its members who exercise
authority. If the authority is not accepted by the subordinate, a negative sanction is applied; if accepted, the
sanction will be applied to the superior in the event that a proposition is proven false.

b- Expertise.
It is the function of the authority to ensure decisions of high rationality and effectiveness. To achieve
advantages in decision-making, their responsibility is established, as far as possible, in such a way that those
that require special knowledge or skill fall on individuals who possess it. The specialist must be in a strategic
position within the formal hierarchy of authority: His decisions must be accepted as decision-making premises
by the members of the organization. But we must go beyond the formal structure of activity: The authority of
ideas must gain importance along with the authority of sanctions.

c- Coordination.
Decision-making functions can be centralized through authority so that an overall plan directs the activities of the
members of the organization.
Procedure coordination: Organization chart.
Substantive coordination: Procedures Manual.

In summary:
-Responsibility: What decision was made?
-Expertise:_Is the decision good?
-Coordination: Did everyone make the same decision?
CONTROL UNIT
Specializing decision making runs the risk of creating authority conflicts since a subordinate may receive
contradictory orders from several superiors. There are 4 methods to resolve this conflict:

1- Traditional command unit: Each individual receives orders from a single superior.
2- Strict unity of command: Each individual receives orders from several superiors but in a case of conflict only
responds to one. (last word)
3- Division of authority: Each unit of the organization has an exclusive area over which it exercises authority;
every individual within it is subordinate.
4- Category system: Each individual receives orders from several superiors, in case of contradiction he abides
by the last one received and must notify the superior who gave that last order of the conflict through.

2, 3 and 4 can be used together.

Hierarchy of authority: Used for 1 and 2, resolves WHO has to decide.

A UTORITY D IVISION .
Each individual is assigned authority over a specific group of subordinates; Authority can also be divided
according to its subject matter: Functional assignment of authority.
Even when there is a hierarchy of authority, it may also be necessary to divide the organization by functional
lines or by subjects. There are two criteria to assess the success of an assignment of authority:
a-According to how it helps or disturbs group work. b-
According to how it minimizes jurisdictional disputes .

To be successful the division of authority must adapt to the division of labor (work process technology). When
authority is divided, the problem is no longer the question itself (What order to comply with) but rather the
jurisdiction (who can order me): Adjudication process. The more the organization resembles Weberian
bureaucracy, the easier it will be to implement.

Bringing a conflict of authority to a superior means that the following must be considered:
a-The effect that the decision will have on the lines of authority.
b-The effect it will have on the organization's standards
c-The information that the conflict provides him with respect to the solidity and competence of his
subordinates.

Category
The category as a basis for authority relations is always used in connection with a hierarchy of authority;
Although this can generate conflicts of authority, it is useful when a superior disappears since temporarily
another of the same category can fill his place without cumbersome administrative processes that could hinder
the work of the organization.

The Application of Sanctions.

Authority implies achieving acceptance in the subordinate and not the latter's power to apply sanctions. It often
happens that a superior does not have enough power to impose sanctions, which does not take away his
authority but forces him to rely on other mechanisms to ensure his condition.
From the point of view of the power to apply sanctions, the purpose of unity of command can be redefined by
stating that it exists when an individual is not subject to sanctions from two independent sources.

F ORMAL AND N O F ORMAL ORGANIZATION .

The way authority is used to keep the organization coordinated, that is, the coordination of procedures
(specification of the lines of authority and the spheres of activity and authority of each member of the
organization) creates a formal organization. It then consists of a series of relatively stable abstract relationships
that govern the behavior of each participant. In this model, authority serves two things.
a- To impose the planned organizational scheme (apply the organization chart) (define hierarchies)
b- Define Roles, that is, what each person does within the organization based on the division of work
and the delegation of roles.
Procedures and lines of communication are also established.

Obviously the organizational reality will differ from what was planned because
1- Reality will show many interpersonal relationships that are not specified in the formal scheme.
2- Actual interpersonal relationships within the organization may contradict those planned .
The term 'non-formal organization' refers to interpersonal relationships within the organization that affect its
decisions but that are either omitted from the formal scheme or are not consistent with it. Reality indicates that
no organization functions correctly without some informality scheme. It is impossible to specify the formal
structure in such detail that the non-formal structure is eliminated, but failure to pay attention to the
organizational design creates an unnecessarily important political environment, so strict monitoring of formality
reduces this problem.

THE PSYCHOLOGY AND THE THEORY OF AUTHORITY .

Given a situation and value system there is only one course of action that a person can rationally follow to
maximize value attainment. Then it is the psychological propositions that explain why behavior deviates from
the norm of rationality in a given case.
Within an organization, propositions about the behavior of its members, to the extent that that behavior is
governed by the organization's system of authority, do not normally entail propositions about the psychology of
the person acting. Psychology has nothing to do with your behavior as you obey another person's decisions, so
psychological propositions are important in determining the area within which authority will be respected but
they are meaningless in determining what behavior will be within that area. area.
The psychology of the individual is what determines his or her threshold of acceptance and that is the
relationship with authority.

CHAPTER 9 – THE EFFICIENCY CRITERION

The analysis now focuses on how the individual synthesizes the premises that the organization provides and
how he relates these to his own premises. They are the 'internal' aspects of decision making. The key aspect in
this synthesis is the efficiency criterion and organizational loyalties.

The Nature of Efficiency

In commercial organizations, the efficiency criterion is that which dictates that the alternative that provides the
greatest net return to the organization must be chosen. It can be achieved
-Maximizing income (at fixed costs)
-Minimizing costs (at fixed income)
As always both things go together, it is said that what should be maximized is the difference between them, that
is, the benefit.
The efficiency criterion is related to the objectives of the organization since it seeks to maximize 'production'
and maintain a positive balance. Money is the common denominator that allows production (costs) to be
compared with income (income). When non-monetary objectives take place in the organization, the comparison
is no longer so easy because there are no parameters of the same nature to make it. If a company, for
example, has as one of its objectives 'not to harm the environment', its costs will be all the inputs or production
processes that help it meet that goal, but the 'income', that is, the The degree to which the environment
improved or did not worsen is not something that is easily measurable. It should be taken to monetary values to
be able to be compared with costs, but it is not something simple.

THE COST IN THE DECISION

The costs are generally monetary but there are contrasting examples:
a- Employees: Not only is their remuneration a monetary cost, improving the work environment may
often not only involve monetary expenditures but also attitudes of motivation and respect that go
beyond salary.
b- Environment: When a company has environmental care as one of its objectives, it considers as a
non-monetary cost the discomfort that it generates in society due to its activity, which motivates the
adoption of certain attitudes that, although they can be measured in money expenditure function cannot
necessarily be measured in such a way.

Positive Values in the decision

It follows from the previous point that the negative values in decision making are basically the costs of time and
money. But there are positive values on the other hand and they are considered the degree to which the
objectives are achieved: This is measured with indices that give an idea of the degree of success of these
objectives. It should be remembered that this is of vital importance since by definition factual propositions are
those that can be evaluated after the fact, so when it comes to fulfilling an objective, whatever it may be, the
degree to which it was fulfilled must be assessed. thus being able to assess the factual premises, that is, the
path, that was followed to achieve it.

Definition of objective: They must be established in terms of value, they will only be of value if they are
expressions of relatively ultimate ends. They must be concrete enough so that they can be applied to decision-
making problems.
A problem arises when an activity serves to cover more than one objective of the organization. In that case, the
relative importance of each of the competing values (objectives) must be pointed out in order to apply rationality
in the decision.
The definition of objectives does not exhaust the value element in an administrative decision; it is also
necessary to determine the degree to which this objective must be achieved. This can be clearly understood
with the cost vs. achievement of objectives where there comes a time when the incremental degree to which an
objective is achieved is much less than the marginal cost associated with it.
The common denominator for value is the criterion of efficiency, that is, in a commercial company for example,
if the decision contributes to a greater economic benefit it will have value.
The problem arises when there is no common denominator for making the decision. The following situations
arise: with a and b being two different choices, and I and O, their respective investments and expenditures,
there are 4 possibilities.
1- I A < I B and O A > O B
2- I B < I A and O B < O A
3- I A < I B and O A > O B
4- I B < I A and O B > O A

The first two cases do not pose any problem since the conclusions are obvious, but for the last two a common
denominator is sought considering the opportunity cost of the decision made. For case three, a third possibility
“C” must be considered, which will include A plus the possible alternative activities due to the difference in costs
between A and B. By doing this the problem is resolved in a comparison of the results that can be obtained by
an application of fixed resources to alternative activities B and C. The efficiency of a behavior is the ratio
between the results obtained from that behavior and the maximum results obtainable from the behaviors that
are alternatives to the given behavior. The efficiency criterion dictates the choice of alternatives that produce
the greatest results for a given application of resources.
This gives a common denominator but not a common numerator, so the results obtained by the same course of
action cannot be compensated.

THE EFFICIENCY
Different meanings were given to the word and many were even confused with effectiveness. Simón adheres to
the theory that efficiency is the ratio between what is invested and what is produced. A problem arises when
efficiency is measured in the social sphere and not in the physical sphere: at practical levels it is known that in
the physical sphere energy is neither lost nor gained but is transformed, so efficiency considering the whole
(the universe ) is perfect; On the other hand, in the social sphere there is the concept of synergy, so here there
are returns, achieving that production exceeds investment or vice versa.
Therefore, the concept of perfect efficiency must be redefined. The real problems as they arise in the
administrative field refer to relative efficiencies, so different degrees of efficiency must be compared to truly
understand the degree of efficiency of the administrative decision. to consider.

Economic analogy .
The efficiency criterion applied to administrative decisions is strictly analogous to the concept of utility
maximization in economic theory; If human behavior were perfectly rational, administrative decisions would
maximize efficiency (hence relative and not absolute efficiencies).
The analogy between the two principles also extends to the assumptions on which they are
based: 1- there is a scarcity of resources
2- The activities are “instrumental”, that is, activities that are carried out for the positive values they
produce, leading to some type of result.
3- Both principles necessarily entail the at least subjective comparability of their results.

CRITICISMS OF THE EFFICIENCY CRITERION

It is stated in relation to the efficiency criterion that if two results can be achieved with the same expense, the
greatest result should be preferred. Two expenses of different magnitude can be compared only in terms of
their opportunity cost (alternative outcomes).

Mechanical efficiency
It is criticized that the principle of efficiency makes the decision “mechanical”, that is, it takes away its
rationality. A simple criterion of preference between possibilities does not limit in any way the administrative
techniques that can be applied to achieve the possibilities nor does it reduce the role of administrative judgment
in decision making.
The social consequences of administration are placed in the first place of its determining influences.

The end justifies the means

It is criticized that the interest of efficiency uses the ends to justify any kind of appropriate means but this is not
the case, because the evaluation of the results of the administrative activity takes into account all the significant
elements of value of the administrative alternatives (of there the disquisition between judgments of value and
fact)

“Relentless” efficiency
Efficiency is accused of directing all attention to the means, without concern for the ends. In relation to what
was said above, it is not that the ends are neglected, but that these, being based on ethical premises, cannot
be scientifically valued, which is very different from saying that they do not pay attention to them.
It is also criticized that the means are completely separated from the ends, but this is not the case, because as
said, every decision involves ethical premises and factual premises.
The ethical element of the decision consists of the recognition and appreciation of all the elements of value
inherent in the possible alternatives; The values involved are commonly expressed as “results” of the
administrative activity, as seen, the activity itself is considered evaluatively neutral. But there are two kinds of
values: positive ones (results) and negative ones (opportunity costs measured in time and money).

Evaluative preferences
A fallacy very closely associated with the application of the efficiency criterion consists of the evaluation of
alternatives only those values that have been previously chosen as the objective of the particular administrative
activity being considered.
While most activities do not typically have significant indirect effects (e.g. shelving a MP in the warehouse
against the color of the product logo), it does not justify ignoring such effects when they are actually present.
Many effects that are not directly related to the organization's objective will necessarily be ignored because the
scope of the manager's attention is limited and because there are often severe limits on the time available for
decision making.

Factual elements of the decision

The criterion that the administrative person applies to factual problems is the criterion of efficiency. When a
decision is made according to the efficiency criterion, it is necessary to have empirical knowledge of the results
that will follow with each alternative possibility. The secret is to separate the external variables and the internal
variables, that is, the result of a decision will be, on the one hand, a function of the efficiency with which the
task is carried out and of non-controllable external variables.
The problem of efficiency consists of determining at each of these levels of analysis, the cost of a specific
element of operation and the contribution that this element of operation makes to the department's objective
achievements. When these costs and contributions are known, the elements of operation can be combined so
that maximum loss reduction is achieved.
There are 4 different levels at which the analysis of the administrative situation is carried
out: 1- compliance with the organization's objectives.
2- Elements of administrative
implementation 3- Contribution measured in
effort
4- The effort analyzed as a cost.

It is observed that everything can be deduced in mathematical equations, so the problem of efficiency consists
of finding the maximum of the production function with the limitation that the expenditure is fixed.

The determination of social production functions.

The factual portion of the decision-making project is resolved in the determination of the production functions of
administrative activities. To understand these functions you must:
1- The values or objectives affected in each activity must be defined in a way that allows their observation
and measurement.
2- The variables, both administrative and non-administrative, that determine the degree of success of
those functions must be determined.
3- It is necessary to carry out concrete investigations empirically about how the results change and how
the variables are altered. (sensitivity analysis).
F UNTIONALIZATION IN RELATION TO EFFICIENCY
The influence of efficiency problems on organizational problems must be considered. There is a hierarchy of
functions and objectives that corresponds to the hierarchy of sections and offices of the organization. In
general, the hierarchical distribution of functions will correspond to a relationship between means and ends.
Effective functionalization requires several requirements:
1- divide the general objective into subsidiary objectives that have a means-to-end relationship
2- The technique of the activity must be such that the work of the organism is divided into distinct portions,
each contributing to only one of the subsidiary objectives.

Specialization by area and by clientele.

If the specialization is by area or by clientele, they are simple forms of functionalization, in order for them to be
successful, they must satisfy the conditions of effective functionalization (see 1 and 2 above).