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Thomas Clark, Julie Stewart

Demonstrating the Concept of Satisficing in Corporate Decision Making in an Introductory Organizational Behavior Class

Abstract: Demonstrating the Concept of Satisficing in Corporate Decision Making in an Introductory Organizational Behavior Class Objective: In this presentation, I will lead and demonstrate an in-class exercise that has worked to elevate student awareness of how business and personal situational factors influence corporate decision making. In particular, it is designed to improve awareness of the issues facing auditors who are charged with investigating their companies’ environmental practices. Students gain a deeper understanding of the concept of “satisficing:” communicating to meet the often conflicting business and interpersonal goals of key stakeholders. Context: Promoting a mission of creating “sustainable development,” many companies have committed to conduct voluntary self-audits of their environmental practices. Voluntary compliance is theorized to lead to more timely identification and remediation of environmental concerns. These audits are to be “systematic, objective, and periodic.” Compliance incentives: The EPA promotes compliance by reducing or waiving certain penalties for environmental violations when they are voluntarily reported and solutions enacted. Audit team environment: If an audit reveals a violation, the company’s environmental audit team is charged with reporting the violation to management, proposing ways of remediating the violation, and indicating potential penalties for non-compliance. When writing about sensitive issues, auditors consider the reactions of intended readers within their organizations and of external readers who may use the information in documents to prosecute the business. Exercise: Small groups analyze either 1) company or 2) interpersonal issues faced by environmental audit report writers: Company Issues How will my bosses and co-workers react to the findings especially if the company is unprofitable at the time of the report? o How do the auditors make a persuasive case in competition with other proposals which might help address revenue shortfalls and reduce budgetary expenses? Will the cost, time, complexity, and effectiveness of diagnosing and fixing environmental problems be perceived as impediments to investments in revenue raising and cost reduction efforts? o Is it more dangerous for the company to know it is out of compliance or would it prefer to buy time and claim ignorance should violations be subsequently revealed? o What are the consequences if the company reports a violation and the report is used as evidence by plaintiffs from various levels of government, environmental groups, zoning hearing challengers, and toxic tort plaintiffs claiming injury to land or health. Personal Issues o If audit team’s solutions thwart or delay competing profit-generating priorities, will it affect top management’s performance evaluations of its members? o Will the employees who are interviewed to determine whether compliance is taking place be honest in revealing violations if they believe their statements will affect the plant’s ability to remain open and for them and co-workers to keep their jobs? o If it is discovered a violation went unreported, what will be the repercussions: fines? criminal charges? Who will be held responsible? Outcomes Students respond well to this exercise as they insight into the reasons why and the difficulty of composing communications that “satisfice” the interests of managers, co-workers, and external audiences.