Decision Making: Pandemic and Management

Decision-making is one of the key factors of managing any system, especially in the business. Managers, basically take responsibility to drive the organization with the decisions consciously or subconsciously every day. To process the activities of the organization, all effective management decision-making has to be finally successful, responsible, robust, inclusive, and defensible, ideally. Moreover, to achieve these characteristics, we can say that defining a decision is like a step-by-step algorithm. Although it can be described in many different ways; we can say that fundamentally the main steps are in this order: identifying the problem, collecting the ideas, analyzing these ideas, choosing the best way from collected data, and choosing the course of action; before obtaining the result, communicating with the parts in such organization, then finally reviewing the effects of the decision. From defining the problem to operating the decision, all the way might be shown on the chart below.

In management, the decision-making theory describes how rational people should act under the circumstances such as risky, uncertain, and critical in a limited time span. Essentially, we can separate the decisions into two groups which are rational and irrational. The rational decision-making process, as the name suggests, is analytic and logical. To attain optimum decisions, the realistic model includes a deterministic approach which starts with identifying the core of the problem. Then it follows an analysis of the other solutions. When a rational decision has been made, the managers think rationally without managerial judgment and personal prejudices. For example, Tim Harford (2020) has mentioned possible escape ways without receiving wounds from the tough conditions of the pandemic that we still experience. Herein, he had given some examples of rational and irrational decision-making of that problem. As he criticized, to make restaurants survive during a lockdown, the government can basically own the restaurants unable to pay the rents. By providing assistance, the government can give a chance to carry on the business to the restaurant owners whose debts will be paid later on. Furthermore, this payment will be based on future incomes and with a small amount of taxes. While finalizing this possible decision to solve the problem, he likened this loaning process to a state-backed student loan. Due to the analytical characteristics of this example, it can be said that was rational. The goal was obvious, the alternatives were argued, and the possible consequences were calculated in the aspects of whether matching the requirements or not, logically. Moreover, he offered another decision to reduce the vast amount of infected society by conducting a “4 days out — 10 days in” regime, which is based on scientific outcomes of Covid19 studies. It was also logical. In brief, rational decision-making steps are shown below.

On contrary, the non-rational decision-making process is more judgemental. It is based on incomplete data, therefore it has insufficient knowledge of environmental, macro factors around the alternatives that help obtain the best decision. It assumes that decision-making is usually uncertain and risky; basically, it is based almost entirely on emotion, personal bias rather than experience. Non-rational models are descriptive, actually, they are difficult for managers to make optimal decisions. To give an example for this kind of process, it can be looked at in Harford’s article (2020) again. He mentioned an idea as a ‘crazy plan’ which offers basically time-stopping action till all lockdowns end. Through the application of this decision; all the mandatory payments such as rents, bills, and financial transactions would be frozen to an unknown date. It sounds crazy but applicable; however, when we stop the time, consumption still continues. If the governments decide it collectively, the financial operations seem stoppable, but what will we do about the health sector, couriers in these pandemic conditions, and their payments? Life is always collaborative, when someone’s landlord mortgage payment has been postponed, it would affect negatively the payment of another. Therefore, this decision can be referred to as not an optimal one. In addition, when he finalized his article, he has come up with an idea such we could release the under-50s early it looks like another non-rational decision that has been said emotionally. This emotion tends to help decision-making; decisions are often made when one is unsure if one’s choices will favor or damage them.

When the pandemic broke, every layer of the society has encountered a new, uncertain, unstable situation and still living inside it. While we were hiding from it in our homes, it created a new world around us outside. All we do in a crisis is based on our understanding of the consequences and aims of the externalities that our business and organization will face in the future. In business management, there are so many different approaches and ways to predict and project the future operations of the organization. These tools might use internal and/or external factors, and then visualize the progress of the business by those determining factors. PESTEL analysis is one of such analytic tools that has been introduced as an abbreviation of the environments include Political, Economic, Social, Technological, Environmental, and Legal. Understanding these external conditions allows us to quickly achieve our target by mitigating challenges and optimizing opportunities while also recognizing potential hazards in order to prevent costly mistakes in the future.

In the aspects of the consequences of the coronavirus pandemic, macroeconomic factors have been more important key points than their past effects on the businesses. Those factors have become brand new challenges in front of the responsible decision-makers. It can be said that to overcome the problems of the pandemic, managers have to be tested to avoid three main challenges by their decisions. Namely, they are to foresee the general situation then decide bailout policies politically, to bypass the unemployment economically, and to control the scope of lockdowns socially. Actually, all these challenges might be argued integrated; because they are affecting each other. Politics power of each country around the world tries to regulate the recessions on the economy. All the trade volume has depressed, due to the change of consumption trends, production and manufacturing lines also have shifted to basic consumption goods. As Harford (2020) mentioned in his article, these economic transformations are knock-on effects on the business. Lots of shops, restaurants are being closed since there are no clients around compared with before the pandemic. Therefore, owners, managers who are decision-makers, generally make the businesses smaller in terms of production volume. It causes unemployment and overall, we see a vicious circle. Deciding the optimum policy has been a really tough choice. Also, as he explained a possible government action for taking the debts of the businesses which would be paid later on; deciding the scope of intervention of the political power is another important macroeconomic process. Liberal policies are essential supporters of economic expansion for the capital. The governments generally tend to let the market be flexible and free to move. However, all the markets have been shocked first and then shrank to preserve their initial position at just the beginning of the pandemic. Due to the fact that no one can predict from now the date that lockdowns and travel bans end, there are no right government policies on the economic distress, yet. Another difficult decision is how to manage the duration and age groups for lockdown periods. Besides its economic pressure, the pandemic came with a payload of psychology on each individual of the society. To manage daily life with a less personal touch the others is our new mental challenge as we are ‘social animals’. Deciding age groups for lockdown in specific time spans, as a social factor of macro scale, directly affects the businesses in terms of regulating the power of labor. In business, the less contact among the society, so long quarantine terms keep employees in their homes. As an optimistic scenario that was told in Harford’s (2020) text, the herd immunity has been already reached hopefully, the peak of the pandemic is still influencing Europe, actually all around the world. Therefore, the decision to obtain full operation business like the past we had, is totally on a razor’s edge.

Since the nature of the coronavirus has not been fully revealed yet, its impacts on the different age groups are still unknown. Thus, there is no optimistic view in the near future to determine whether let the working population out of their houses or not. As it was already experienced practically after we passed almost 2 years under pandemic conditions, it is known that we do not know the entire frame and the big picture about it. So, all the processes to reduce the defects on the market as an ‘exit strategy’ would be not sufficient and absolutely right. However, decision-makers have to choose the optimum ones in the light of the science and collective conscious, then operate them.