Rational Decision Making Process

Topics: Decision making, Decision theory, Flipism Pages: 10 (2741 words) Published: October 21, 2012

1.0 Introduction
1.1 Steps to Problem Solving Process
2.0 Defining Problems
2.1 Problem Statement
3.0 Identifying Decision Criteria
4.0 Allocating Weights to Each Criteria
5.0 Developing/Generating Alternatives
6.0 Evaluating Alternatives
6.1 Potential Solution Evaluation Checklist:
6.2 When should you evaluate potential solutions?
6.3 Criterion – weight matrix
7.0 Selecting the Optimal Decision/Alternatives
7.1 Selection of alternatives
7.2 Pros and Cons
8.0 Implementing the Alternatives
9.0 Evaluation the Decision Effectiveness

This report will discuss about the approach to rational decision making process. It discusses how an everyday problem faced by management can be tackled by using facts, opinions and reasonable reasons.

1.0 introduction
Decision making describes the process by which a course of action is selected to deal with a specific problem. The success of an organization depends greatly on the decisions of managers. There are two major types of models used by managers to make decisions rational model and non-rational models. In the rational model, managers engage in rational decision making processes. Any rational decision making process consists of eight basic steps. Those steps are: defining problems, identifying decision criteria, allocating weights to each criterion, developing or generating alternatives, evaluating alternatives, selecting the optimal decision or alternatives, implementing the alternatives and finally evaluating the decision effectiveness. These decision making steps which is mentioned in the text book are really practical.

According to Ohio State University management professor, Paul C. Nutt, we only get about 50% of our decisions in the workplace right! Half the time they are wrong, so there is clearly plenty of scope to improve on our decision making processes. Based on his research into over 300 decisions, made in a range of organizations, he discovered that  “some tactics with a good track record are commonly know but uncommonly practiced” Why? Well one reason that emerged from his research is that: “too often, managers make bad tactical selections… because they believe that following recommended decision making practices would take too much time and demand excessive cash outlays.”

Nutt argues that using good decision making practices actually costs very little. In my opinion, the rational decision making model is a priceless tool to help managers to improve the way they make decisions. 

1.1 Steps to problem solving process
I have an example of how a manager of call center operations faced a common problem in every call centers in the world with regards to hiring. What worries the manager as well as the Human Resource (HR) hiring team is the cost per hire for every call center representative (CCR) has increased significantly over the years. This report will show how the manager and HR formed up a team known as team Kronos applied the eight steps of problem solving process to find solution on the ever increasing cost per hire of a CCR. Figure 1 below are the steps applied to solve the problems:

Figure 1: Steps in rational decision making process

2.0 Defining Problems
Problems that are visible tend to have a higher probability of being selected than ones that are important. 1. Easily to catch a decision maker’s attention
2. Decision maker want to appear competent and “on top of problems”. This desire motives one to focus on problems that are visible to others. If a decision maker faces a conflict between selecting a problem that is important to the organization and one that is important to decision maker, self-interest tends to win out. This tendency also is related to the issue of visibility. It’s usually in a decision maker’s best interest to attack high profiles problems. It conveys to performance is later reviewed, the evaluator is more likely to give a high rating to someone who...

References: http://www.the-happy-manager.com/rational-decision-making-model.html
G. Dennis Beecroft, Grace L. Duffy, and John W. Moran, The Executive Guide to Improvement and Change, ASQ Quality Press, 2003, pages 17-19.
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