Rationale decision making is a process where one employs systematic and analytical steps to review relevant choices, facts, observation, and possible outcome before choosing a particular course of action. To have a rational decision-making process, the following components have to be in place.
Identify and define the problem
The first step to solving a problem and making a rational decision making is by identifying and describing the issue considering the current and desired state. Identifying a problem and defining alternatives enables an organization to come up with a variety of options rather than quick solutions to the problem.
Identify the decision criteria
The second component involves identifying the criteria as early as possible as a guideline during the decision making process. Criteria are majorly used to measure all viable alternatives and determine with the solution is more favorable and easy to achieve with the best results.
Weigh established criteria
We can use an absolute and relative comparison to determine the level of importance of each approach. In a simple analogy, we evaluate and compare criteria side by side using their metric and not with another.
Generate a list of alternatives
Once we have identified and compiled a list of criteria accordingly, we can now generate a list of many options as possible. The more the made alternatives, the higher the chances of coming up with the most effective solution to our problem.
Evaluate the alternatives
At this step, we evaluate the other options using the criteria in step 2. This duration of this process depends on the number of criteria and alternatives.
Determining the optimal decision
The sixth component is determining the optimal choice by multiplying the ranking of each alternative by that of individual criteria.
Heuristics are decision-making strategies and mental short cuts people use that are based on little information to reduce the cognitive burden associated with decision making. People who use heuristics scrutinize few signals and or alternatives choices during decision making thus overlooking processes involved in rational decision making.
I have learned that human judgment and decision making is subject to cognitive limitations, yet we still strive to make rational decisions. Rational decisions involve weighing factors like potential costs against possible benefits. Human beings are limited by the amount of time and information they have at their disposal to make a choice. Other factors such as overall intelligence and accuracy of perceptions also influence the decision-making process.
While heuristics can speed up our problem and the decision-making process, they are prone to errors. Just because something has worked in the past does not mean it will work again, and relying on an existing heuristic during decision making can make it difficult to for managers to come up with effective alternatives or ideas.
Poor heuristics results in cognitive bias drawing a false conclusion based on prior available data. This automatically leads to a waste of time and resources required to carry out another decision-making process. Many organizations have collapsed or become bankrupt due to poor heuristics because a lot of resources are spent on hiring professionals or tools to help in the process.
As a result of cognitive limitations, we are forced to rely on mental shortcuts to help us make sense of decisions and the environment. This demonstrates that humans are limited in their ability to make rational decisions and have specific ways of thinking during the decision-making process.
Humans have never been perfect when it comes to decision making. Humans are not just perfect but rather tend to deviate from reasoning rationally more systematically and predictably. Humans make a decision based on intuition and facts. However, in the business, it is mandatory that decision making is supported by reasonable evidence. Bazerman is a business administration professor at Harvard school of business. He is renowned for his contribution to research based on decision making, and negotiation. Bazerman suggests that conscious decision making should be systematic and well calculated. In his book on the judgment in management decision making, Bazerman notes that to apply rational decision making in business, business owners should explicitly or implicitly take the following six steps.
Definition of problem
This is achieved by noting down the problem and why it should be solved. A good manager should understand the question before rushing to a solution. Precise judgment is needed in recognizing that the goal is to solve the problem and not to find a quick fix in eliminating fleeting symptoms.
Ascertain the criteria
In most cases, decision making is always required to achieve more than one objective. For instance, in buying a new organizations asset, the manager has to understand the pros and cons, the economic values of the asset, and cost-effective aspect of the asset. For proper evaluation, a good manager will be able to ascertain applicable criteria in decision making.
Weight the criteria
It is attained by deciding the relative significance of the goals. A sensible scoring system should be in place to aid in identifying a relative value of various criteria.
Good decision-making manager should come up with a possible course of action. A good manager should time conscious when coming up with solutions. In most scenarios search for alternatives goes on until an organization realizes that the cost of search has overshadowed the values of additional information.
Evaluate each alternative on each criterion
It is a problematic stage since it involves figuring future results. A manager is required to assess potential consequence on the entire criteria identified visa via the proposed solution on each.
Compute the ideal decision
Having achieved all the five steps a manager ought to compute the perfect solution. The process involves 1) doing multiplication of step 5 against the weight of every criterion, 2) making additions of weighted ratings against all the requirements of every alternative, 3) finally making a choice based on the highest sum of weighted scores.
From Bazerman'ssix steps, have learned that the success of the organization is lying heavily on quality decision making. Decision making requires one to be objective and open-minded to come up with various alternative solutions. Following the steps enables the management team to have a clear path in finding lasting solutions. Furthermore, I have learned that Bazerman's six steps is a tool that helps in time-saving. Finally, have learned that rational decision making is a recipe for sound judgment in an organizational setup.
Overconfidence is the excessive belief in one’s abilities during the crucial decision-making process ignoring the fact that their decision can be incredibly wrong. I have learned that overconfidence during the decision-making process has resulted in far-reaching negative impacts in an organization and needs to be always to ensure efficiency.
I believe that overconfidence has resulted in the Illusion of control which is the tendency of individuals to behave as if they might have complete control over something when in reality they have none. Research shows that naturally, people tend to underestimate how much power they have, while overconfident people tend to overestimate the extent of control they have. This has resulted in poor judgment and reduced work output in various organizations.
Planning fallacy is another effect brought about by overconfidence in an organization. Many organizations will often err on the side of underestimating the resources, time, costs that are needed rather than overestimating. To be successful in decision-making organizations need to avoid the planning fallacy and find a way to achieve accurate estimation.
Comparative-optimism effects in organizations are as a result of overconfidence during decision making. This notion is based on the belief that only positive outcomes are expected to make organizations prone to collapse in case the unexpected finding knocks in.
Strikes, lawsuits, and wars in various organizations have risen from over placement which is a distinction of overconfidence. Over-investment is considered the most prominent manifestation of the overconfidence effect of judging your performance compared to another.
I believe that as a strategic manager, one has to take into consideration every bit of information provided by all stakeholders and not overlook any info due to biasness or overconfidence of an individual or a group of people. This will promote rational decision making with far-reaching benefits to the organization.
I have learned that bounded awareness occurs when individuals or organizations fail to identify critical information in their surroundings because they are overly focused on some other unnecessary issues far beyond the scope. In an organization bounded awareness is characterized by cognitive blinders that prevent employees from focusing on highly relevant and easily accessible information during the process of decision making.
This concept applies to many organizations who are very slow in realizing significant development issues that are strategically important in business. Therefore, having this in mind, it very critical managers understand that limited awareness can and will happen in the decision-making process.
Group dynamics also hinder information sharing and sensible decision making. Group dynamics can make rational individuals make wrong decisions they might not come to on their own. Since nearly all organizations and businesses rely on collective judgment, managers need to be on the lookout for group biases and their undesirable bounded awareness results. Teams may discuss information, but the discussion usually conveys information that is widely known, not information that is uniquely identified to a single team member.
Organizational silos and multiple layers of management systems hinder information flow. Silos create an environment of individual and disparate systems within an organization which is unable to operate as a unit. Information doesn't get transmitted well across silos, and management layers can filter out messages management doesn't want to hear. This results in the loss of valuable information being overlooked during the decision-making process.
For organizational managers to overcome this menace of limited awareness in decision making, they should try to research and identify the information that is required in making the decision, rather than using the already available data in the room. Due to blind spots and misplaced focus, we miss crucial information, and then the mind replaces what we didn't see with what it expects to experience. Studies show that wonderful information is particularly easy to miss.
Personal framing is the notion of framing something to focus on a moment in time, a scene, or a set of ideas. It involves the use of psychological and intellectual skills, less conscious skills within a sense of perception. Framing is a set of skills employed to one degree or another by individuals. Preference reversal refers to a change in the relative frequency by which one option is favored over another in behavioral experiments to contradict the predictions of rational choice.
Framing results from our nature and the experience we have that nurture us both naturally and learned. Besides, some frames can be contrived, deliberately learned and used as a way of more consciously trying to interpret events. The most common frame of reference is each person's way of viewing, observing, understanding, and acting in the environment. Personal framing includes all that an individual believes in, what has happened in the past and what is expected to occur in the future
There exist gaps in our knowledge, experience, perception, ability to process information. This causes limitations that can impair the individual in recognizing and dealing successfully with the surrounding environment. What we see or hear might be affected by prejudice or a moment of distraction. The fact that we use a frame of reference, with all its limitations, as the basis for decisions and actions which may turn out to be false, is essential at all levels of management and leadership.
The existence of preference reversal sets a challenge to fundamental assumptions of the economic theory. It is an apparent failure of procedure invariance; some see it as a challenge to the very idea that preferences govern human decisions.
Making sense of the environment is one of the critical tasks of the strategic leader. Awareness of the value of framing and reframing as ways of looking at the world, and skill in using sense-making techniques, are critical to the success of a strategic manager.
An ethical standard is a modern society’s concept that runs deep in the mutual mindfulness. Ethical standards are what the vast majority accepts to be good without being coerced by rules and regulations. Society dictates that a moral individual should stand by his principles. Foundation for every action and rational decision making should be based on doing that which is right. The critical underpinning of ethical decision making entails choice and balance. Before making any irrational decision, one should ask a question “in this situation what would a reasonable man do?” Choice and balance come with an impact and consequences; hence one should apply the three rules of management, 1) the precept of private gain, 2) gains vs. strain, 3) if everyone does it.
Positive ethical impact of decision making
Practicing good ethical standards in an organization results in respect and mutual understanding. Every employee and customer expects to be respected and treated equally. The connection is a virtue that fuels good decision making. Before making any decision, one should consider how the decision will affect everyone.
Good ethics promotes building reputation in an organization. Status is robust to build; however, with good reputation an organization can grow. A good reputation is pegged on the mission and vision of the organization.
Responsibility is part of an ethical standard in an organization. Decision making that is based on obligation is vital is the operations of the organization. Most organization fail because most of the employees are not responsible enough to value the culture of the organization.
Negative ethical impact of decision making
Despite ethics impacting significantly on decision making, ethics also have negative consequences on decision making for ethical standard might result in interpersonal conflicts and performance pressure. People usually disagree when it comes to taste and preference. A worker might get into a fight as a result of internal feuds hence leading to poor decision making. The pressure at work is not healthy in an organization. Too much trouble based on ethics might result in poor decision making.
I have learned that ethics play a considerable role in the success of an organization. Ethic is essential in building trust among employees. Organizations should focus on promoting ethical standards for it to thrive. Good ethical standards eliminate corruptions and graft in an organization.
The belief system and personality are the invisible forces that shape someone’s decision making. Humans tend to acquire various beliefs regarding aspects of life as they grow. Most beliefs are gained through the news and the things people read. All these beliefs interact with each other effect each other, and together they form a system. The belief system has three main elements 1) homeostasis, 3) self-regulation and 3) autopoiesis. The ultimate goal of a belief system is to guarantee human survival hence influencing someone’s decision making. Belief mostly originates from family, society and cultural conditioning. Religion and principles have changed my decision making over the past few years.
Has a manager in organized religion has always played an enormous role in my decision-making process. I still find myself sympathizing and empathizing with the employees. Religion has played both positive and negative impact on decision making. For instance, religion has influenced the organization in such a way that everyone feels they are part of a large family. On the other hand, religion has made it difficult to scale down on employees who are not up to the task since I feel sorry the employees.
Personal beliefs have played a significant role in shaping my decisions in the organization. I believe in integrity in all that I do as a leader. Honestly and nobility couple with hard work is the key to success. Honesty has helped me in making crucial hard decisions on corruptions facing the organization. Most employees believe in the principle of the end justify the means, but I believe in working hard.
Have learnt that when it comes to decision making an individual should be flexible enough to change certain beliefs. Some of the ways of improving a belief for self-growth are by doing self-evaluation on what you can and cannot do or what one does and does not believe to be true. Additionally, an individual should listen to his intuition and trust his instincts when it comes to decision making.
Importance of urgency in decision making
Urgency entails carrying out a task with swift action. In business, a sense of urgency is necessary for work to be handled in a promptly and decisively without having a delay. A good leader should incorporate urgency in decision making. Urgency is necessary when coming up with change and accelerating progress. A good leader should understand that difference in impetus and hard. A sense of urgency is essential in pushing things forward. Urgency serves as self-motivation towards making things happen. A good leader is one who comes with positive change and is able to incorporate a sense of urgency. In a nutshell, the urgency is indispensable to success.
Importance of building and rallying support in decision making
Every business requires a secure support network that surrounds it. A good support network is essential when deciding since you have a broad scope of seeking advice. A growing business will always be faced with obstacles along the way. As a result, it is essential for such a company to seek help and advice when it comes to making a decision that are critical. Such support comes with years of experience and significant influence that a growing business needs.
Importance of vision and strategies in decision making
A vision is the mental portray of result that an organization strives to achieve. A vision is a wish or a dream or hope for the organization. A vision originates from the future, and it enlightens and rejuvenates the present. Vision is essential in decision making since it inspires action by bringing people together in striving to achieve a common goal.
Additionally, a vision kept the organization together and focused primarily on a complex project. Lastly, a vision inspires decision making when it comes to making plans and setting objectives and goals. A good strategy encourages change in attitude hence standing firm in times of problem. A changing in perspective can help an organization in coming up with the right decision to fight a common problem. Have learned that for an organization to grow, it has to have a clear vision and strategies. Visions are used to communicate the values and goals of an organization. Additional a great vision should originate from the heart and not the mind.
John Kotter proved through his research that the efforts put in implementing change do not always provide the intended outcome. There is usually only a 30% success chance of the proposed changes to an organization according to the research. Based on his conclusion’s Mr. Kotter developed eight-step change model to facilitate a better successful change implementation process for an organization. The eight-step change plan are as follows.
The first step is the creation of a sense of urgency through involving the employees of the organization by emphasizing to them the necessity and need for change. This is achieved by engaging employees in open and honest dialogue. Employees are given a chance to come up with possible solutions to the organization’s potential threats.
The second step in this model is the creation of a guiding coalition. A special team is created solely with the mandate of ensuring that the intended implementation changes are done. This team works hand in hand with employees of the organization in providing cooperation towards achieving the changes.
The third step is the creation of a vision for change. A clear vision enables employees to picture what the organization is trying to achieve within a given time frame to realize the difference.
The fourth step is communication of the vision to employees to get their honest feedback concerning the changes the organization intends to make.
The firth step is removing potential obstacles that may undermine the organization's vision by incorporating employees to help single out the change weakening factors.
The six-step is the creation of short term wins to motivate employees to work towards a more significant change.
The seventh step is a consolidation of improvements to establish the success of the change since most change trajectories usually fail due to the declaration of victory earlier.
The last step according to Kotter is anchoring the changes as the central part of the organization. Therefore continuous support from employees is required for the change to be effective.
It’s a fact that change is not easy to embrace, but through Kotter’s eight plan step in effecting change within an organization, I have learned that it is possible for any organization to successfully implement change by incorporating their employees fully in the process.
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