Rational Decision Making Model

In their managerial duties, all managers encounter issues that need decisions on a daily basis. The decisions are usually about managing resources and employees, and setting strategies and plans. To effectively achieve this, two methods of decision-making can be used: intuitive technique and rational decision-making technique (Betsch, 2014). The latter is a linear and multi-step process that is aimed at problem-solving, beginning from identification of the problem, through solution, and seeks to make decisions that are logically sound.

Theories behind the 7 steps of rational decision making model

The idea of rational decision making model hinges on the economic theory. This model of decision making assumes that individuals will make decisions that maximize returns or benefits while minimizing costs (Cascetta et al., 2015). For example, many people will prefer getting the most useful good or service at the lowest price possible. As a result, individuals will judge the profits of certain items in terms of how useful they are compared to those of similar goods. Such individuals will then compare the costs or prices. Overall, humans will go for the products that offer the greatest reward at the lowest cost possible. In this regard, the rational model, just like the economic theory, makes the following assumptions;

a) That people have full and perfect knowledge and information on which to base choices.

b) That there are measurable criteria under which information and data can be gathered and analyzed.

c) That people have the cognitive abilities, resources, and time to assess each alternative in relation to the others.

What is more, the rational decision making model fails to consider factors that are not quantifiable (Lee & Carlson, 2015). These factors include ethical concerns as well as the value of altruism. Moreover, it does not consider personal feelings, sense of obligation, or loyalties. As such, its objectives establish a bias toward individuals’ preference for facts and data analyses over desires and intuition.

Rational decision-making model steps:

Making good decisions that can help in the realization of set goals are dependent on the available facts for making careful and informed analysis of decisions. Such decisions take the following steps:

1. Identification of a problem or opportunity

The initial step of rational decision-making model is to recognize a problem or identify opportunities that are worthwhile. Managers need to ask themselves how worthwhile it will be to realize the opportunity or to solve the problem identified.

2. Collect information

In this stage, managers determine what is relevant to the decision as well as what are is not relevant. They then consider what they need to know before making the decision, or what will make them arrive at the right decision (Lee & Carlson, 2015). Decision-makers also determine those who can help, for instance, those who have the influence and power to make the decision happen or stop it from happening.

3. Situation analysis

The third step entails exploring the alternative courses of actions that may be available to the decision-maker. What is more, managers look into the possible different interpretations of the data.

4. Developing options

In this stage, several possible options are developed. The decision-maker has to be creative and positive, and uphold a critical mind with ‘what if’ questions. It is at this step that the manager decides how they would like their situation to be.

5. Evaluation of alternatives

Here, the alternatives are evaluated for desirability, feasibility, and acceptability in an attempt to determine the alternative that will best realize the set objectives.

6. Choose a preferred alternative

Provisional preferred alternatives are explored for possible adverse concerns in future. The possible problems that may arise are explored, together with the possible risks of making the decision.

7. Act on the decision

The last step entails putting the plan in place in order to execute the decision. The manager has to ensure that the resources are allocated before implementation (Lee & Carlson, 2015). Additionally, the decision has to be supported and accepted by colleagues, who should be committed to ensuring the decision works.

Justification of using this model

The rational decision-making model is an ideal model for making good decisions, as it is dependent on rational methods used to solve problems. Additionally, it is more complete and thorough. For instance, it entertains a wide range of scenarios and extremely considers the possibilities of success for each and every preferred course of action (Pettigrew, 2014). What is more, the manager is likely to be exposed to little or no criticism. The reason is that managers can explain that their decisions were grounded on reports as well as analysis of procedures and algorithms (Lee & Carlson, 2015). Moreover, with rational decision-making model, the problem is static in the sense that if the managers work in environments in which resources and time are abundant, then when they encounter major decisions with relatively high risks, then the approach can enable them reduce the last bit of possible error.

References

Betsch, R. D. M. T. (2014). Preference theory: An affect-based approach to recurrent decision making. In The routines of decision making (pp. 69-96). Psychology Press.

Cascetta, E., Carteni, A., Pagliara, F., & Montanino, M. (2015). A new look at planning and designing transportation systems: A decision-making model based on cognitive rationality, stakeholder engagement and quantitative methods. Transport policy, 38, 27-39.

Lee, W. S., & Carlson, S. M. (2015). Knowing when to be “rational”: Flexible economic decision making and executive function in preschool children. Child Development, 86(5), 1434-1448.

Pettigrew, A. M. (2014). The politics of organizational decision-making. Routledge.