Question

Making a Rational Decision* Select a personal decision that you are currently making or that you will need to make soon. It might be picking a major, buying a car, renting an apartment, choosing a job, or something else. Now apply the rational decision-making process to it by identifying criteria and goals, assigning weights to the criteria, generating and evaluating alternatives, ranking the alternatives, and making a decision. Next, compare the outcome of this decision with the outcome you would have reached by following a more intuitive or emotional process. Are the outcomes different? Which process do you feel led you to the best decision? Why?

Answer 1

Business ipeople iare ifaced iwith idecision imaking ievery iday. iIntuitive iand irational idecision imaking iare ithe itwo iways ithat ian iindividual ican iapproach iproblem isolving. iSome ipeople iare ivery iaware iof ifeelings ior iinstincts iand iuse ithem ias iguides ito idecision imaking. iThese itypes iof ifeelings iare iinstinctive iand irely ion iintuition iand inot ifacts. iIn ifact, iintuition iis ithe iability ito ihave ia igrasp ion ia isituation ior iinformation iwithout ithe ineed ifor ireasoning. iIn ibusiness, ipeople iuse ithis itype iof idecision imaking iwhen ifacts iare iunavailable ior iwhen idecisions iare idifficult iin inature.

i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i i iThe isecond, iopposing itype iof idecision imaking iis icalled irational idecision imaking, iwhich iis iwhen iindividuals iuse ianalysis, ifacts iand ia istep-by-step iprocess ito icome ito ia idecision. iRational idecision imaking iis ia iprecise, ianalytical iprocess ithat icompanies iuse ito icome iup iwith ia ifact-based idecision. iLet's itake ia ilook iat ihow ithe irational idecision-making iprocess ican iwork iin ian iorganizational ienvironment.

The ifollowing iare ithe iseven ikey isteps iof ithe idecision imaking iprocess.

1. Identify ithe idecision. iThe ifirst istep iin imaking ithe iright idecision iis irecognizing ithe iproblem ior iopportunity iand ideciding ito iaddress iit. iDetermine iwhy ithis idecision iwill imake ia idifference ito iyour icustomers ior ifellow iemployees.

2. Gather iinformation. iNext, iit’s itime ito igather iinformation iso ithat iyou ican imake ia idecision ibased ion ifacts iand idata. iThis irequires imaking ia ivalue ijudgment, idetermining iwhat iinformation iis irelevant ito ithe idecision iat ihand, ialong iwith ihow iyou ican iget iit. iAsk iyourself iwhat iyou ineed ito iknow iin iorder ito imake ithe iright idecision, ithen iactively iseek iout ianyone iwho ineeds ito ibe iinvolved.

3. Identify ialternatives. iOnce iyou ihave ia iclear iunderstanding iof ithe iissue, iit’s itime ito iidentify ithe ivarious isolutions iat iyour idisposal. iIt’s ilikely ithat iyou ihave imany idifferent ioptions iwhen iit icomes ito imaking iyour idecision, iso iit iis iimportant ito icome iup iwith ia irange iof ioptions. iThis ihelps iyou idetermine iwhich icourse iof iaction iis ithe ibest iway ito iachieve iyour iobjective.

4. Weigh ithe ievidence. iIn ithis istep, iyou’ll ineed ito i“evaluate ifor ifeasibility, iacceptability iand idesirability” ito iknow iwhich ialternative iis ibest. iManagers ineed ito ibe iable ito iweigh ipros iand icons, ithen iselect ithe ioption ithat ihas ithe ihighest ichances iof isuccess. iIt imay ibe ihelpful ito iseek iout ia itrusted isecond iopinion ito igain ia inew iperspective ion ithe iissue iat ihand.

5. Choose iamong ialternatives. iWhen iit’s itime ito imake iyour idecision, ibe isure ithat iyou iunderstand ithe irisks iinvolved iwith iyour ichosen iroute. iYou imay ialso ichoose ia icombination iof ialternatives inow ithat iyou ifully igrasp iall irelevant iinformation iand ipotential irisks.

6. Take iaction. iNext, iyou’ll ineed ito icreate ia iplan ifor iimplementation. iThis iinvolves iidentifying iwhat iresources iare irequired iand igaining isupport ifrom iemployees iand istakeholders. iGetting iothers ionboard iwith iyour idecision iis ia ikey icomponent iof iexecuting iyour iplan ieffectively, iso ibe iprepared ito iaddress iany iquestions ior iconcerns ithat imay iarise.

7. Review iyour idecision. iAn ioften-overlooked ibut iimportant istep iin ithe idecision imaking iprocess iis ievaluating iyour idecision ifor ieffectiveness. iAsk iyourself iwhat iyou idid iwell iand iwhat ican ibe iimproved inext itime.

Rational idecision imaking ibrings ia istructured ior ireasonable ithought iprocess ito ithe iact iof ideciding. iThe ichoice ito idecide irationally imakes iit ipossible ito isupport ithe idecision imaker iby imaking ithe iknowledge iinvolved iwith ithe ichoice iopen iand ispecific. iThis ican ibe ivery iimportant iwhen imaking ihigh ivalue idecisions ithat ican ibenefit ifrom ithe ihelp iof itools, iprocesses, ior ithe iknowledge iof iexperts.

1. Decision imaking iwill ifollow ia iprocess ior iorderly ipath ifrom iproblem ito isolution.

2. There iis ia isingle ibest ior ioptimal ioutcome. iRational idecisions iseek ito ioptimize ior imaximize iutility.

3. The ichosen isolution iwill ibe iin iagreement iwith ithe ipreferences iand ibeliefs iof ithe idecision imaker.

4. The irational ichoice iwill isatisfy iconditions iof ilogical iconsistency iand ideductive icompleteness.

5. Decision imaking iwill ibe iobjective, iunbiased iand ibased ion ifacts.

6. Information iis igathered ifor ianalysis iduring ithe idecision imaking iprocess.

7. Future iconsequences iare iconsidered ifor ieach idecision ialternative.

8. Structured iquestions iare iused ito ipromote ia ibroad iand ideep ianalysis iof ithe isituation ior iproblem irequiring ia isolution.

9. Risk iand iuncertainty iare iaddressed iwith imathematically isound iapproaches.