[Solution] Rational Perspectives on Decision Making
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Author: Sarah Bennett
Ideally, decision makers have all the information they need, think perfectly logically about it, and act in the best interests of the organization. In the real world, situations and people are complicated, and it is rare that all three of these conditions, or indeed any of them, are entirely true. Nonetheless, the rational perspective on decision making is a good benchmark, since managers' actual decision making can be compared to this prescriptive model.
The Classical Decision Model
These are the steps in the rational decision-making process:
- Recognize and define the decision situation. Based on a stimulus (some event or new information), realize a decision needs to be made.
- Identify alternatives. The number of alternatives should rise in proportion with the importance of the decision.
- Evaluate the alternatives. For each, consider how feasible it is, how well it's likely to address the problem or opportunity (how satisfactory it is), and what its consequences are likely to be.
- Choose the best alternative, that is, the one most appropriate to the situation.
- Implement the chosen alternative, working with other people or departments as needed. This step often involves an operational plan, as well as a contingency plan if things don't go as expected.
- Evaluate the results and make adjustments as necessary.
Classical Decision Model
Evidence-Based Management
Evidence-Based Management (EBM) is an approach that emphasizes the use of the best available evidence in making managerial decisions. According to Jeffrey Pfeffer and Robert Sutton, EBM involves several key principles:
- Building an organizational culture where people feel safe to tell the truth
- Basing decisions on the best available evidence rather than tradition or intuition
- Encouraging experimentation to test and learn from new approaches
- Critically examining recommendations to identify potential downsides
- Avoiding overreliance on personal opinions or past practices
Select the term that best complete the following sentences.
Fifth
Second
View Explanation
The first step in the classical decision model is to recognize, based on new information (a stimulus), that a decision needs to be made and to define what that decision is.
The second step in the classical decision model is to identify what the various alternatives are. If a decision could have a large impact on the organization, the manager should discover as many alternatives as possible.
The third step in the classical decision model is to evaluate the alternatives identified in the second step. The manager rates the alternatives in terms of how effective they are likely to be. Considerations include how feasible they are, how satisfactory they are, and what consequences they will have.
The fourth step in the classical decision model is to select one of the alternatives evaluated in step three. The best course of action in one situation will not be the best course of action in another situation.
The fifth step in the classical decision model is to turn the alternative chosen in step four into a reality. To take effective action, it's often helpful to make an operational plan, especially when a number of people and resources must be coordinated.
The sixth step in the classical decision model is to evaluate the results of the process. The manager may be satisfied with the outcome. Alternatively, the manager may realize that a different alternative should have been chosen or that the implementation of the decision could have been better.
Select the correct responses to the following question.
Which of the following are principles of evidence-based management (EBM)? Check all that apply.
- Establish an organizational culture in which people are encouraged to always be positive.
- Do things the way the organization has done them before because the outcomes are known.
- Analyze recommendations, looking for potential downsides.
- Use the best information available to inform decisions.
- Promote experimentation with various alternatives to learn how well they work.
View Explanation
According to Pfeffer and Sutton, five principles of EBM are:
- Build an organizational culture in which people feel it is safe to tell the truth.
- Commit to base decision making on the best evidence available.
- Encourage a spirit of experimentation, in which people try out new ways of doing things to learn whether they work.
- Critically examine recommendations for downsides.
- Avoid relying on personal opinions, the organization's past practice, or the uncritical adoption of the practices of successful organizations.
Managers should establish an organizational culture in which employees tell the truth as they see it, even if the ideas are "negative" in the sense of running counter to prevailing management thought or casting doubts on a committed course of action.
An organization using EBM should be trying new approaches to learn what new results can be achieved, not automatically replicating what has been done before.
