Business Behavior. Rational Decision-Making

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Business Behavior. Rational Decision-Making

Table of Contents

Introduction
Main body
Conclusion
References

Introduction

Decision-making is one of the most important functions of the administration body of an organization. The sound decisions that are made by the governing body of the organization are the main determinant factors in deciding whether the business will reach its intended goals and objectives or not. For this to happen, the governing body of the organization has to adopt a rational decision-making approach and model that will enable them to make the soundest decisions that will aid them in reaching the desired goals and objectives. Even though a rational decision-making approach is the best to be used while making decisions, certain factors cause deviation from the decision-making process and this brings about hindrances to making effective rational decisions. This essay intends to look at the influence that behavioral factors, organizational learning, and previous experiences have on the rational decision-making process. These factors make it difficult for people to make decisions rationally. The essay intends to look in detail at how these factors affect the possibilities of rational decision-making.

Main body

The rational decision-making models usually involve a cognitive procedure whereby every single concept is governed by the preceding logical idea that was made before the one that is currently required to be made. By a cognitive procedure, it means that the person has to make critical thoughts about the subject and think thoroughly about the available options by critically evaluating and weighing the options that the character has so that the final decision is the best option that could be reached through evaluation of available options.

As much as rational models exist, different models exist and this also involves steps that differ depending on the different models that are used in the decision-making models. Decision-making differs greatly from problem-solving and the two should not be confused as being similar in concept. It is also true that many decisions that are formulated are usually aimed at solving a particular problem, but it should be noted that decisions are made without necessarily intending to solve a particular problem. Various steps are put in place during the decision-making by using a rational decision-making model. These procedures include:

Defining the situation and the possible decision that should be reached,
Identification of the most vital criterion that can be used to arrive at this decision and the possible outcomes of the decision,
Consideration and evaluation of all the possible solutions,
Reach a recommendable determination of the possible consequences of the solutions that have been decided upon against the possibilities of decision satisfying the criteria being solved,
settle on the most excellent option

Even though a rational decision-making model seems like the best option in the making of decisions, it has its disadvantages. One of the disadvantages presented by this model is that it assumes that there is only a single outcome that will come out of the decision that has been made without considering the string of different consequences that usually result from a single decision that has been made. This time that is usually taken in trying to reach a decision that brings about perfection is time-wasting and this rational decision-making model can only be valuable in a situation whereby there is enough time to reach a certain decision. It is therefore limited for a decision that needs to be made promptly and this makes it a disadvantage because it only becomes useful in a situation whereby a lot of time is available for a decision to be made.

Another disadvantage that is presented from this rational decision-making model is that all the options that should be weighed to reach a certain conclusion should be taken into consideration and as a result it assumes that the decision-makers know the future consequences of the decisions they are making. This is not true as the only thing that this model does is to give the decision-makers an illusion that they have made the best decision and that the consequences they have in mind from this decision are actually what is going to take place. However, more often than not, the consequences of a certain decision are not usually predetermined because nature has its way of rewarding the decisions made by human beings.

Another limitation of this rational decision-making model is that it usually depends on the cognitive abilities of certain people. This results in various questions that arise from the cognitive abilities of these people, how efficient is their memory, is it reliable or not, is the imaginations f these people efficient in proving the required options that are needed in reaching a plausible conclusion that will demonstrate a rational decision? This model also ignores the fact that most decisions are usually based on the emotional take a certain individual has on a particular matter. It ignores that emotions take a considerable position in the making of a decision. The rationality of a decision made is therefore most dependent on the ability that an individual has in disassociating their emotional attachments to a certain topic because the involvement of emotions in decision making usually has the outcome of irrational decisions.

Apart from these few disadvantages, various factors may cause deviation from the rational decision-making model one of them the behavioral patterns of different individuals. The factors that determine the behaviors of a certain individual such as the attitudes the person has towards life, the beliefs that these people associate with certain things in life and their values more often than not cause them to deviate from the rational decision-making model. Considering that all the decisions that people make usually have rational/ objective as well as subjective elements to them, it is impossible that a decision can be reached without the association and influence from human behaviors. Even though the factors that determine the behaviors of different individuals affect the making of rational decisions, their influence is also limited to a certain extent in rational decision-making but this does not also make the rational decision-making model the best alternative for reaching a decision. It is important to note that decisions that are made in both management and personal life usually need a combination of both subjective and objective/rational perspectives to reach a certain decision. The behaviors of different individuals also vary from one person to another. The factors that make up the behavioral patterns of these individuals also vary and therefore reaching a rational decision is almost close to impossible in the case where management has to reach a decision. A deviation, therefore, occurs from the rational decision-making model because personal; values differ from one individual to another and this cannot allow for the achievement of a rational decision. Take the example of a case where the values of the different individuals in a decision-making panel are concerned, it becomes difficult for these people to reach a rational decision because their values differ and each notes that their values are the best in reaching the most rational decision. This, therefore, serves to show just how behavioral patterns of different individuals create deviations from the use of the rational decision-making model.

Another factor that influences the deviation from the rational decision-making model is the organizational learning that different individuals acquire from the work experiences they have had while working in other organizations. Different organizations have different approaches that they use to reach a certain decision. It is therefore likely that when a person is working for a particular company, they tend to adopt this various methods of reaching rational decisions and incorporate them into the different approaches that they use in reaching a certain decision. Deciding on an organization is also influenced by the objectives and goals of that company after an individual has worked in a particular company for a long period it becomes difficult for that person to adapt to different ways and concepts that could be used by another company to reach a potential rational decision. This is what entails organizational learning and these different lessons learned from different organizations influence the rationality these individuals use in reaching an objective decision. If a good number of these individuals have had working experiences in other organizations, then reaching a rational decision could be an almost impossible process keeping in mind that these people have been exposed to different ways of reaching a rational decision in which they believe is the best. Getting this person to shift from this method of reaching a rational decision could be a difficult process which in the end creates a deviation from the rational decision-making process since each individual has their own opinion on how a rational decision can be reached from the different organizational learnings they acquired while working for different institutions. Take the example of an individual who was working for a competing company with the one they are currently working for. This individual has insight knowledge on the workings of these other company and the use of these tactics in this new company may not appeal to the other existing members who have not had working experience with the other company, in such a situation. Reaching a rational decision is difficult, having in mind that the behavioral patterns of these individuals are also used in the rational decision-making process (Hayakawa 2000, p.4 ).

Another factor that may cause deviation from the rational decision-making process is a bias to previous experience. People usually make decisions based on what they have had with the previous experiences they have had in life. Having that nature has different ways of rewarding different decisions made by different individuals, it can be agreed that not all decisions made by different individuals have the same outcome for them. These differing outcomes create different opinions that people formulate regarding the use of a particular decision-making model. Rationality in decision-making models, therefore, differs from one person to another based on what the individuals experienced when they used a certain system to reach a certain decision. This creates biasness towards a particular approach that can be used in making a business decision. Such biases present a problem when the people who have to reach rational decisions have all had past experiences that have caused them to develop certain biasness towards a particular method of reaching a rational decision. If a meeting is held amid such people, all these people would present a big problem because all of them have different views on how a rational decision can be reached at considering then reaching a rational decision that rational. In such a situation, what is rational to one individual may appear to be very subjective to another individual based on the biasness they have created as a result of exposure to past rational decisions. In such a case, a decision will have to be reached that would satisfy all these individuals, and to achieve this, they would have to deviate from the rational model of decision making and use another method of reaching a decision that is supported by all parties. In such a circumstance, it is clear how deviation from the rational decision-making model can be reached based on biasness as a result of past experiences.

Conclusion

Rationality in decision-making is a good approach. Nevertheless, its not always guaranteed that an objective/rational approach in decision-making can result in the best decision that could be implemented to achieve the desired objective. In such a situation deviation from the rational decision, making model would be necessary and other factors such as behavior organizational learning, and biasness from experience can all lead to deviation from the rational decision-making model.

References

Hayakawa, Hiroaki., 2000. Bounded rationality, social and cultural norms, and interdependence via reference groups. Journal of Economic Behavior & Organization 43(Sep), pp. 1-34.

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