GSBS6001: Rational Decision Making Process Model | Critical Analysis Assignment

This observation review is comprised of three headings and requires you to:

Decision Summary

Engage in academic summary writing and effectively summarise a planned decision an individual made and implemented in a workplace environment. It is important that you personally observed this decision being made. It may be drawn from you being involved in a workplace or observing another making a decision in a workplace e.g. friend, family member etc.

Write the summary from the perspective of your observation of the decision.

In your summary, address the following points:

• What decision was made
• Who made the decision
• Where was the decision made
• How was the decision made
• What factors influenced the decision
• What were the outcome of the decision

Rational Decision Making Analysis

Using relevant academic sources, critically analyse the decision from the perspective of rational decision making theory. In your critical analysis, identify those parts of the decision that were rational in part or in full and justify your argument through coherent academic analytical writing.

In your answer, you will need to select and use a suitable rational decision making process model and provide a fully referenced diagram of that model.

Bounded rational decision-making analysis

Using relevant academic sources appropriate to bounded rational theory, critically analyse and evaluate what potential issues could have bounded the decision maker in this decision.

In your answer, include in your analysis and evaluation potential limitations and benefits of bounded rationality in this decision.

Decision Summary

The decision summary comprises of decisions that has been taken at an organisation regarding change in management by the CEO of the company. To make this decision all the stakeholders are required to brainstorm and give creative and innovative ideas. This is the background to the summary. The CEO has decided to implement ERP system in the organisation and this is why it is important for every stakeholder to give their feedback so as to ensure the CEO that he is going to take right decision. The process of decision making of CEO started with taking feedback for all the stakeholders and especially from the employees. During the course of decision making several factors came into way. The most significant factors that affected decision were perception of employees, scepticism for change, motivation and insecurity (Lau, 2013). Every employee in the organisation has different perception for upcoming change in the organisation and due to that it became very difficult for the CEO to take this decision. Every employee presented a different idea and that made huge confusion. Moreover, employees were sceptic for change and this is why they were trying to ignore a role in decision making in his case. It became very difficult for the management to motivate the employees for this change and ultimately it affected the decision making process to a very great extent.

Taking a decision is not an easy task and when it comes to change in management it becomes more difficult for the organisation to take decision. Amidst all these, the CEO took this decision and implemented ERP system in the organisation. The outcome of this decision was hilarious. Employees became very reluctant and they were not willing to work as per the new technology. Due to this, the rationale of this decision went into vain (Michael et al., 2013).The reason behind taking this decision was to increase the productivity but due to this decision the productivity of the employees decreased and it further lead to a decrease in revenue of the organisation. Thus, this decision was not too effective and there are many contributing reasons behind this outcome. The most important reason was scepticism of employees in taking part in decision making. Thus, an effective decision making process is the one that includes the contribution of all the stakeholders in the form of feedback.

Rational Decision Making Analysis

There are basically two types of decisions making processes available in front of a manager in an organisation. The first one is to make decisions on the basis of intuitions and another is to make on the basis of rationality. The decisions that are based on rationality are very well explained in rational choice decision making model. This model is based on rationality of a manger. It is a systematic way of taking decisions using all the facts and evidences (Grunig & kuhn, 2012). This type of decision making is exactly opposite to intuitive decision making. The model is based on six steps that help in taking effective decisions.

The first step of rational choice decision making is to identify the problems. The most important aspect of any kind of decision is to identify the problems. The problems in organisation here relate to change process. To solve these problems in an organisational setup it is important to take creative decisions. So this is the first step from where rational decision making starts (Armstrong, 2014). The CEO had correctly found out the problem. The second step of rational decision making is to establish decision criteria. The CEO could not establish the decision criteria effectively and this is the stage where he failed. The reason why the CEO could not establish decision criteria is that he indulged all the stakeholders in decision making process initially and asked them to brainstorm. Due to this they failed. The third stage is to weigh decision criteria and in this stage the decision maker compares all the criteria of decision making and come up with the effective one. At this stage the CEO again failed because the ideas availed from employees were and again it was not a successful stage for the organisation.

[caption id="attachment_1721" align="aligncenter" width="655"] Figure 1: Rational decision making model
Source: (Lardbucket, 2015)[/caption]

Bounded Rational Decision-Making Analysis

The model of rational decision making suggests that all the decisions are based on evidence, facts and figures and without that decision making is not possible. This model does not take into account the boundaries that exist within an organisation (Max & Moore, 2012).This is where the bounded rational-decision making takes a toll. It also suggests that there are several boundaries within which a manager has to remain while taking a decision. The boundaries deals with the factors such as limited time scale; limited implications, limited ideas, limited number of employees takes active participation, etc. are some of the decision making boundaries. It has some limitations but at the same time it is also very effective with a number of benefits. The most significant benefits of bounded rational decision making is that priorities are clear, the problem is clear and it is also known what would be the solution. This is how a manager can take decisions effectively. The limitations involved with this model are lack of evidences of taking decisions and there is no basis of taking any decision.

In this situation the bounded decision maker has lack of support from the employees and at the same time the ideas presented by employees are not creative due to this the decision making process of the CEO got affected to a very great extent. The CEO has used rational decision making partially and he also used bounded rational decision making because he used his instincts to take the decisions. Bounded rational decision making did not prove to be effective for the organisation and ended after making a wrong decision (Michael et al., 2013).Thus, the potential issues which affected decisions are lack of support from stakeholders, unclear ideas, and inefficient background to the organisational problems etc.

The potential limitation of bounded rationality in this decision is related to reluctance of the stakeholders for decision, perceptions of the employees, lack of infrastructure to implement that particular decision, the differences in cognition of employees, etc. These are the factors that are responsible for the inefficient decisions in the organisation. These factors are acting as a boundary to the optimum decision making in this situation. Thus, the relevance of bounded rationality decision making can’t be traced from this particular situation. The benefits of this model in decision making in this situation for the CEO is, to use his instincts to take the decisions. The employees and stakeholders could not come up with expected behaviour and this is why the CEO had to use his instincts besidesthe fact that there were boundaries. Thus, bounded rational decision making plays a significant role in an organisation when the responsibility of taking decisionsfalls under a single person.

In this situation the decision maker has used bounded rational decision making as well as rational decision making model. Both have their own strengths and weaknesses so it depends upon the organisation and decision maker that how they are going to use these models. It shall always be noted that when an individual takes a decision, the rationality is limited. This limited rationality is due to the information available with the decision maker (Punt, 2015).This is also implied from the analysis of bounded rational decision making that besides all the benefits and limitations everything depends upon the rationality of decision maker. A decision maker shall focus on the situation and then decide about the model and process that is optimum to take the decisions in a particular situation. The most significant point of this analysis for a decision maker is that boundaries and limit exist, and managers will have to take decisions using thumb rule.