Rational Decision Making Process

This report will discuss about the approach to rational decision making process. It discusses how an everyday problem faced by management can be tackled by using facts, opinions and reasonable reasons. 1. 0 introduction Decision making describes the process by which a course of action is selected to deal with a specific problem. The success of an organization depends greatly on the decisions of managers. There are two major types of models used by managers to make decisions rational model and non-rational models. In the rational model, managers engage in rational decision making processes.

Any rational decision making process consists of eight basic steps. Those steps are: defining problems, identifying decision criteria, allocating weights to each criterion, developing or generating alternatives, evaluating alternatives, selecting the optimal decision or alternatives, implementing the alternatives and finally evaluating the decision effectiveness. These decision making steps which is mentioned in the text book are really practical. According to Ohio State University management professor, Paul C. Nutt, we only get about 50% of our decisions in the workplace right!

Half the time they are wrong, so there is clearly plenty of scope to improve on our decision making processes. Based on his research into over 300 decisions, made in a range of organizations, he discovered that  “some tactics with a good track record are commonly know but uncommonly practiced” Why? Well one reason that emerged from his research is that: “too often, managers make bad tactical selections… because they believe that following recommended decision making practices would take too much time and demand excessive cash outlays. ”

Nutt argues that using good decision making practices actually costs very little. In my opinion, the rational decision making model is a priceless tool to help managers to improve the way they make decisions. 1. 1 Steps to problem solving process I have an example of how a manager of call center operations faced a common problem in every call centers in the world with regards to hiring. What worries the manager as well as the Human Resource (HR) hiring team is the cost per hire for every call center representative (CCR) has increased significantly over the years.

This report will show how the manager and HR formed up a team known as team Kronos applied the eight steps of problem solving process to find solution on the ever increasing cost per hire of a CCR. Figure 1 below are the steps applied to solve the problems: Figure 1: Steps in rational decision making process 2. 0 Defining Problems Problems that are visible tend to have a higher probability of being selected than ones that are important. 1. Easily to catch a decision maker’s attention 2. Decision maker want to appear competent and “on top of problems”.

This desire motives one to focus on problems that are visible to others. If a decision maker faces a conflict between selecting a problem that is important to the organization and one that is important to decision maker, self-interest tends to win out. This tendency also is related to the issue of visibility. It’s usually in a decision maker’s best interest to attack high profiles problems. It conveys to performance is later reviewed, the evaluator is more likely to give a high rating to someone who has been aggressively attacking visible problems tan to someone whose actions been less obvious. . 1 Problem Statement In this first step the manager defined what is their real problem is. To identify the real problem the manager conducted a brainstorming session with human resource recruitment team to identify the root causes of high cost per hire. After analysis and discussion it is discovered that the root cause is due to inefficient hiring process and current criteria not meeting the industry standard. Furthermore, contact center is the least favourable career path option for fresh graduates with high turnover rate. Therefore, the problem statement was such:

Based on January 2010 to December 2011 Human Resource analysis, it is observed that cost per hire for a Call Center Representative (CCR) is at RM900 with turnover rate of 80% per year. This is an opportunity to reduce the cost as well as the turnover rate, hence, increase the overall cost efficiency. 3. 0 Identifying Decision Criteria Once a decision maker has defined the problem, he or she needs to identify the decision criteria that will be important in solving the problem. In this step, the decision maker is determining what’s relevant in making the decision.

This step brings the decision maker’s interests, values, and personal preferences into the process. Identifying criteria is important because what one person thinks is relevant, another may not. Also keep in mind that any factors not identified in this step are considered as irrelevant to the decision maker. In our case study, the manager has now identified the following criteria to combat the high cost per hire and turnover rate for new hire. * oral and written communications skills * sales and customer service abilities * Multitasking skills * Keyboarding and computer skills * Telephony skills

The team realized that they needed a solution that would identify potential top performers earlier in process, boost hiring success rate and provide proactive jump on CCR recruiting needs. 4. 0 Allocating Weights to Each Criterion The next step in the decision making process is prioritization. Prioritization is achieved by assigning quantitative weights to each criteria element. The weightage defines the relative significance of each element Going back to team Kronos problems, the manager identified the weighting of each criterion for a new CCR. This is where the team start to get clarity on what really matters.

Figure 2 below show the weights to each criterion Criteria| Rating| oral and written communications skills| 5| sales and customer service abilities| 3| Multitasking skills| 3| Keyboarding and computer skills| 4| Telephony skills| 4| Figure 2: Weights to each criterion *Note – Rating 1 to 5, 5 is the highest 5. 0 Developing or Generating Alternatives The decision maker generates possible alternatives that could succeed in resolving the problem. No attempt is made in this step to appraise these alternatives, only to list them. Below are the lost of possible alternatives provided by Kronos team. Prescreen candidate through online assessment, this will help the recruiter to determine the candidate suitability for an interview * recruiters to evaluate a candidate with a role-playing simulation during interview * increase usage of IVR (Interactive Voice Response) * outsource the hiring process to reputable recruitment agencies i. e Kelly Services, Ask Recruitment Agencies, Michael Page etc. * outsource the call center to outsourcing partner in the Philippines 6. 0 Evaluating Alternatives Evaluating potential design solutions is the process which leads to the selection of the best of alternatives.

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