Tuesday, December 30, 2008

The Rational Model of Decision making

Managers who weigh their options and calculate optimal levels of risk are using the rational model of decision making. This model is especially useful in making non-programmed decisions. It helps managers go beyond a priority reasoning the assumption that there is an obvious solution already existing and simply waiting to be found.

No approach to decision making can guarantee that manager will always make the right decision. But managers who use a rational, intelligence and systematic approach are more likely than other mangers to come up with high quality solutions. This belief has guided managers for many, many years. It is an article of faith that we can trace to the managerial approaches of Henry Ford, Henri Fayol, and Chester Barnard.

Investigate the situation:

A thorough investigation has three aspects: Problem definition, diagnosis and identification of objectives.

Define the problem: Confusion in problem definition arises in part because the events or issues that attract the manager’s attention may be symptoms of another more fundamental and pervasive difficulty. A manager may be concerned about an upsurge in employee resignation, but this is not a problem unless it interferes with the achievement of organizational objectives. If the individuals resigning are relatively low performers, and more qualified replacement can be readily found, the resignation may represent an opportunity rather than a problem. Curing the turnover problem, then, may be the last thing the managers should do. Defining the problems in terms of the organizational objectives that are being blocked helps to avoid confusing symptoms with problems.

Diagnose the causes: All this underscores the importance of diagnosing the causers of the problems. Managers can ask a number of diagnostic questions. Each involves, in some way, human relationships: What changes inside or outside the organization may have contributed to the problem? What people are most involved with the problem situation? Do they have insights or perspectives that may clarify the problem? Do their actions contribute to the problem?

Causes unlike symptoms are seldom apparent and managers sometimes have to rely on intuition to identify tem. Different individuals, whose views of the situation are inevitably shaped by their own experience and responsibilities may perceive very different causes for the problem. It is up to the manager to put all the pieces together and come up with as clear a picture as possible.

At Ruiz Foods, a California based Mexican food company founder and CEO Fred Ruiz realized that one cause of difficulty for immigrant employees was the language barriers. His solution, offering classes in English literacy, is just part of larger picture of concern for employees and employee development.

Ruiz started his small, family run business with his mother’s recipes, her freezer and Mixmaster, and a small commercial stove that he built. His is a family oriented business that he tries to run as a Mexican American role model for its employees, other minority owned businesses, and the community. Embracing the concept of familia (family) the company actively encourages the recruitment and hiring of family, members both members of the Ruiz family and those of current employees. English literacy classes (80 percent of the employees speak Spanish) are just part of the training offered to Ruiz employees, who are encouraged to grow both personally and professionally. Training in math skills, computer skills, and management development has not only benefited the employees, but has helped Ruiz Foods more than triple its sales.

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