The Rational Decision Making Model

The study of organizational behavior has shown that there is a specific model that most people follow in the process of deciding one path over another. The rational decision making model is a process that is used by many to make logically sound decisions. There is a specific and orderly path that individuals follow in the attempt to make a rational decision. This particular seven-step model for deciding rationally begins with defining the problem. This is perhaps the most important step since it is impossible to solve a problem that is unknown or unclearly defined. Ironically, this step is often overlooked within organizations as management will sometimes aim to solve the symptoms of the problem, rather than the problem or question itself. The next step in the process is brainstorming a list of all possible solutions to the problem within the organization. Gathering a comprehensive list of options is a vital step towards solving the dilemma that the company faces.

Next, the team needs to generate a list of all possible consequences for each of the solutions that were generated in the previous step. It is important to list good and bad results that can come from each option in order to have an accurate picture of the situation. In the business world this may involve the use of a cost-benefit analysis. The next logical step in this process is to choose the best solution from the list. If the first three steps are executed properly then the correct choice may be very obvious. The remaining three steps are to implement the solution that has been chosen as the one most likely to have the desired outcome, evaluate the success of the option you have chosen, and then take any corrective measures that are necessary to solve the initial problem.

Role of Cost-Benefit Analysis

In a business setting it is important to make sound decisions. If you are a business leader making bad decisions, it not only affects you and your family but your employees, shareholders, customers, suppliers, and all of their families. A cost-benefit analysis can be a very valuable tool in business based decision making. It can give you a sense of perspective that is very valuable in business. The rational decision making model can be implemented in many different situations, but is particularly valuable in a business setting.