Rational decision making and long term decisions

An overview of RATIONAL DECISION-MAKING AFFECTING LONG- TERM DECISIONS

For my Problem Analysis and Decision Making class, Doctor of Education major in Educational Administration

1. RATIONAL MAKING & LONG-TERM DECISIONS Presented by: CHRISTELLE ANGELICA C. CORPIN, MA.ED Ed.D Student

2. Decision making is a central factor of internal accountability and is crucial for managing company performances. Managers are required to continuously make decisions, but different criteria need to be used, taking time and the impact of decisions into account.

3. The business dictionary defines decision making as “the thought process of selecting a logical choice from the available options.” (Decision Making n.d. ) styles are therefore the learned, habitual response pattern exhibited by an individual, when confronted by a decision situation (Scott and Bruce 1995).

4. Scott and Bruce (1995) proposed four different types of decision-making models: ( a ) rational decision- making style , which is characterized by a thorough research for and logical evaluation of alter- natives ; (b) intuitive decision-making style , which is characterized by a reliance on hunches ; ( c) dependent decision-making style , which is characterized by a search for advice and direction from others ; and (d) avoidant decision-making style , which is characterized by attempts to avoid making decisions altogether (Scott and Bruce 1995).

5. Rational decision making leverages objective data, logic, and analysis instead of subjectivity and intuition to help solve a problem or achieve a goal. It’s a step-by-step model that helps you identify a problem, pick a solution between multiple alternatives, and find an answer.   LOGICAL, PROCEDURAL, REASON TO ACTION

6. Rational decision making is an important skill to possess, especially in the digital marketing industry, in management, in education and human resources. Humans are inherently emotional, so our biases and beliefs can blur our perception of reality. Fortunately, data sharpens our view. By showing us how our audience actually interacts with our brand, data liberates us from relying on our assumptions to determine what our audience likes about us. DATA-DRIVEN TO PREVENT BIASES AND FALSE ASSUMPTIONS

7. Being the opposite of intuitive decision making, rational model of decision making is a model where individuals use facts and information, analysis , and a step-by-step procedure to come to a decision . The rational model of decision making is a more advanced type of decision-making model.

8. The rational style according to Russ et al. (1996) is “deliberate, analytical and logical; rational decision makers assess the long-term effects of their decisions and have a strong fact based task orientation to decision making” (p. 5). Rotter (1966) opined that the rational style seems related to initiation of a structure and an internal control orientation. Kholi (1989) has posited that both initiation of a structure and a higher internal control orientation may be linked to higher performance .

9. A Model of Rational Decision Making Rational decision making may involve several different processes. Regardless of the various steps in each process, rational decision processes have similarities that mostly result in effective solutions. A model of rational decision making is presented in the following steps: Identifying the problem that requires a solution Identifying the solution scenario Carrying out a gap analysis Gathering facts, options, and alternatives Analyzing option outcomes Selecting best possible options Implementing decision for solution and evaluate final outcome

10. Identifying the Problem that Requires a Solution It is important in any problematic situation to properly clarify what the problem is that requires a distinct decision-making process for a solution. If the nature and source of the problem are not accurately defined or identified, the manager stands a risk of throwing solution options at a situation that is working well or doing little to resolve the actual problem. 1

11. 1. Verify and define your problem . To prove that you actually have a problem, you need evidence for it. Most marketers think data is the silver bullet that can diagnose any issue in our strategy, but you actually need to extract insights from your data to prove anything.   To pinpoint your specific problem, collect as much data from your area of need and analyze it to find any alarming patterns or trends .   Example : “After analyzing our blog traffic report, we now know why our traffic has plateaued for the past year -- our organic traffic increases slightly month over month but our email and social traffic decrease.”

12. Identifying the Solution Scenario Equally important in the rational decision-making process is defining what a solution scenario will look like at the end of the process. Expanding your pool of potential solutions boosts your chances of solving your problem. To find as many potential solutions as possible, you should gather plenty of information about your problem from your own knowledge and the internet. You can also brainstorm with others to uncover more possible solutions. 2

13. 2. Research and brainstorm possible solutions for your problem. Example: Potential Solution 1: “We could focus on growing organic, email, and social traffic all at the same time .” Potential Solution 2: “We could focus on growing email and social traffic at the same time -- organic traffic already increases month over month while traffic from email and social decrease. ” Potential Solution 3: " We could solely focus on growing social traffic -- growing social traffic is easier than growing email and organic traffic at the same time. We also have 2 million followers on Facebook, so we could push our posts to a ton of readers .” Potential Solution 4: "We could solely focus on growing email traffic -- growing email traffic is easier than growing social and organic traffic at the same time. We also have 250,000 blog subscribers, so we could push our posts to a ton of readers .”   Potential Solution 5 : "We could solely focus on growing organic traffic -- growing organic traffic is easier than growing social and email traffic at the same time. We also just implemented a pillar-cluster model to boost our domain’s authority, so we could attract a ton of readers from Google."

14. Carrying Out a Gap Analysis A gap analysis is simply defining and understanding the gap between the problem and the solution. The business dictionary defines gap analysis as “a technique that businesses use to determine what steps need to be taken in order to move from its current state to its desired, future state.” Setting a threshold to measure your solutions' success and failure lets you determine which ones can actually solve your problem. 3

15. 3. Set standards of success and failure for your potential solutions. Your standard of success shouldn’t be too high, though. You’d never be able to find a solution. But if your standards are realistic, quantifiable, and focused, you’ll be able to find one .   Example : “ If one of our solutions increases our total traffic by 10%, we should consider it a practical way to overcome our traffic plateau.”

16. W ith the facts in hand, the consequences or outcomes of the various options identified should be analyzed to determine the most effective and functional option. The goal is to accurately predict the outcome of each of the options selected, and from these predictions, a final option is selected. Analyzing Option Outcomes 3

17. Potential Result 1: ‘ Growing organic, email, and social traffic at the same time could pay a lot of dividends, but our team doesn’t have enough time or resources to optimize all three channels. ” Potential Result 2: “ Growing email and social traffic at the same time would marginally increase overall traffic -- both channels only account for 20% of our total traffic .” Potential Result 3: “ Growing social traffic by posting a blog post everyday on Facebook is challenging because the platform doesn’t elevate links in the news feed and the channel only accounts for 5% of our blog traffic. Focusing solely on social would produce minimal results. ” Potential Result 4: “Growing email traffic by sending two emails per day to our blog subscribers is challenging because we already send one email to subscribers everyday and the channel only accounts for 15% of our blog traffic. Focusing on email would produce minimal results. ”   Potential Result 5: “Growing organic traffic by targeting high search volume keywords for all of our new posts is the easiest way to grow our blog’s overall traffic. We have a high domain authority, Google refers 80% of our total traffic, and we just implemented a pillar-cluster model. Focusing on organic would produce the most results.”

18. Flesh out the potential results of each solution . Next , you should determine each of your solutions’ consequences. To do so, create a strength and weaknesses table for each alternative and compare them to each other . You should also prioritize your solutions in a list from best chance to solve the problem to worst chance .   4

19. Choose the best solution and test it . Based on the evaluation of your potential solutions, choose the best one and test it. You can start monitoring your preliminary results during this stage too . Example : “Focusing on organic traffic seems to be the most effective and realistic play for us. Let’s test an organic-only strategy where we only create new content that has current or potential search volume and fits into our pillar cluster model. ” 5

20. Implementing Decision for Solution and Evaluating Final Outcome After the best option has been selected, the decision has to be implemented accurately as decided for effective and functional solution. 6

21. Track and analyze the results of your test . Track and analyze your results to see if your solution actually solved your problem. Example : “After a month of testing, our blog traffic has increased by 14% and our organic traffic has increased by 21%.” 7

22. If the test solves your problem, implement the solution. If not, test a new one.

23. Assumptions of the Rational Decision-Making Model The rational model of decision making assumes that people will make choices that maximize benefits and minimize any costs. The idea of rational choice is easy to see in economic theory. In general, people will choose the object that provides the greatest reward at the lowest cost .

24. The rational model also assumes: An individual has full and perfect information on which to base a choice. Measurable criteria exist for which data can be collected and analyzed. An individual has the cognitive ability, time, and resources to evaluate each alternative against the others. The rational-decision-making model does not consider factors that cannot be quantified, such as ethical concerns or the value of altruism. It leaves out consideration of personal feelings, loyalties, or sense of obligation. Its objectivity creates a bias toward the preference for facts, data and analysis over intuition or desires .

25. Critiques of the Rational Model Critics of rational choice theory —or the rational model of decision-making—claim that this model makes unrealistic and over-simplified assumptions. Their objections to the rational model include: People rarely have full (or perfect) information. For example, the information might not be available, the person might not be able to access it, or it might take too much time or too many resources to acquire.

26. Individual rationality is limited by their ability to conduct analysis and think through competing alternatives. The more complex a decision, the greater the limits are to making completely rational choices. Rather than always seeking to optimize benefits while minimizing costs , people are often willing to choose an acceptable option rather than the optimal one . T his is especially true when it is difficult to precisely measure and assess factors among the selection criteria.

27. The Process of Rational Decision Making Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. The word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense. The approach follows a sequential and formal path of activities. This path includes: Formulating a goal(s) Identifying the criteria for making the decision Identifying alternatives Performing analysis Making a final decision .

28. The Key to Making Smarter Long-term Decisions If we were rational, we would make choices based on our long-term goals, not our short-term desires. “ We’re trying to understand how one  should  behave. [And] we’re trying to understand how one  does  behave.” Understanding why we do what we do Looking ahead

29. Conclusion Rational decision making has been defined as a more advanced type of decision-making model, laying emphasis on the characteristics of thorough research and logical evaluation , selecting among possible choices based on reason and facts. Rational decision making should be extensively included in leadership training, seminars , and conferences, specifically those that border around management and sustainable development within organizations and governments . Rational decision making is positioned as the most promising, effective, and functional decision-making process for leaders, managers, and individuals, especially when stake- holders, investments, and high stakes are involved.

30. REFERENCES Blume LE, Easly D (2008) The New Palgrave Dictionary of Economics, Second Edition. Palgrave, Macmillan. Retrieved from http:// www.dictionaryofeconomics.com / article Decision Making ( n.d. ) Retrieved from www.business dictionary.com Eppinger B, Nystrom LE, Cohen JD (2012) Reduced sen - sitivity to immediate reward during decision-making in older than younger adults. PubMed, 7(5). In Samanez - Larkin GR (2013) Financial decision-making and the aging brain. Assoc J Psychol Sci Observer, 26(5), 30–33 Kholi A (1989) Determinants of influence in organizational buying: a contingency approach. J Mark 7(1):50– 65 Scott, S. G., & Bruce, R. A. (1995). Decision-Making Style: The Development and Assessment of a New Measure. Educational and Psychological Measurement, 55(5), 818–831. doi : 10.1177/0013164495055005017 Uzonwanne FC (2016) Influence of age and gender on decision-making models and leadership styles of non- profit executives in Texas, USA. Int J Organ Analysis 24(2):186–203. Emerald Insight

31. ONLINE RESOURCES https://courses.lumenlearning.com/boundless-management/chapter/rational-and-nonrational-decision-making/ . Retrieved last April 19, 2020. https://www.oreilly.com/library/view/performance-measurement-and/9780128019023/xhtml/chp007. xhtml . Retrieved last April 21, 2020.

32. Ms. Corpin