Management Rational Decision Making Process - Assignment Example

Introduction to management Rational decision-making Decision making process Even with automation happening in every segments of organization, thedecision-making process still rests with the humans. When the decision making process is initiated many factors will come into consideration, including the different views, personality, values, perception, and emotions. These different views, which will come up formally or informally will be ‘congregated’ and ‘condensed’ into a single or main plan. But, ‘condensing’ those views or ideas or suggestions into a single or main plan or strategy will not be an easy process. On the other hand, if the leader or the management takes a decision single-handedly, without consulting with anyone, that decision could fail and importantly it would be difficult to actualize in the organization. Thus, if a consensus and the best plan are formulated after analyzing all the different views, that plan will surely succeed. Rational decision making models involve a cognitive process where each step follows in a logical order from the one before. By cognitive, it is meant that thinking will be carried out by weighing up the alternatives from all the stakeholders to come up with the best potential result. (decision-making-confidence.com). There are two different accounts or perspectives of managerial decision-making, one deals with how rational decision making will not be a feasible idea, while other points out how it s a optimal idea Ideas of rational decision making process could fail to explain When rational decision making is analysed from the view of the decision makers and how the decision makers behave, it could give rise to few ethical dilemmas. Inside the organizations, the leader along with the employees as a form of group needs to take apt and effective decisions, for the survival as well as the success of the organizations. Groups involved in decision making will have to think in various and importantly needed perspectives to come up with good decisions. However, unlike personal decisions that may affect only one person, i.e., the decision-maker, decisions made by groups will have positive as well as negative impact on everyone in the group, the organization, the customers, the owners of the business, and even the sections of the society in which the organization operates. Thus, group decisions carry greater risks, which is the probability that the perceived effect of the decision would not be the same as or even close to what is originally intended. Decisions may not turn out well, either because the factors that were considered when the decisions were made were wrong or have changed, or there was a fault in the decision-making process, which can happen for several reasons (Shiller, 1990). Firstly and importantly, decisions are made according to the personal perceptions of those making them or decision-makers. Each person or decision-maker involved in making the decision has biases shaped by education, personal experience, and tolerance for risk. In addition, those decision-makers may lack the skills needed to make complex decisions. Employees without the requisite skills and knowledge will come up with inept and irrelevant decisions and implementing them will be a sure recipe for disaster for the organization. A good decision may lead to a bad outcome, but most bad decisions, those that are based on poor information or that do not reflect the decision-maker’s preferences, eventually lead to a bad outcome. Ideas of rational decision making process may not fail to explain, and this account of managerial decision making gives good ideas and perspectives When viewed from another perspective or another account of managerial decision-making, it clearly states that rational decision making can be worked out positively for the decision maker and also for the resultant decisions. That is, when groups cooperate and coordinate aptly and logically in coming up with decisions, then the process of relational decision making could work out very well. In contravention to the perspective discussed above, which states that each employee or stakeholder would have biases and this could affect the decision, there are major chances that the stakeholders could contribute correct and effective inputs. Thus, he also backs the need to go for rational decision making involving all the stakeholders Evaluation and conclusion of the question So, during the process of decision-making or, one of the approaches the leader and the management could try to actualize the basic tenet of rational decision making (which is involving the employees in a logical manner) is, putting for discussion his/ hers thoughts among the individuals, and involving them productively. This strategy will have favourable results, because when employees are given responsibility and expected to give their feedback, they will optimally use their minds to come up with good suggestions. Also logically, if the workers with responsibility keep on participating in all the important decision making process, they will begin to comprehend all the intricacies of organization functioning. By this way, they will utilize their knowledge and skill to come up with effective strategies and feedbacks for the well functioning of the organization. These different views, which will come up formally or informally will be ‘congregated’ and ‘condensed’ into a single or main plan. Different views from maximum persons will give rise to different ideas and the best one of those ideas can be picked up and can be implemented. This way employees will gain maximum confidence, because they will be happy with the thought, that they have put in something purposeful to the groups’ or organization’s decision making process. Plus, as a logical step acknowledgement of their contribution by the management and the leader will further optimize their confidence level and responsibility towards the organization, thereby their contribution to the organization. So, it is clear that rational decision making process involving all the stakeholders will have a positive and optimal impact on the decision maker as well as well the decisions. 2. Staff performance appraisal and Motivation Appraisal-motivation link The relationship between appraisal and motivation can be discussed by firstly discussing about appraisal, and how effective appraisal system will lead to optimum motivation. Employees only form the crucial ‘cog’ for the efficient running of the organization. They have to be appraised optimally, then aptly rewarded and finally trained adequately for the organizations to achieve optimum success. Among these processes, performance appraisal is an important process, without which the other two processes of rewarding and training cannot function adequately. As part of the performance appraisal techniques, the performance of an employee is evaluated, particularly the employees’ productivity, quality of the work, employees’ response to critical situations, suggestions of the employees, their perspective of organisational goals, etc, etc. Based on these job appraisal results only, organisations will give the employees motivational aspects like salary hikes, job promotions, etc - in case of positive results. On the other hand training, mentoring, demotions, etc, etc – in case of negative as well as not so expected positive results. “Appraisals are used for determining pay increases, who gets let go, who gets promoted. Often they are used to focus on what people have done wrong.” (Bacal, 2004). Staff performance appraisal and employee motivation, based on objective-setting The role of appraiser will be objective in a two dimensional way, as they not only have to judge whether the employees are performing productively according to organisational goals, leading to motivational rewards, but also to find out whether the employees are underperforming, thereby leading apt training measures. With correct job appraisal, the motivation of the employees can be accentuated optimally, thereby improving their productivity. Adonis (2008) writes that performance appraisal has to be carried out because it motivates employees, it creates consistency and finally it is a prompt for managers to review and recognise good performance. Only if the employees are made aware that their work performance will be appraised and assessed, and importantly will form key criteria for either advancement or demotion, they will exhibit optimum motivation and provide highly productive and consistent performance. Thus, appraisal of the employees will indeed aid in better manageability of them and is based on objective framework. The factor which normally makes the employees to participate in the appraisal process is the norm that rewards and other incentives will be given on the basis of job appraisal. Although, the employees will carry on with their works for their organisations for personal motivations like salary, career development, lifestyle attraction, etc, their motivation will be boosted if they receive additional financial rewards, promotions as well as non-financial recognitions. As rewards and other incentives can optimally motivate the employees and make them perform better, and with performance appraisal being the criteria for rewards, it again validates the point that appraisal can enhance the manageability of the employees. Another way of motivation is training the underperforming employees, which was pointed out through the appraisal process. After the performance appraisal process, the managers instead of putting blame on the employees for underperformance should closely work with them, first finding out what hampered their performance. Then as a continuation of the appraisal and with an objective framework, should try to remove those hampering issues and make the employees motivated. In essence, people management theory argues that if management implements a specified set of employment as well as work practices, it is going to lead to better performance (Boxall and Purcell 2008). This process of finding out the wrongs and removing it, will mostly extend to the training process. After appraisal results, an extensive and effective training process will surely improve the employees, removing their shortfalls and making them equipped skill wise as well as knowledge. This will equip them to undertake theirs allocated works with renewed motivation. Thus, apt and objective performance appraisal with objectivity will surely lead to enhanced motivation for the employees, improving their performance as well as organisational performance, thus proving its developmental role. Product life cycle and the Break-even analysis Elements of Product life cycle’s, which should be understood by the entrepreneurs One of the key objectives of any business organization including entrepreneurial enterprises is to reach a position where it is able to attract more customers than its competitors. In order to gain such a competitive advantage, organizations try to identify their distinct competencies in the way they can manufacture and reach their products. The manufacturing of the product through various stages constitutes Product Life cycle. That is, the succession of process that are used by the organisation, when the raw materials for the product enters the production unit till the product gets completed and reaches the customer constitutes product life cycle. “A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix” (quickmba.com). Thus, organisations including entrepreneurial enterprises need to understand the different product life-cycles, so they can pick and implement the cycle, which is best suited to the product they intend to manufacture. The following examples show how product lifecycles and operational strengths can be used effectively as competitive weapons. An entrepreneurial enterprise can employ its strengths in certain areas of product functionalities and process capabilities to gain a competitive advantage over its competitors. For instance, Intel Corporation, USA, has superior computer chip design due to its technological expertise in producing micro chips. An entrepreneurial enterprise with flexible capacity and an adaptive production process can produce a product and satisfy customer needs quickly. One-hour eye glass manufacturing, one-hour photo developing services and ‘same-day’ dry cleaning and shoe repair services are some examples. The first company that enters a market usually gains a significant market share over subsequent entrants. An entrepreneurial enterprise which is more adaptable than its competitor in its product life cycle, can introduce a product into the market relatively quickly. Through this step, they will gain the advantage of untapped market demand and so they will be able to corner a significant market share. Celestica, Inc, a Canadian computer component manufacturer, uses equipment that is not fixed to the floor. This enables production lines to be reconfigured with in hours or day to make new and different products. This flexibility has allowed Celestica to expand from manufacturing a few products for a single customer (IBM) to making hundred of products for over 40 different companies. An entrepreneurial enterprise with an efficient production system or access to low-cost resources as part of its product life cycle can make standard products at costs lower than its competitors. For example, steel companies, such as Nucor in the United states, have completed successfully with larger integrated steel producers like Nippon and US steel by using mini-mills (a smaller version of steel refining mill that can process scrap). The mini-mill production process allowed Nucor to gain substantial price advantage over competitors by reprocessing scrap steel rather than producing primary steel from iron ore. It the entrepreneurs or entrepreneurial enterprises study about these product cycles, they can select the one which will be apt for their businesses. Elements of Break even analysis, which should be understood by the entrepreneurs Likewise, the entrepreneurs also need to fully understand and also calculate the tentative costs of their production processes, using which they can set the price of their final product or service. However, entrepreneurs are miss-calculating or not finding out these figures and this will lead to major problems or even the failure for the enterprise. So, they should study and find out how much capital they are investing into their business, how much they should charge and so in the final analysis they could determine in how much time, they will be able to get or earn the invested money. One of the key tools, which any businessperson or any entrepreneur could use to make better business decisions regarding the investment, pricing and profit decision, is the break-even analysis. Break-even point for any product or service is the point where the total revenue earned equals the total investment or costs that is associated or used for the manufacturing and the sale of the product. Break even analysis can also be used to analyze the potential profitability of an expenditure in a sales-based business. “Break-even analysis is a technique widely used by production management and management accountants. Total variable and fixed costs are compared with sales revenue in order to determine the level of sales volume, sales value or production at which the business makes neither a profit nor a loss (the "break-even point").” (tutor2u.net). So, when this analysis is done by the entrepreneur, he/she can first find out the price that can be set to get the investment back within a stipulated time and also to get an idea about the profits, they can get. “A break-even analysis is a simple way to determine how much of the product must be sold to generate a specific level of profitability.” (Tracy 2004). In addition, this break even analysis, could also help the entrepreneurs to study the processes in which cost cutting can be done and importantly the processes which can be optimized, so the break even point can be actualized at their favourable and expected time period. References Adonis, J. 2006, MANAGERS dread them. Employees resent them, accessed on April 17, 2010 http://www.theage.com.au/news/business/appraisals-lack-one-thing-performance/2006/11/29/1164777656789.html Bacal, R 2004, Management File - What IS The Point Of Performance Appraisal, accessed on April 17, 2010 http://work911.com/performance/particles/perfpoint.htm Boxall, P., and Purcell, J., 2008, Strategy and Human Resource Management, Palgrave Macmillan, New York. decision-making-confidence.com, Rational decision making models, accessed on April 17, 2010 http://www.decision-making-confidence.com/rational-decision-making-models.html happy-manager.com, Rational Decision Making Model, accessed on April 17, 2010 http://www.the-happy-manager.com/rational-decision-making-model.html Shiller, R. 1990. “Market Volatility and Investor Behaviour.” American Economic Review vol. 80, no. 2: 58–62. Tracy, B 2004, Conducting a Break-Even Analysis, accessed on April 17, 2010 http://www.entrepreneur.com/startingabusiness/startupbasics/article73782.html tutor2u.net, introduction to break-even analysis, accessed on April 17, 2010 http://tutor2u.net/business/production/break_even.htm quickmba.com, The Product Life Cycle, accessed on April 17, 2010 http://www.quickmba.com/marketing/product/lifecycle/ Read More