Risk and Uncertainty in Decision-Making - Coursework Example

CASE REFLECTIVE ANALYSIS FOR DECISION MAKING Introduction Personal decision making is considered as an important tool for every business in the competitive environment in order to achieve the organizational objectives and tasks. This report will present a personal experience when I worked as a front desk manager in a 5 stars hotel and analyze my decision making by the use of relevant theories.  Case background One day, six walk-in guests came to the hotel and requested for 3 standard twin rooms. However, the receptionist checked the room’s occupancy system and told them there are only 2 standards twin available. The guests therefore decided to change another hotel for their holiday accommodation. At that time, as the manager, I checked the computer system again and found an exclusive president room was vacant as well. Then I decided to sell the oversized room to the guest with a negotiable prize to reduce the lost and maximize the profits for the organization. After the guest check-in, the hotel manager told me that one of the up side stakeholder will came to the hotel that night and so I needed to organize the exclusive president room for him. But there was no more available room I could offer for him. I could only refuse the order and provide another room for the guest. After this, the hotel manager not satisfied with my decision, but there was no negative impact for my good job performance. Due to a continuous long term full room occupancy task, I got a promotion to be a higher-level manager in the Hotel. Analysis of Case Bounded rationality impact for my decision making I decide to promote the presidential room as a lower price to the walks in customer because of the bounded rationality. Bounded rationality is individual’s personal cognitive abilities to take decision towards rational outcomes and optimal decision making style (Kalantari, 2010). Individual’s personal decision making is hindered by various external and internal factors as decision making is a complex process of understanding cognitive abilities and personal abilities. Sometime manager hold bounded rationality theory in to action for taking decision as neo-classical theory cannot justify and hold in real world decision making where the limitations are in excess (Saphiro, 1997). Foe example, selling the rooms with a lower price is a method to outcome the economic depression. As the manager, I should carry on decision while understanding objectives supports the decision making process for organization. Moreover the individual cognitive ability tends to impact the decision making process as cognition ability of every individual vary person to person. (Robbins and Judge, 2011). Therefore, I must kept in mind and help staff to make a better decision when they working. So based on the bounded rationality, I cannot sell the rooms with the normal price which will lead low profit for the hotel. Therefore individual’s decision making is affected and influenced by various elements of intrinsic and extrinsic factors that needed to understood in order to completely understand the decision process. Various methods can be utilized for making decision making as it can referred that individual sometime behavior of the decision maker directly associate the decision outcome (Nicholson and Snyder, 2007) Risk and uncertainty in decision making In hotel room management, which involves the sale of rooms to guests, several acts of risk and uncertainty comes up. These risks and uncertainties increase as the rate of options in decision making increase (Hissam and Daniel, 2009). The reason this is so is that hotel rooms come with different values and costs. In most cases however, customers do not come to request for rooms according to the value and cost of rooms. In such a case, the hotel sales manager is said to be faced with risk and uncertainty. The risk is in the fact that if the manager sales out the room at a reduced cost, there may be another customer coming in with the right bid for the hotel room. The uncertainty also has to do with the fact that if the customer is allowed to go without giving the room out to him, no other customer will come for the room and the room will be empty all day long. In such a situation, decision making becomes critical and based on dilemma. It would be said that it is the exact situation that I found myself in because I was in a dilemma of what the eventual outcome would be if the presidential room was not given out to the walk-in guest. In the given situation of risk and uncertainty, it is advised that decision making will be based on the weight of outcome of risk (Humphrey, 2001). Clearly, I felt that the best way to mitigate the impact of the risk for me to give out the presidential room at a lower cost as against leaving the room unoccupied all night long. Critical Thinking for decision making Even though some researchers have made justifications as to why critical thinking could be approached as an independent or stand alone theory (Chen and So, 2002), further research has actually proved that critical thinking is best utilized when it is used in consonance with other cognitive processes such as decision making (Icove, Karl and Vonstorch, 2005). Critical thinking has been explained to be a reasoned thinking that is backed with purpose (Child, 1972). In effect, the kind of thinking that is done with a consideration that one’s own opinion may be wrong and that accept facts as true even when the facts do not agree with one’s view constitute critical thinking (Breiman et al, 2009). In relation to decision making, critical thinking has been said to aid in making right and appropriate decision in very crucial moments when a person has to do a qualitative thinking. That is, in moments such as the one I found myself in, when there were no other people to reason with, the application of critical thinking was very necessary in ensuring that I made the right decisions. The reason this is so is that critical thinkers do not put their interests ahead of other people’s interest, whether or not those people are present. Once the walk-in guest arrived and he was going to refuse all 3 standard twin rooms if he did not have an extra room, I quickly put myself in the shoes of the hotel manager and critically diagnosed what his opinion on losing the guest would have been if the decision was to be made by the hotel manager himself. It was the result of this critical thinking, backed with empathy that made me take the decision of giving out the presidential room. Johari window theory and its relation to the case Once used, the Johari Window theory helps a person to critically assess himself in relation to other people and to improve group relationship (Carter, Daniel and Betty, 2006). The Johari Window theory uses four quadrants of parameters with each parameter, giving some level of mutual development between a person and the group in which he finds himself. According to the first quadrant which is known as the open self, there must be certain behavior, attitude, knowledge, skills, views and emotions about the person (the self), which are known by the person and the group (others) as well (Childers et al, 1985). Working in this area has been said to enhance effectiveness and productivity. Looking at my position at the hotel as a room sales manager in relation to my employer, this area of the Johari Window theory will be used in explaining my action and the implications of my action thereof. Clearly, there were key characteristics and knowledge of hotel management that I had that was known to me and my employer at the time of taking the decision I took. I therefore made the decision, knowing that my employer was aware of these knowledge and characteristics and would therefore understand my reason for taking the decision. A typical example of these characteristics and knowledge are the fact that I try to avoid waste and also use my persuasive skills not to get guests choosing other hotels over ours. Based on these, letting the guest go away when there was the presidential room that could serve the purpose for which he was looking for the standard twin rooms was going to be a very difficult thing for me to do. How Personality (MBTI ) and values influent my decision As outlined using the Johari Window theory, each person has some unique skills, knowledge, characteristics and emotions that set them apart from other people. Based on the skills, knowledge, characteristics and emotions of a person, and how frequently a person uses these, personality and values are created for the person (Das and Teng, 1999). In relation to theory, the Myers-Briggs Type Indicator (MBTI) may be identified as a very useful tool for measuring the psychological preferences in people and in relation to how these people perceive the world around them (Chinese Culture Connection, 1987). Interestingly, due to the relationship between psychological preferences and the actions that people take, using the MBTI has been said to be a very relevant theory in explaining reasons behind the decisions that people take (Davies and Ma, 2003). From the MBTI, two major attitudes are noted namely extraversion and introversion attitudes. These two forms of actions clearly apply in the case under study because it helps in understanding factors that people consider when making decisions. From an extraversion perspective, a person makes decisions by combining his cognitive functions with external world of influence (Earley, 1994). From an introversion perspective however, decisions are made by combining these same cognitive functions with internal world of reflection and ideas (Davidson and Mcfetridge, 1984). In my case, my decision to give out the presidential room at a lower cost was influenced by extraversion attitude whereby I considered the external world and external economic influence of losing all three available rooms if I turned the guest away. Based on economic benefits that I perceived therefore, I decided to take the risk of giving out the presidential room to a walk-in guest. Application of Hosfstede’s cultural dimension theory to the case Using Hosfstede’s cultural dimension theory helps in having an understanding of workplace values that exist around different parts of the world (Edwards and Bagozzi, 2000). Indeed as globalization brings people of different cultural backgrounds together in working within a very limited scope of setting, it is important that employees whose nature of work demand that they interact with people from different backgrounds study to know how these people behave and why they behave as such. Clearly, doing this creates an atmosphere of cultural diversity and integration and comes with a long term benefit of improving the growth and development of individual businesses. The theory generally presents five dimensions of cultural differentiations namely power/distance, individualism, masculinity, uncertainty/avoidance index, and long term orientation. On the surface of the case at hand, I can use one of these five dimensions to explain and justify my reason for giving out the presidential room to the walk-in guest. This dimension is uncertainty/avoidance index identifies two levels, which are high and low uncertainty/avoidance index. As far as low uncertainty/avoidance index is concerned, people with this rate are identified to have informal business attitude and become more concerned with long term strategies (Eisenhardt and Bourgeois, 1988). Indeed, I took my decision based on the long term consequence that refusing the walk-in guest could have on the company. That is, instead of following the strict business attitude, I had a feeling that making the customer walk away would make him probably never come back to the hotel. To avoid this, I prioritized the need to be information with business attitude rather than formal. What is more, people like me with low uncertainty/avoidance index tend to accept change and risk. I therefore accepted the change of corresponding hotel rooms with cost. Reflective Decision Use of Black swan theory The Black Swan theory has been used in psychoanalytical studies to explain events that come to us as surprises but leaving consequential effects (Edwards and Bagozzi, 2000). In principle, having had a foresight of this theory would have made me take a more rationalized decision than I took in the event that the walk-in guest came looking for three standard twin rooms and there were only two of the standard twin rooms and a presidential room to offer. This is because the theory outlines the need for people to prepare for the unexpected in all situations. The best way to undertake such preparations, not knowing what the unexpected event would be, has been advised to entail working with assumptions. Using my work environment as an example, it with the basis of the Black Swan theory, it should have been possible for me to make all possible working dilemma assumptions that can confront me in the delivery of service. If I had done this, one of the most likely options that would have come out would have been a situation where a customer comes in and there are only rooms he cannot afford. According to the theory also, assumptions should lead to pre-event solutions. That is, if I had made the assumption, I would have taken steps to finding answers to that dilemma before it happened and so I would have been in a better position to solving it in a manner that would have met the expectations of my employer. For instance, I could have asked my employer ahead of time so that based on the response he gave me, I acted accordingly. Impact of Gibbs reflective cycle The Gibbs reflection cycle is a method used in taking reflections on actions and decisions that we make as people. Generally, applying the use of the Gibbs reflective cycle requires that we go through a number of stages in recollecting our actions with a mentality of idealizing the impact of our actions and how we can make future amendments (Breiman et al, 2009). Some of the stages or tasks involved in the cycle include description of the event, feeling at the time of the action, assessing the good and bad aspects of the situation, analyzing the situation, creation of action plan for future events with similar situations. The chart below gives a vivid representation of the components of the cycle and how it may be used in decision making processes. Fig 1. Gibb Reflective Cycle (source: Nursemini, 2013) In relation to the situation that I find myself currently, it can be said that using the Gibbs reflective cycle will help me become a better decision maker in the nearest future. That is, in the event of any future similar occurrence, I am going to be guided by the outcome of the reflection that I took using the Gibbs reflective cycle. Needless to say, I must be ready to have an independent and personal usage of the Gibb reflective cycle in relation to the event that happened before I can be guaranteed of better results in any future endeavor. For best results, I will have to document my results and outcome for each of the stages represented in the diagram. Thereafter this, there must be a commitment to stay and act within the action plan that is constructed. Once all these processes are followed, all other future decisions will be more effective. The role of Strategic decision making Decisions are made on a ready and frequent basis but for decisions to be referred to as strategic decisions they ought to possess some key characteristics and features. First of all, the decisions that are made must bring about a desired change for it to be referred to as strategic decision (Chen and So, 2002). In my situation, one of the best means of achieving more positive results with the decision that I made was for me to apply strategic decision making. This is because if I had done so, I would have identified all possible avenues of desirable changes that the hotel wanted to achieve and would have directed my decisions to that sector of thinking. It has been said that strategic decision making is more than an event but entails a process that has a start and a finish (Breiman et al, 2009). Normally, strategic decision making starts with an appreciation of cognitive biases that may have the potential of impeding good decisions. These cognitive biases have been said to be abundant in situations where the decision maker chooses to be more individualistic in his decision than being general with decisions. To apply strategic decision making in my future actions to ensure that my decisions are more fruitful, I would have to identify all conditions that could possibly bring about cognitive biases. Examples of these are the Hosfstede’s cultural dimension and the Myers-Briggs Type Indicator that I have identified myself with. Even though these may best reflect my personality, it will always be important that I give much credence to the strategic execution of my decision rather than cognitive biases. Conclusion In conclusion, it would be said that the process of making decision is a very important phenomenon for ensuring and achieving growth for any given organizations. Clearly, mistakes made in the decision making process can lead to very serious consequences that might even affect the corporate growth of the company. But for affluent decisions to be made, it is always important that the personalities in the hem of affairs use the combination of tried and tested theories and models to ensure effectiveness of the decisions they make. On a person note, the successes that I made at the company, which resulted in my eventual promotion was because I was always proactive to back all my decision with academic and professional reasoning. 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