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Chapter 7

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Ryerson University
Human Resources
MHR 405
Kristyn Scott

Chapter7DecisionMakingandCreativityDecision Making is the conscious process of making choices among alternatives with the intention of moving toward some desired state of affairs The decision is viewed through three paradigms which we will be discussingRational Choice ParadigmMany business leaders say in essence that the best decisions use pure logic and all available information to choose the alternative with the highest valuesuch as highest expected profitability customer satisfaction employee wellbeing or some combination of these outcomesThe extreme form of this calculative view of decision making represents the rational choice paradigm It is the view that people shouldand typically douse logic and all available information to choose the alternative with the highest valueThe ultimate principle of the rational choice paradigm is to choose the alternative with the highest subjective expected utilitySubjective expected utility is the probability expectation of satisfaction utility for each specific alternative in a decisionRational choice assumes that decision makers naturally select the alternative that offers he greatest level of happiness maximization such as highest returns for stockholders etcThere are 6 steps that loop in the Rational decision making process1Identify the problem or opportunity2Choose the best decision process3DiscoverDevelop alternative solutions4Choose the best alternative5Implement the selected Alternative6Evaluate decision outcomes Then repeatThere are some problems with the rational choice paradigm even though it seems so logicalIt assumes people are efficient and logical information processing machinesIn reality people have difficulty recognizing problems and why choices have failedIt also completely focuses on logical thinking and completely ignores the fact that emotions also influence and in some cases dominate the decision making processProblems With Each Of The 6 Steps Of Rational Decision MakingThere are inherent problems with each of the steps Lets start with the first stage problem identificationIdentify the problem or opportunity5 widely recognized concernsoStakeholder Framing Employees suppliers customers and other stakeholders have vested interests when bringing good or bad news to corporate decision makers Often unwittingly they filter information to amplify or suppress the seriousness of the situationConsequently organizational decisions and actions are influenced mainly by what attracts managements attention rather than by what is truly important in the external or internal environmentoMental Models Even if stakeholders done frame information one mind creates its own framing through preconceived mental models They are visual or relational images in our mind of the external world These models represent models of things SHOULD be Unfortunately these mental models can also blind us from seeing unique problems or opportunities because they produce a negative evaluation of things that are dissimilar to the mental modeloDecisive Leadership
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