RATIONAL DECISION MAKING

A rational decision is the one which, effectively and efficiently, ensures the achievement of the goal for which the decision is made. If it is raining, it is rational to look for a cover so that you do not get wet. If you are in business and want to make profit, then you must produce goods and sell them at a price higher than the cost of production. In reality, there is no right or wrong decision but a rational or an irrational decision. The quality of decision making is to be judged on the rationality and not necessarily on the result it produces. The rationality of the decision made is not the same in every situation. It will vary with the organization, the situation and the individual’s view of the business situation. The rationality, therefore, is a multi-dimensional concept. For example, the business decisions in a private organization and a Public Sector Undertaking differ under the head of rationality. The reason for this difference in rationality is the different objectives of the decision makers. Any business decision if asked to be reviewed by a share-holder, a consumer, an employee, a supplier and a social scientist, will result in a different criticism with reference to their individual rationality.This is because each one of them will view the situation in different contexts and the motive with the different objectives. Hence, whether a decision is right or wrong depends on a specific rational view.

Simon Herbert differentiates among the types of rationality. A decision, in a given situation is:

•Objectively rational if it maximizes the value of the objective.

•Subjectively rational if it maximizes the attainment of value in relation to the knowledge and awareness of the subject.

•Consciously rational to the extent the process of the decision making is a conscious one.

•Organizationally rational to the degree of the orientation towards the organization.

•Personally rational to the extent it achieves an individual’s personal goals.

In other words, so long as the decision maker can explain with logic and reason, the objectivity and the circumstances in which the decision is made, it can be termed as a rational decision.

Whether the rationality applied is appropriate or not could be a point for debate. GrossBertram M* suggests three dimensions of rationality.

1.First, the degree of satisfaction of human interest.

2.Second, the degree of feasibility in achieving the objectives.

3.Third, a consistency in decision making. If a decision maker shows a consistent behavior in the process of decision making, then one can say that he meets the test of the rationality.

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