Researchers at Cornell University estimate that the average adult makes 35,000 remotely conscious decisions each day. As your level of responsibility increases, so do the number of choices you have to make.
It's not surprising that good decision-making skills are essential when working in a leadership role.
Making a decision isn't easy, especially in business. It's important to consider the pros and cons of both the implementation and outcome. Therefore, a better understanding of decision-making models can help you make more informed decisions.
In this article, we highlight 6 decision-making models, describe the advantages and disadvantages of each, and offer insight and examples of when to use them.
A decision-making model is a standard process or structure that provides professionals with guidelines they can follow to help them make the best choice and, at the same time, make the decision-making process more manageable.
Below are 6 different decision-making models in business you can use, and they work best in varying situations, let’s check them out.
Using a sequence of logical steps to help make a decision, the rational model leverages data, logic, and analysis to identify the problem, brainstorm possible solutions, and select the most viable option after careful evaluation.
Identify the Problem: Think about the central problem that you plan to address.
Determine the Decision Criteria: Define what information is relevant in making decisions.
Weigh the Decision Criteria: Decide the importance of decision criteria based on your priorities regarding the final decision.
List Potential Options: Now you can list all of the possible options to solve the problem and arrange them by likelihood of success, feasibility, etc.
Choose the Best Option: Take your time evaluating the options, considering the potential outcome for each. Once you’ve chosen the best one, commit to implementing it.
The rational model is very effective when working with a team and there is time for multiple meetings and brainstorming sessions.
You'll be able to come up with various solutions and the pros and cons of each. Since the rational model requires careful evaluation, there is less risk and uncertainty with the final decision outcome.
To start, the rational decision-making model is often time-consuming and costly, so it's usually not used in more minor decisions but rather for more significant decisions that could have considerable impacts.
Another thing to remember is that if you lack any essential information, the rational model might not be that useful.
As mentioned above, the rational model works best when making complex decisions.
Before implementing the rational model, ensure you have all relevant information accessible and time scheduled with your team to work through the steps. For example, suppose your company is trying to an effective meeting productivity tool, then the rational model is a great way to decide by going through the cost, pros, and cons of the various programs you are comparing.
There are times when you have to go with your gut instincts. Believe it or not, when you go with your instincts, this is another decision-making model in management that you are following, known as the intuitive model. It's often less structured than the other decision-making models on our list but just as helpful depending on the situation.
The intuitive model relies on past training, experience, and knowledge to arrive at a final decision without conscious reasoning. Although it might seem like the intuitive model is a gamble, the decision-maker usually makes their final decision by scanning the situation for patterns based on what has worked in the past, sometimes without even realizing it.
The intuitive model is a great option when making a decision with limited time or resources, as long as the decision-makers are familiar with and experienced in the topic.
If your team is unfamiliar with the task or has little experience, they might not be able to come up with a solution intuitively. It would be best to collaborate with more experienced coworkers in this situation.
The intuitive model is best suited for knowledgable professionals who have experience making similar decisions. They can refer back to what has worked or hasn't and create a more informed decision based on their experience and intuition. Since many managers must make numerous decisions in their day-to-day work life, even with time constraints and challenging circumstances, they often rely on their professional experience to make decisions using this model.
Victor Vroom designed the Vroom-Yetton model with the premise that the best solution to a problem depends on the context.
Following the Vroom-Yetton model, decision-makers use a decision tree containing seven yes or no questions, such as "is there sufficient information for a leader to make a good decision on their own?" The results from these questions then help determine which decision-making process to go with from the five aspects described by the Vroom-Yetton model, which include Autocratic (A1), Autocratic (A2), Consultative (C1), Consultative (C2), and Collaborative (G2).
The Vroom-Yetton model is very flexible and accessible for employees at all levels of management. In addition, since organizational psychologists created it, its methodological process is more accessible to follow than some other models and doesn't take very long to complete; in some cases, it only takes a few minutes.
Keep in mind that the questions used in the Vroom-Yetton model may not be specific enough for your situation. There is also a lack of consideration around personal factors when filling it out.
The Vroom-Yetton model is helpful for managers and leaders trying to figure out if they should be making the decision themselves or if it would be beneficial to include team participation and the extent of how much the team should be involved.
Like the intuitive model, the recognition primed model relies on experience when making decisions, but it goes further. First, the decision-maker would analyze the problem to see if they can recognize patterns based on similar situations they've experienced. Using that information, they would then create a list of possible solutions and then run each scenario through their minds to develop the best course of action.
The recognition primed model is an excellent option if you have limited resources and need to quickly come to a final decision.
The recognition primed model requires a lot of experience and knowledge. It also requires detailed records of past projects unless the decision-maker has an excellent memory.
If you have successfully solved similar problems in the past, the recognition-primed model is a great decision-making model to use. Since there is a bit more to it than the intuitive model, many leaders who use this model like to map out their thoughts on paper and take detailed notes, and it is also helpful to refer back to when making future decisions.
Sometimes, you have to go with a "good enough" solution to get the job done. We are often "bounded" by time constraints, limited available information, and cognitive limitations as humans. This is the idea behind the bounded rationality model: doing the best with what you have available rather than overanalyzing every alternative solution.
The most significant advantage of the bounded rationality model is that it allows teams to make quick decisions without putting much time or thought into it. But, of course, you will need to be open to shifting gears as things change and are able to think on your toes.
Since there is less time and strategy dedicated to this decision-making model, there is the risk that things won't work out, wasting valuable resources.
The bounded rationality model is best suited for decisions that won't have a significant impact or consequences if things don't work out. For example, deciding what to order for lunch.
The creative decision-making model is usually applied when the decision-maker has to develop original ideas to create an innovative solution to a problem. Unlike the other models in this list, the creative decision-making model doesn't allow team members to rely on their experience since they must find a new, unique solution to their current problem.
One advantage to the creative model is that even if a team is inexperienced in their tasks, they can still apply this model when making a decision. The creative model also encourages collaboration and can strengthen team building.
The downside of this model is that it consumes a lot of time and resources and requires extensive brainstorming and meetings. On top of that, there is no past proof that the final decision will work until you try it. Additionally, success depends on the decision maker's creativity and availability to conceive fresh ideas.
The best time to use the creative model is when the solution to the problem is not obvious. For example, in the early days of social media marketing, companies had to develop innovative social media campaigns without a blueprint for success. Even today, the most successful campaigns are ones that are unique and stand out from competitors.
As humans, we make thousands of decisions every day, both at work and in our personal lives. When you work in a leadership role with increased responsibilities, your decisions shape the workplace and impact multiple lives.
Fortunately, understanding the different decision-making models in business and when to implement them can help make the decision-making process much easier. We hope this list of the six standard decision-making models enables you to make decisions confidently.
Ranee has worked in the SaaS industry for nearly ten years. She loves working with, learning from, and helping develop effective leaders and is willing to share her thoughts through words. Outside of work, you can find her dancing, hiking in the mountains, or reading in a cafe.