Models of decision making: descriptions and processes
By Indeed Editorial Team
Updated 28 June 2022
Published 30 November 2021
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
The majority of leadership and management roles in any workplace demand that you make decisions and often in a very short timeframe under high pressure. To make these decisions easier, you can implement a decision-making model to help you to create an effective solution in a difficult situation with no time to think through every possibility. Understanding these theories of decision making can save both time and money. In this article, we learn more about the types of decision-making models available to new and aspiring managers and how they can implement them successfully.
What are models of decision making?
Models of decision-making are processes that teams can implement to make decisions that benefit their company when there isn't enough time to make a decision manually. Each and every model varies from one another, meaning that a different decision-making model is likely to come out with a different decision from the others available. This means that companies choose a decision-making model that best suits their style and doesn't compromise the company's ethical focuses.
Why are models of decision making important?
Business can be a highly complex world, where no two decisions you make are the same and the context behind every choice you engage with varies in some manner from any other that you make. In high-pressure situations where you make a decision immediately, it can be impossible to take all of the contextual factors into account and come to a decision that satisfies everybody. At a deadline, inaction may be worse than taking the wrong action.
By making use of one of the many theories of decision making and ingraining these philosophies in the workplace, high-pressure situations become much easier than they are in any other situation. You can focus on applying the decision-making method to the situation at hand without having to overthink the decision being made, saving a significant amount of time, potential resources and even your reputation with some of your most consistent and reliable customers.
What are some of the most common decision-making methods?
Below are some of the most common decision-making models that companies and organisations embrace and the steps that you take to engage with them. These include examples of when you might look to use the decision-making methods, helping you to know when to use which. It is important to focus on one method where possible in order to keep the operation of the company as consistent as possible from decision to decision. Key decision-making models include:
Rational decision model
Rational decision making focuses on taking logical steps to reach the best conclusion possible in any given situation. Often completed by laying out a series of potential solutions in front of the decision-maker, rational decision making can take more time than other methods, as it requires an extensive process of considering responses to the issue. The steps involved in rational decision making include:
Set out the context: This means defining your goals in the decision, the context around the decision and the resources available to you at the time.
Establish your options: Using the above information, brainstorm a selection of options that could help achieve your goals.
Arrange your options by value: After creating the prior list, establish the feasibility of each of your alternative solutions. Some will be quicker than others, some will be more affordable and some may not work at all and you arrange them in terms of viability.
Choose the best: From this ranked shortlist, select one, or very few, options that are clearly superior to the others available to you. This makes the choice simpler for you and can help you and the team reach a consensus.
Act: Once you decide on a course of action, commit and act on your decisions. This can speed up the implementation process and also reduce the risk of backtracking on decisions.
The Bell Manufacturing has struggled with producing locks over the past few years due to an aluminium shortage and is looking to modify its production model and product line. The company can either shift towards fibreglass locks, aluminium doors with locks using the supply the company has, or stop producing locks completely. Using fibreglass locks would require complex new manufacturing procedures, where moving away from locks breaks with its decades-old company identity. The best solution is integrating door and lock products. Production teams create integrated solutions that use scrap aluminium, saving resources and preserving the company's identity.
Intuitive decision making
Whereas careful process and planning drive rational decision making, thought and feeling can help intuitive decision making. This can help make fast decisions, but may often lack structure, so implementing a rigid set of decision-making steps may improve the quality of intuitive decisions being made. Consider making use of the following steps to improve the standard of intuitive decision making in the organisation:
Know the decision to make: No matter how limited your time, take a moment to understand the problem fully. Responding without knowing about a key factor can lead you down the wrong path.
Relate to experience: Decision-makers often experience difficult decision making. Think back to similar decisions you made and remember solutions you found at the time for inspiration.
Be impartial: In a workplace, we all have biases, whether it's a member of staff you don't like or a process you enjoy doing. Allowing this to cloud your judgement damages the decision-making process and may even damage the company.
Establish a solution: Using your experience and knowledge of the company, you can think of a solution that will work effectively to achieve a solution.
Finalise the decision: Once you make your decision, alert a person to act swiftly so that you can fix any problem as soon as possible. This method is ideal for those with experience, although inexperienced leaders may wish to consult with others when establishing a solution.
When working on the shop floor of a supermarket, you discover that the dairy aisle's refrigerator has completely stopped working. Although you prefer the 'Meal Deal' products in the store, they are significantly less profitable than those found in the dairy section. By removing your biases from the situation, you ask staff to take Meal Deal products into the back, move signage around and place dairy products in what was previously the Meal Deal fridge. This means that higher-value products are now safe from spoilage and you've mitigated the company's loss of the food.
Creative decision model
The creative decision model does not rely on experience but rather leans on innovation and intuition. When engaging with this decision model, decision-makers don't engage with their previous work and experiences, instead, they focus on building solutions from scratch. The steps you may wish to take when engaging in the creative decision model are as follows:
Define objectives and gather information: It is incredibly difficult to find solutions to problems that you don't truly understand, so first look to build a proper understanding of your situation.
Think passively: This method is far from ideal for time-sensitive issues as you take a day to mull the problem over. You can brainstorm, talk to colleagues or even get inspiration from the world around you, but time allows your mental faculties to breathe through the process.
Develop a solution: Whether the idea comes naturally to you, through a session of team brainstorming or after hard consideration, logically think through your solution to establish whether it will fix the issue.
Present your solution: As your solution is creative and doesn't pull from previous cases, you present your solutions formally in order for your team to understand them fully before following through.
A government department has outsourced a service throughout its entire existence and the company providing the service is no longer in operation whilst the service is still necessary. This is a key service that is necessary for the department to utilise and be successful. After taking some time to consider, decision-makers integrate members of the suppliers' management and leadership team into the department whilst hiring further members of staff through graduate programs. The department essentially acquires new members for more senior roles, whilst protecting the services necessary for the users.
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