4 business decision-making models compared

13 May 2021

Whether you’ve reached the top or are in a junior role, no matter your employment level, strong decision-making skills are essential. This is especially true in companies with flatter organisational structures, where everyone is encouraged to play their part when it comes to reaching resolutions.

If you’ve struggled to weigh up your options in the past, how can you improve your approach? Luckily, there are several decision-making models that can boost your managerial skill set.

Though not 100% fool-proof, applying models to different situations can help you be more assured in your decisiveness. In this guide, we'll take a look at a selection of decision-making models that business leaders can use to optimise their opinions and judgements.

The rational decision-making model

If you need to make a complex, risky decision that requires a large degree of thought, research and collaboration, the rational decision-making model could be a sound option.

Considered to be the classic approach, it's one of the most commonly used methods of decision-making. The model consists of the following six simple steps:

  1. Define the problem
  2. Identify the criteria you will use to judge possible solutions
  3. Decide how important each option is
  4. Generate a list of possible alternatives
  5. Evaluate and assigning a value to these alternatives
  6. Determine the best solution

What are the pros of the rational decision-making model?

Because it uses scientifically obtained data to reach informed decisions, the model reduces the chance of errors, distortions and assumptions which can lead to bad decisions. Thus, for the risk-averse, it's a safe option.

What’s more, due to its step-by-step methodology, it provides the necessary information for leaders to deal with difficult and emotionally charged problems.

businessman thinking

What are the cons of the rational decision-making model?

If crunch time is approaching, this model isn't the best approach. You need to set aside time to observe, collect and analyse information; it may be limited in fast-paced environments.

What’s more, because it’s reliant on information, insufficient data/evidence means you can’t always use it. Similarly, because it errs on the safe side, leaders may limit their decision-making to what is available to them, instead of taking risks.

The intuitive decision-making model

If you tend to go with your gut, you’re already following the intuitive decision-making model. Your brain is carrying out pattern recognition in the blink of an eye, reviewing previous experiences to inform the current situation.

With this model, it's less about ideas popping into your head. Instead, it's recognising the cause and effect of a situation and understanding how information can affect our judgment.

What are the pros of the intuitive decision-making model?

Intuitive decisions are quick and let leaders see the bigger picture. It requires decision-makers to combine data, facts and figures to create a cohesive idea of what they need to do.

And since it takes emotions into account, the model ensures that positive feelings are used advantageously – guiding the decision-maker through the process with a degree of motivation.

What are the cons of the intuitive decision-making model?

Negative emotions can affect intuitive decisions just as much as positive ones. These experiences may cloud judgment, leading to rash, impulsive decisions.

Likewise, because experience plays a large part in the intuition process, it's a difficult model to use in unfamiliar situations, where you can't draw on past experiences to guide you.

team having a discussion

The recognition-primed decision-making model

The recognition-primed model functions as a combination of the rational and intuitive approaches. It works like this:

  1. The leader quickly assesses a situation by recognising patterns and comparing it to past situations.
  2. They create a mental 'action script' that plays the scenario through to its conclusion.
  3. This then leads to two options:
  • If the action script works, then the decision-maker forges ahead with the chosen course.
  • If the script encounters a flaw and doesn’t work, the decision-maker revises the script or repeats the process with a different script.

What are the pros of the recognition-primed decision-making model?

The recognition-primed model works best when you can draw on experience or expertise, making it useful in time-critical situations.

Likewise, since the experience you’re applying to these situations has played out in your head using rational and intuitive reasoning, it's a good way to avoid problems.

However, it’s not without its drawbacks, which we'll touch on below…

What are the cons of the recognition-primed decision-making model?

If you’re short on time, you may be tempted by the first course of action, which could lead to a poor decision. Similarly, the model's trial-and-error approach means it's not always geared towards time-sensitive situations.

What’s more, inexperienced managers may opt for this model when either a rational or intuitive approach may suffice.

The Vroom-Yetton Decision-Making Model

Of course, there's no one-size-fits-all approach to decision-making. Every situation is different, and some models will produce more effective outcomes. That's the central idea of the Vroom-Yetton decision-making model.

The model consists of answering seven yes-or-no questions, such as "do I have sufficient information to make a high-quality decision?" or "is conflict among subordinates likely to arise in the event of a preferred solution?", for instance.

The answers will guide you to one of five decision-making processes:

Autocratic (A1): Make the decision using the information you have, and no further input
from the team.

Autocratic (A2): Make the decision using the information you have, as well as feedback from
the team.

Consultative (C1): Inform the team of the situation, collate the feedback, and then make the
decision.

Consultative (C2): Gather the team for a consultation, but you still make the final decision
by yourself.

Collaborative (G2): Reach a group consensus and make the decision collaboratively.


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businesswoman on her laptop

What are the pros of the Vroom-Yetton decision-making model?

The model's main strength is its flexibility. Anyone can put it to good use, even in unfamiliar situations.

What are the cons of the Vroom-Yetton decision-making model?

Despite its usefulness, the model doesn't factor in the individual needs of the decision-maker, and it may not be precise enough to work in certain situations. 

 

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The views, opinions and positions expressed within this article are those of our third-party content providers alone and do not represent those of Gazprom Energy. The accuracy, completeness and validity of any statements made within this article are not guaranteed. Gazprom Energy accepts no liability for any errors, omissions or representations.

 


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