Rational and Intuitive Decision-Making Models

In this section we are going to review two decision-making models that can help leaders make effective decisions: the rational decision-making model and the intuitive decision-making model.

The Rational Decision-Making Model

The

rational decision-making model

is perhaps one of the most common models leaders use to make decisions. It consists of the eight steps shown here.

This graphic shows the eight steps of rational decision making connected with a large circular arrow. The steps are (1) identify the problem, (2) establish decision criteria, (3) weigh decision criteria, (4) generate alternatives, (5) evaluate the alternatives, (6) choose the best alternative, (7) implement the decision, and (8) evaluate the decision.

Expand image

The eight steps of rational decision making.

Source: Simon, H. A. (1979). Rational decision making in business organizations. The American Economic Review, 69(4), pp. 493-513.

As leaders, it is important to note that at times we may have to go through this decision-making process quickly. In fact, if you think about a simple decision such as what to make for dinner, you will realize you are ultimately using this same model. First, you identify the problem (I'm hungry! Time for dinner!). Second, you determine what criteria you will use to make your decision on what to eat (I have chicken in my refrigerator; I don't want to go to the store). Then, you weigh the options (Although I don't want to go to the store, I also really want a hamburger, which would require me to drive to the store but will make me happy). Next, after you weigh the pros and cons of the decision, you determine the "overall" scope of the decision (So, I can go to the store to get beef, or I can stay here and have chicken). Next, you make your selection. Once you have made it, you will act on it and then evaluate it (I am really glad I just had chicken at home; the traffic looks really bad).

Of course, this example is simplified to illustrate how often we utilize this decision-making model without realizing it. But as leaders, we may do the same thing. We are often faced with choices that must be made quickly, or, other times, we are faced with decisions where we can really consider all the alternatives over a period of time. When consideration is an option, we want to make sure to involve all the stakeholders in our decision-making process.

2 Multiple-Choice Questions

Question 1.

What is one characteristic of the rational decision-making model?

Question 2.

What step comes right after choosing the best alternative when using the rational decision-making model?

One thing to be concerned about when making a decision is a concept called

analysis paralysis

. This occurs when we overthink a decision, spending so much time contemplating it that we never take action. The danger of analysis paralysis in a leadership role is missed opportunities. One of the more popular quotes on analysis paralysis comes from Ross Perot. Discussing what work was like at General Motors (GM), he said:

At GM, if you see a snake, the first thing you do is go hire a consultant on snakes. Then you get a committee on snakes, and then you discuss it for a couple of years. The most likely course of action isnothing. You figure, the snake hasn't bitten anybody yet, so you just let him crawl around on the factory floor. We need to build an environment where the first guy who sees the snake kills it.⁵

As a leader, there are a few ways you can deal with analysis paralysis:⁶

Expectation clarification. Make sure everyone on your team understands the clear expectations, goals, and outcomes of a decision. Of course, make sure you understand them yourself!

Checkpoints. Set realistic checkpoints and small goals. Sometimes even just considering a big decision (i.e., changing a marketing strategy) can be daunting. Making the decision in small steps can be a helpful way to overcome analysis paralysis.

Certainty of uncertainty. Understandand make sure your team understandsthat no decision will ever be 100 percent sure. Get comfortable with the fact that it may be 80 percent right, which means it may be the right decision to go with.

Trust and support. If you do not support your employees when they make bad decisions, they may no longer try to make any decision.

2 Multiple-Choice Questions

Question 1.

What is an example of analysis paralysis?

Question 2.

Which method helps people avoid analysis paralysis?

Intuitive Decision Making

Decision making based on intuition is not as favored as other decision models, but we feel it is worth mentioning since many organizational leaders utilize a combination of the rational decision-making model and intuitive decision making. Due to technology's ability to provide numerous data points, charts, graphs, and information, making decisions based on intuition when combined with other methods can be an important part of the leadership toolbox.⁷

Intuition

is a complex form of reasoning based on past experience, patterns, concepts, and other useful knowledge a leader has accumulated.

Multiple-Choice Question

What does intuitive decision making rely on?

past experience and patterns in data

checkpoints and small goals

small steps toward big decisions

Correct. Intuitive decision making is a complex form of reasoning based on past experience, patterns, concepts, and other useful leadership knowledge.

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Regardless of our decision-making style, any one of the models discussed can help us with decision making. Rationalizing in an ordered, step-by-step manner allows us to make decisions consistently and efficiently. Intuition helps us tap into feelings and experiences that can be valuable parts of the decision-making process. Regardless of our style, each of the models discussed can help us with decision making in any situation.

Decision-making models are essential for making consistent and informed decisions. In this discussion, you will apply decision-making models to solve the organizational problem below.

As an organizational consultant for SNHU Pet Supply Company, you need to recommend who should lead a new initiative to expand the company's online presence. After interviews and discussions, two candidates have been shortlisted:

• Myra: Myra is a 15-year veteran with deep knowledge of the company's products and culture. She has little experience in e-commerce but is a fast learner.
• Michael: Michael is a recent hire with an MBA and experience launching online businesses. He has no experience in pet supplies but is skilled in e-commerce technologies.

In your initial post, address the following points:

• Compare two decision-making models from your course and explain how each could guide the hiring decision.
• Recommend the best decision-making model for this situation and justify your choice.