By Indeed Editorial Team
Published November 5, 2021
Making good decisions consistently involves choosing options that have the best chances of leading to favourable outcomes. While using your intuition may help, applying a rational decision-making model can be more effective. Learning what a rational decision-making model is and how to implement it can improve your ability to choose between alternatives at work. In this article, we discuss the rational model of decision-making, explain how to implement it, show the differences between rational and intuitive decisions, and present other essential models.
What is the rational model of decision-making?
The rational model of decision-making uses logical steps to select the best possible solution. It involves analyzing multiple alternatives and using credible data or facts to choose among options. Rational decision-making is a precise process that many teams use when they have time to research solutions and discuss possible outcomes. Its purpose is to maximize the benefits and minimize the costs of decisions by being objective.
Related: What Are Decision-Making Skills and How to Improve Them
How to implement the rational decision-making model
Follow these steps to use the rational decision-making model at work:
1. Define the problem
Start by identifying the issue and understanding why making a decision is important. Describing the problem can also help you determine your desired outcome. Ensure your definition is clear because it can impact other steps in the rational decision-making model.
Example: Henry is a manager at Cloud ClearWaters Inc. After his performance review with company executives, he receives a memo to increase monthly profits and generate more revenue. The challenge for Henry is finding the best way to increase profits every month.
2. Identify the decision criteria
Next, determine relevant information related to your goal or challenge. Completing this step typically requires research and reflection. The criteria you choose compose variables that can impact the decision's outcome, and they often depend on your core values.
Example: Henry examines the relevant information that can help him increase profits. He doesn't believe in terminating or laying off a teammate to reduce expenses but feels finding cost-effective vendors and improving sales are more effective strategies. Henry considers the impact of his decision on customers, teammates, and product quality, which is his decision criteria.
Related: Research Skills: Definition and Examples
3. Assign weights to the criteria
Next, rank your decision criteria based on factors that are more important to decision-making. To complete this stage, you typically need analytical and critical thinking skills. While analytical thinking involves analyzing a problem and finding a solution, critical thinking involves applying reasoning to reach a conclusion.
Example: Henry feels the crucial factor is how his financial strategy would impact the team. He also feels that other factors, such as the impact on customers and the product quality, are equally essential.
Read more: Key Differences: Analytical Thinking vs. Critical Thinking
4. Create a list of options and order them
Next, outline potential solutions to the challenge you want to overcome. When developing alternatives, aim to provide evidence on why they can help reach your goal or overcome your obstacle. Completing this step often requires creative thinking and research skills to identify feasible solutions.
Example: Henry creates a list of alternative solutions. Ranking them according to their ability to meet the decision criteria, he has the following strategies for solving the financial challenge:
Select a new distributor that charges less money.
Reduce overtime hours, which would reduce overhead costs.
Increase customer promotions to attract new customers and make more sales.
Rent a section of the company's building to increase revenue.
Request more funding from company executives for expansion operations.
Invest in more stocks and bonds to improve the company's market position.
Request funding from angel investors and venture capitalists by developing an effective sales pitch.
Lay off employees who receive high salaries but contribute less to revenue generation.
5. Choose the best option and finalize your decision
Take enough time to evaluate your options and how they can affect your success. Reflecting on alternative solutions ensures you make the correct decision. Once you're confident of the preferred strategy or solution, commit to implementing it.
Example: Henry recommends that finding a new distributor for the company can reduce costs, leading to more profits. He also chooses this option because it's the most favourable considering the decision criteria he established. He creates a document detailing the process followed when implementing the rational decision-making model to present to Cloud ClearWater Inc executives.
What to remember when using the rational decision-making model
Here are essential points to note when implementing the rational model:
Ensure you can identify all relevant criteria and alternatives for the decision you want to make.
Check that you can order the decision criteria and alternatives you develop.
Check that the decision criteria and the importance assigned to each factor remain the same over time.
Verify the time available to decide between alternatives and ensure no constraints can limit your choices.
Ensure the strategy you choose can provide the highest value you want.
Rational vs. intuitive decision-making
The rational decision-making model involves reasoning, facts, and data. In comparison, intuitive decision-making involves choosing among options without relying on reasoning or analysis. It involves unconsciously recalling a memory or relying on emotions to make decisions. Both rational and intuitive decision-making models are useful at work.
For example, you can typically use the rational decision-making model when creating strategic plans, such as deciding whether to merge with another company. In comparison, you can use the intuitive decision-making model to make instinctive decisions, such as suddenly opening the door because you feel a colleague you can't see is around it. Depending on the decision, you may use the rational decision-making model to justify your intuitions.
Other essential decision-making models
Aside from the rational decision-making model, here are other important models you may use for a specific team or situation:
Recognition-primed decision model
This decision-making model requires you to use your quick-thinking skills and experience. It's typically valuable for fast-paced work environments, where you can expect to make several vital decisions. Implementing the recognition-primed decision model often requires extensive experience with the goal or challenge to develop suitable solutions. It involves iterative steps. Here are the steps to use this decision-making model at work:
Define your goal or objective. Understand the task to complete or challenge to overcome. For example, the goal may be to rescue an individual from a fire or stop a production machine.
Consider similar situations and relevant information. Using your experience, quickly evaluate the situation. You can determine what information or prior situation can help develop a solution.
Create a potential solution. Next, develop at least one potential solution based on patterns you identified from your experience. You can make the first solution generic and change or update it later.
Check whether the solution works. Think about the solution to determine whether it can solve the challenge or reach the goal. You can first consider the most important issues and evaluate whether the solution addresses them.
Change the solution. Challenge the solution if you want to confirm it's the best possible outcome. You can alter it by making it more specific or adding new actions.
Finalize your decision. Take the required action once you're confident in your final solution.
Creative decision model
This model uses original ideas to create innovative solutions for reaching a goal or overcoming a challenge. It involves reflecting on a situation and developing a solution without relying on similar situations or experiences. The creative decision model is common when dealing with a new challenge or project. It typically requires you to be flexible and creative. Here are the steps for implementing the creative decision model at work:
Understand the goal or challenge. Clearly defining the goal or challenge is important, as you may not have experience with it yet. You may collaborate with team members or professionals or conduct extensive research.
Identify the relevant information. Learn about the factors that can impact your outcomes. You can check similar projects, reports, or companies for inspiration on the details you need.
Evaluate the information you identify over time. Assess the information you gather and determine how long to evaluate it carefully. This stage also requires you to work with team members and obtain expert advice.
Create a practical solution. Using your creative skills, develop a solution or strategy. Reflecting on the available information can increase your chances of naturally developing the idea you need.
Make your decision. After considering the solution, take the required action. It may be helpful to prepare a draft or presentation of your thought process and check that it's accurate.