Decision-making models in the workplace: pros and cons | SMD (2023)

The mark of any good manager is being able to make the right decision at the right time, even when circumstances aren't exactly ideal. Regardless of sector and industry, it is an important element of any managerial role, which has the potential to impact employees and the direction a company can take in the future.

Big or small, decisions have the power to change things at the micro and macro levels. Whether it's snacks served at a meeting or a change in company culture, management has a lot to weigh when a crisis hits.

The good news is that there are many different decision-making models that managers can employ when needed. Here, we'll explore some of the most prevalent theories, including their pros and cons, to see which approach might be right for your management style.

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The importance of decision making in companies

How to improve decision-making in companies

The different decision-making models

Examples of Effective Decision Making in the Workplace

Biases and errors in decision making.

Business intelligence and decision making

The importance of decision making in companies

Decision making seems like a relatively simple idea. After all, everyone has to do them at various times in their lives. But many managers are often unaware of the importance of the process.

Decision-making models in the workplace: pros and cons | SMD (1)

In a business context, a formal process allows companies to make more informed and thoughtful decisions that trigger specific actions. It also offers a number of benefits, which help to support the importance of decision making in business. These benefits include:

Better time and money management: A coach who takes too long to decide can cause a domino effect on his team. When they are kept in the dark about a decision, it takes longer for them to gain the mindset needed to act on that decision. On the other hand, quick decisions lead much more to more efficient teams, and the more efficient a team is, the more time and money can be saved in the long run.

Safer and more engaged employees: When employees know that decisions are made with logic, reason and their best interests in mind, they are more likely to commit to the goals your organization is working towards. An indecisive leader, on the other hand, may be faced with a lack of confidence, less trained staff and dips in motivation.

more effective delegation: Every good leader delegates. And when you think about it, the act of delegating is decision making in action. Through proper decision making, you will be able todelegate more effectivelyand let your team know what needs to be done and when with greater confidence.

less mistakes: When you are more decisive as a leader, set a clear path your team can follow. When they are clear about what needs to be done, correcting mistakes becomes much easier. However, muddled direction and a lack of confidence in their own decisions can leave your team unsure of what they should be doing, and this is where mistakes can start to slip through.

Decision-making models in the workplace: pros and cons | SMD (2)

How to improve decision-making in companies

It's no secret that decision-making can take up a good chunk of your day. And when the hours and minutes are against you, you can make hasty and hasty decisions, especially if you have to make several over the course of a single day.

This is decision fatigue in action. The mental fog that can build up often means impulsive actions rather than informed, thoughtful decisions. To avoid this, try these effective strategies to improve your decision making.

Make fewer decisions:The cumulative effect decisions have on us can be exhausting. Try to minimize this fatigue by reducing the number of decisions you have to make throughout the day. Rationalizing our choices leaves us with more mental energy to invest in bigger, more important choices.

Delegate decisions to others:We can reduce the number of decisions to be made by delegating them to employees in the same way that we can delegate tasks to them. Asking others to take charge of the decisions not only frees you up, but also allows employees to feel empowered and engaged in their work.

Make decisions in the morning:In the afternoon, that post-lunch feeling can leave us tired and sluggish. At night, risky and rash decisions are more likely to be taken. The morning, however, can lead to precise and well-thought-out decisions. If you have an important decision that requires your full attention, try to make it in the morning.

Give yourself deadlines:Over the course of a project, there are likely to be a few last-minute decisions that don't get the attention they deserve. To combat this, try creating mini deadlines. This allows you to act sooner than you normally would, replacing impulsive, last-minute decisions with smart, well-informed choices long before the end of the project is in sight.

The different decision-making models.

Before getting into the details, it's worth asking "what are decision models?" Essentially, a decision-making model is a method that allows an individual or a team to make decisions that benefit the company as a whole.

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The methodology varies from model to model, but the goal of each model is the same: to allow you or your team to analyze and overcome challenges. Due to their different approaches, the sheer number of decision-making models means that they are incredibly useful for people withdifferent learning styles.

To help you find a model that fits your management style, let's take a look at some of the most popular decision-making models below.

Examples of Effective Decision Making in the Workplace

While specific examples of workplace decision-making vary by industry, the following are some scenarios involving varying degrees of decision-making that individuals and teams may need to consider on a daily basis:

– Lead brainstorming sessions for new product names

– Analysis of commercial proposals to select the best approach (such as choosing an advertising agency to lead a campaign)

– Gather information from staff to make important business decisions regarding their future

– Identify ways to save costs across multiple business areas

– Weigh the leadership potential of different team members for promotion

– Investigate potential legal or logistical ramifications related to the new company policy


Often cited as the classic approach, the rational decision-making model is the most widely used method and typically consists of the following steps:

– Identification of the problem or opportunity

– Gathering and organizing relevant information

– Analyzing the situation

– Development of a range of options.

– Evaluate and assign a value to each option

– Selecting the option you think is the best

– Act decisively on this option.

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The pros of the rational model

The rational model allows for an objective approach that relies on scientifically derived data to arrive at informed decisions. This reduces the possibility of mistakes and guesswork. It also helps to minimize the manager's emotions that may have resulted in errors of judgment in the past.

This means that, due to the step-by-step methodology, decision makers are better prepared to tackle difficult problems in complex environments.

The Cons of the Rational Model

Sometimes the process is constrained by insufficient information, which creates problems if a manager has to consider and evaluate any alternatives needed to make a decision.

Time constraints can also be an issue. As so much information is needed, the time required for observation, collection and analysis is also critical. In a fast-paced business environment where time is of the essence, the rational model is somewhat limited.

It is also an approach that tends to err on the side of caution. By limiting decision-making based only on what is available, you may not be able to take the risks that may be necessary for success.

Which companies use the rational model?

Sweden's biggest innovation companies, such as Volvo and Ericsson, adhere to the rational model, using structured processes to manage their processes, often collaborating with large numbers of people, all with different backgrounds.

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Compared to the objective judgments of the rational model, the intuitive decision-making model is much less structured and opts for more subjective opinions, although it is not based solely on gut feelings. Instead, consider the following:

– Pattern recognition: see patterns in events and information and use them to determine a course of action

– Similarity recognition: seeing similarities in previous situations and recognizing the cause and effect of a given situation

– Salience: understanding the importance of information and how it can affect personal judgment

The advantages of the intuitive model

Compared to the rational model, intuitive decision making allows for quick decisions to be made, while a degree of intuition means that managers can eliminate counterintuitive ideas when drawing conclusions.

Taking into account the person's emotions, it ensures that the positive feelings are used in your favor, taking advantage of them as a way to motivate them during the process.

Unlike the rational model structure, which proceeds in stages, the intuitive model chooses to see everything as a bigger picture. As a result, intuition can help managers integrate siled pieces of data, facts, and figures into a cohesive view of what needs to be done.

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The cons of the intuitive model

The intuitive model relies heavily on a person's experience and judgment. As a result, emotions and insufficient experience can cloud judgment and lead to bad impulsive decisions.

Which companies use the intuitive model?

Intuition and your thought pattern cannot really be measurably quantified. Instinct has its fair share of advocates, however, none more so than perhaps Malcolm Gladwell, the author and speaker who has written extensively on the idea.

When we think of leaders who trusted their instincts, we think of people like Henry Ford or Bill Allen, the CEO of Boeing in the 1950s, who gambled $16 million to bring about civil air travel as we know it today. We can even see this in the present, with the likes of Uber CEO Travis Kalanick a controversial figure who has held up despite strong resistance to charging customers more for the service.


A combination of the previous two models, the prepared decision-making model starts with a manager quickly assessing a situation, comparing it to past situations, recognizing patterns, and creating a mental "action road map" that walks the scenario through to completion.

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This then leads to two options:

– The decision maker finds no flaws in his scenario and defines the chosen course of action according to the roadmap he created.

– The decision maker finds a problem in his action script. They then start over with a different script, repeating the process until a scenario is successfully executed.

An experienced decision maker will have more developed recognition patterns, with more past scenarios to draw from to form your action roadmap. Meanwhile, less experienced decision makers may look more at problem solving than mental scenarios.

The advantages of the model with recognition primer

As rational and intuitive reasoning is used, it provides a degree of mental simulation from your predictions. From here you can avoid problems should they arise because they were mentally developed beforehand.

The cons of the model prepared for reconnaissance

Inexperienced managers may opt for this model when one of the other two models would be more appropriate in certain situations, such as for non-critical decisions.

The trial and error approach makes it relatively slow. If time is of the essence, a manager may choose the first course of action, which may prove unsatisfactory.

Which companies use the model designed for recognition?

Coupled with a variety of different business sectors, the model is highly effective for leaders affiliated with fire departments, search and rescue units, and other emergency services.

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Also known as the Vroom Yetton decision-making model by its creators, Victor Vroom and Philip Yetton, the normative model helps leaders and managers decide the degree to which their team should be involved in the decision-making process.

Vroom identified five types of decision-making processes, which increase the amount of team involvement as they go along. These processes are the following:

To decide:The leader makes the decision and solves the problem before announcing his decision to the group. Information from the rest of the team may or may not be collected.

Consult individually:The leader approaches each team member individually and presents the problem. After writing down his suggestions, the leader makes the decision, with or without the information provided by his team.

Consult by group:The leader organizes a group meeting to present the problem to all participants. Each team member can make suggestions, which the leader uses at his discretion to make a decision.

To facilitate:Similar to the previous step, the leader presents a problem to the team. This time, however, the decision is made by group consensus, not just the leader.

Delegate:Here, the leader fully hands over the reins to the team. After providing information about the issue, they are encouraged to make a decision for themselves.

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The pros of the normative model

As no single decision-making process fits all scenarios, the normative model accommodates a variety of different approaches, whether you need something autocratic or a more democratic process where the opinions of others are valued and acted upon. .

Its simplicity also works to its advantage, and it can be used by leaders at all levels of an organization.

The cons of the normative model

While the normative model certainly has its uses, the approach loses its effectiveness in certain situations. For one thing, you might not take into account important considerations like your team's emotions and work styles, as well as the complexity of the task at hand.

Which companies and businesses use the regulatory model?

The high degree of application of the regulatory model makes it suitable for both boardrooms and warehouse operations. It is also especially beneficial when used by managers who want to include their team in their roles and who also want to improve their decision-making accordingly.

Biases and errors in decision making.

Of course, not every decision you make will end well for you. Even with the research to back it up, cognitive bias means that even the most open and unbiased employees can have their judgment clouded and their thinking distorted.

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Below you will find a selection of the most common biases that frequently occur in business decision-making that you should be aware of.

confirmation bias:Do you ever find yourself looking for information to support your existing beliefs despite hard data and evidence to the contrary? When you don't take into account all relevant information, even if it is contrary to what you believe, you are often faced with confirmation bias.

Anchoring: It's easy to keep information early in the decision-making process and use it to base your final judgment on. Rather than jumping to conclusions based on what you've identified as "the anchor", be sure to look at the big picture before making a decision.

overconfidence bias: An unrealistic view of your decision-making abilities can often lead to hasty and instinctive choices. And while acting on a hunch certainly has its own value, those who put too much faith in their own abilities often succumb to this particular bias.

halo effect:If you are swayed by someone else's positive traits, or even their negative traits, it's easy to follow or reject your way of thinking when it comes to making a decision. These are unfounded beliefs that don't necessarily translate into good decision making.

gambler's fallacy:When it comes to decision making, the results are highly uncertain. What may have worked for you in the past will likely have little effect on how things will turn out in the future.

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carriage bias:Following the herd just because others have embraced an idea can certainly be tempting, but it reduces your own individual role in decision-making. Remember, just because others are following a particular line doesn't mean you should too.

mere exposure effect:Similar to the gambler's fallacy, the mere exposure effect occurs when the decision maker has a preference for opinions, people, or information with which he is already familiar.

hindsight bias:We all know that hindsight is 20/20, but hindsight bias in decision-making can be particularly harmful. This bias occurs when you believe that you accurately predicted the outcome of a decision before it was made (even if you didn't). This makes it difficult to look at the results objectively.

Business intelligence and decision making

A growing phenomenon among business leaders, business intelligence refers to the processes that gather quantitative and qualitative data for decision making. Rooted in science and engineering, where data analysis is used to improve decision-making, business intelligence enables companies to make accurate and accurate diagnoses. And by identifying these pain points, they can make better-informed tactical decisions that help the business as a whole.

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Through the collection and aggregation of data, business intelligence allows companies to take action based on their findings, which helps manage risk and offers a number of different benefits, including:

trend forecasting

Business Intelligence encompasses a wide variety of tools. ERP software, one of the many business intelligence tools available, has the ability to predict market trends.

Let's say your business is growing and you want to anticipate the need to invest in employee recruitment. Through this software you can, as it already contains information that includes an expected increase in sales.

Creating realistic goals.

Market analysis can definitely be beneficial, but when you ignore internal factors, the results will not be as effective. Business intelligence, on the other hand, allows companies to set efficient goals, presenting reports that consider the current context of their business. This allows you to reconfigure your objectives amid the current climate in your markets.

Greater use of transparent data

Through its automated systems, business intelligence can greatly reduce the risks of human error and fraud in the generation of information. When data is reliable, it tends to lend itself to greater credibility. And when decisions are needed, the more reliable data you have on hand, the more confident your team will be in their ability to make the right decisions.

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