Rational Decision Making Model
A rational decision making model provides a structured and sequenced approach to decision making.
Using such an approach can help to ensure discipline and consistency is built into your decision making process. As the word rational suggests, this approach brings logic and order to decision making. Our rational decision making model consists of a series of steps, beginning with problem/opportunity identification, and ending with actions to be taken on decisions made.
There seems to be a problem with decision making. According to Ohio State University management professor Paul C. Nutt, about half of the decisions made in organisations fail. Over more than 20 years, he studied more than 400 real decisions made by managers in private, public and nonprofit organisations, and found that around half were not fully used after two years. There is clearly plenty of scope to improve our decision making processes.
Why does this happen? One reason Nutt identified is that managers rush to judgement. They grab the first remedy they come across instead of investigating what is driving the concern, and he found that failure was four times more likely when they did. Many managers also skip good practice because they assume it takes too much time and money. Nutt argues that good decision making practice actually costs very little, especially compared with the cost of a decision debacle. It costs even less here, because our rational decision making model is a free tool to help improve the way you make decisions.
This article is part of our series on decision making. Our first article, types of decision making outlines a range of decision making approaches. Rational decision making forms part of what we have termed types of decision, categorized by process. In this category we have put two contrasting approaches, that of rational decision making and that of judgement or intuitive decision making.
A General Rational Decision Making Model
Rational decision making processes consist of a sequence of steps designed to rationally develop a desired solution. Typically these steps involve:
1: Identifying a problem or opportunity
The first step is to recognise a problem or to see opportunities that may be worthwhile. A rational decision making model is best employed where relatively complex decisions have to be made.
(So the first decision making lesson should be to ask yourself if you really have a problem to solve or a decision to make. Then read this article for more specific advice: Problem Solving Skill: Finding the Right Problem to Solve).
2: Gathering information
What is relevant and what is not relevant to the decision? What do you need to know before you can make a decision, or that will help you make the right one?
3: Analyzing the situation
What alternative courses of action may be available to you? What different interpretations of the data may be possible? Our Problem Solving Activity uses a set of structured questions to encourage both broad and deep analysis of your situation or problem.
4: Developing options
Generate several possible options. Be creative and positive. Read The Power of Positive Thinking for our five questions that create possibilities.
5: Evaluating alternatives
What criteria should you use to evaluate? Evaluate for feasibility, acceptability and desirability. Which alternative will best achieve your objectives?
6: Selecting a preferred alternative
Explore the provisional preferred alternative for future possible adverse consequences. What problems might it create? What are the risks of making this decision?
7: Acting on the decision
Put a plan in place to implement the decision. Have you allocated resources to implement? Is the decision accepted and supported by colleagues? Are they committed to making the decision work?
Strengths and Weaknesses of the Rational Decision Making Model
The main strength of a rational decision making model is that it provides structure and discipline to the decision making process. It helps ensure we consider the full range of factors relating to a decision, in a logical and comprehensive manner. This is a key feature of our comprehensive guide: Making Better Decisions.
However, we should always remember that whilst the model indicates what needs to be done, it’s often how things are done that characterises effective decision making.
Nutt’s research points to two recurring weaknesses. Too often the people affected by a decision are not involved, even though decisions that draw on participation succeed far more often than those imposed by power or persuasion. And too little time goes into looking for alternatives before one is chosen and acted upon, often with disastrous effects.
Another weakness arises if we attempt to use the model in isolation. This is particularly important where complex or important decisions are involved.
The principal assumption of the rational decision making process is that human beings make rational decisions. However, there are numerous factors which determine our decisions, many of which are not rational. In many situations decisions have to be made with incomplete and insufficient information.
Judgement, intuition, experience and knowledge all come together when making decisions. This critical aspect is further explored in our article: Intuition and Decision Making.
Putting the Rational Decision Making Model to work
Regardless of any perceived weaknesses these models are essential tools.
You’ll find more on these and other practical techniques in our related e-guides (below) or in Making Better Decisions.
Use the tools in this guide to help your decision making:
Tool 1: Do you need to make a decision?
Tool 2: The POCA decision making model
Tool 3: Decision levels
Tool 4: 7 step decision making process
Tool 5: Team decision making
Tool 6: Evaluating alternatives
See for yourself that a rational decision making model can help us to make better decisions – and thus help us to be better managers.
