Decision Models and When to Use Them (2024)

What are decision-making models?

Decision-making models are ways of making a choice that follow a certain method. These models act as a roadmap when presented with a certain problem type, and you can choose the best approach for that issue.

You’d use a different model when you have lots of data to inform your decision compared to a situation where you can’t access factual information.

5 common decision-making models

Here are five of the most common and well-understood decision models, all of which you’ll find useful in the workplace.

1. The rational model

The rational decision-making model prioritizes logic and analysis, outlining eight precise steps:

1. Clarify the goal

2. Determine decision criteria

3. Define the relative importance of each criterion

4. Seek alternatives

5. Gather information about each possible solution

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6. Determine the best alternative

7. Execute the decision

8. Evaluate the decision

Here’s how this process looks in practice: let’s say you’re planning to hire remote employees from around the world and you need to decide what platform you’ll use to pay them.

First, you clarify your goal: find the cheapest, most reliable way of transferring funds internationally. The decision criteria would then be the cost to your company, the cost to employees, reliability, and speed. Of these criteria, you rank reliability as the most important, cost to your company next, cost to employees after that, and speed last.

Then you list options, look for price information and reviews, and record the information in an Excel spreadsheet. Based on this information, you pick the best platform and roll it out for new employees. Finally, you accept feedback regarding any problems that might make you want to switch to another provider.

The rational model works well in an ideal world where you have all the time and information you need. But, as economist Herbert Simon pointed out, few decisions are fully rational.

In practice, you’ll more likely use a bounded rationality model: you operate as logically as possible within the bounds of your cognitive and environmental limitations. Maybe you’re finishing a report close to the deadline and must decide how to present it.

You’re not going to carefully explore several layout options — you’ll find the first one that makes the document look decent and go with that.

Use the rational model when you have a clear sense of the options available and can get detailed information on each one.

Avoid the rational model when you’re working within tight time constraints or don’t have all the necessary information.

2. The intuitive model

The intuitive decision-making model is the opposite of the rational approach. Instead of thinking everything through logically, you decide based on the option that feels right to you.

Trusting your gut intuition works best when you have a lot of experience with or knowledge of the subject. That’s because while it feels like the solution just comes to you, your subconscious is looking for patterns in the information you’re receiving and linking the new information to implicit knowledge you already have.

Most managers make at least some of their decisions intuitively. One study found that 89% of managers always follow their intuition when making decisions, while a majority (59%) said they often use intuition to make decisions.

Because intuition is mostly subconscious, when using this method, it’s important to guard against the following cognitive biases:

• Confirmation bias: You tend to pay attention to new information consistent with your beliefs and ignore anything contradictory.

• Anchoring bias: When comparing numbers, the first one you see carries a lot of weight. Let’s say you’re job hunting and the first listing pays $200,000. The second one pays $100,000, which doesn’t seem like much in comparison to the first. But if the first one had paid $75,000, $100,000 would seem like a pretty good salary.

• Availability bias: You often base decisions on the most recent information you have. For example, if you’re deciding who to give a raise to, you might want to reward someone who did an excellent job on a recently finished project instead of someone who’s performed consistently well over the last year.

• In-group bias: You favor people in groups you belong to over people in groups you don’t.

If you’re using the intuitive model, examine your conclusions for traces of these cognitive biases.

Use the intuitive model when you have specific experience in the area and are under time pressure.

Avoid the intuitive model when you know you won’t be able to control your biases (like if someone close to you is involved).

3. The recognition-primed model

The recognition-primed decision model is closely related to the intuitive model and focuses on the intuitive decision-making process of people in high-pressure professions like firefighting, nursing, and the military.

Gary Klein, the developer of this model, was fascinated by how expert firefighters make life-saving decisions so quickly. He noticed that many firefighters could tell when a fire situation was out of the ordinary, even if they couldn’t quite understand why.

Klein found that these people don’t generate a series of options and consider each one (the rational approach), but they also don’t completely go with their intuition.

Instead, they use contextual knowledge to recognize the most important features of the situation and let that guide their decision about the best course of action. Then they play out response options in their heads. If they notice a problem with the simulated response, they either modify the approach or choose another.

Even if you’re not making life-and-death decisions, you can use the recognition-primed model to think on your feet. Let’s say you’re meeting with a star employee who tells you she has another offer and is considering quitting.

Your previous experience with these situations has taught you that if you want to keep the employee you should beat the offer, so you mentally map out what would happen if you did.

But by jumping ahead a few steps and thinking about what she’ll likely say, you realize that this particular employee values flexibility over financial security. You take a different track by matching the competing salary and offering her one day a week to work from home.

Use the recognition-primed model when you have a lot of contextual knowledge and need to adjust to changing circ*mstances.

Avoid the recognition-primed model when you’re not an expert, don’t know the situation well enough to predict likely answers, and aren’t under time constraints.

4. The creative model

The creative decision-making model is ideal when thinking outside the box might yield innovative solutions. The exact steps for this approach depend on whether you’re making the decision on your own or with others, but the rough sequence is as follows:

1. Clarify the decision: What are you trying to achieve?

2. Immerse yourself: Learn as much as you can about the problem and available options.

3. Incubate or brainstorm: If you’re by yourself, take a break and don’t think about the problem for a while. If you’re in a group, this is the right time to brainstorm.

4. Develop your idea: If you’re alone, a solution may have come to you after the incubation period. If not, go back to step two. If you’re in a group, pick some of the brainstormed ideas, experiment with the best ones, and use the results to choose one.

5. Apply the solution: Implement your idea and evaluate it.

Use the creative model when there’s space for unpredictability and experimentation.

Avoid the creative model when you don’t need to develop anything new.

5. The Vroom-Yetton decision model

Great leaders don’t just make good decisions on the ground — they also make thoughtful decisions about how to approach making decisions. The Vroom-Yetton model helps you decide which approach to take in different situations. To start, ask yourself the following questions:

1. Do you need to choose the absolute best option (maximizing), or can you settle for a good one that meets the minimum criteria (satisficing)?

2. Do you need buy-in from others?

3. Do you need more information from others?

4. Are the alternatives apparent?

5. Would your team protest if you made the decision without consulting them?

6. Do all your team members have the same goal?

7. Will your team accept your final decision peacefully?

The Vroom-Yetton model then guides you through a decision tree to one of five possible decision-making strategies based on your answers. For example, if it’s okay to satisfice and you don’t need buy-in from your team, you should make a top-down unilateral decision.

But if you need to choose the best option, require buy-in from your team, and don’t need information from others but know your team wouldn’t like it if you made the decision by yourself, you should work with the team to reach a solution.

Use the Vroom-Yetton model when you’re not sure which decision-making approach to take.

Avoid the Vroom-Yetton model when there are already constraints on how to make the decision (e.g., the organization has its own guidelines to follow for collaborative decision-making).

Hone your decision-making skills through practice

Getting to the best solution is just part of the challenge. As the intuitive and recognition-primed models suggest, your decisions get more accurate with practice — so improve your decision-making skills by trying these approaches.

If you’re nervous about trying a new decision model, use it in a fairly low-stakes situation. Over time, you’ll develop your own decision-making style and become more confident that your choices lead to the best outcomes for everyone around you.

Published April 25, 2023