An overview of decision-making models
Decision making means the process of selecting the best choices among various options. Every person has to make many decisions on a daily basis, and the decisions range from simple ones such as what to eat, where to go out for fun, to more complicated and important decisions such as which university to attend, or which major to study. These decisions tend to be personal and only affect one individual at a time. For a top-level manager of a big company, decision making is another story because his decision can influence hundreds of other employees' lives, and can even change the course of a company. Each manager employs a different decision-making model to evaluate their choices and reach the final decision. However, regardless of the models managers choose, there exist inherent decision-making traps that if they do not recognize and learn to deal with them, they will suffer from choosing the wrong course of actions which can lead to problematic consequences.
Rational decision-making model
The classic decision-making model is the rational decision-making model which consists of 8 steps that decision makers need to take to achieve the optimal decision given their goals and constraints. In order to come up with an appropriate decision, they should establish a list of criteria used to evaluate their choices. By adopting this model, the decision-makers have the opportunities to contemplate on what are the things that matter the most in their situation and select the choices that best reflect their standards. However, the problem of this model is the fact that people do not always know what they want or have enough information about the available alternatives, and usually, people end up just making a "good enough" or a safe-bet decision.
Intuitive decision-making model
The second decision-making model which is utilized frequently by experts and experienced managers is the intuitive decision-making model. At first, this model appears to be based solely on gut feelings, but closer examination reveals that it is in fact a very sophisticated process in which the manager applies their intuition in many ways. First, they intuitively detect a potential problem and use their intuition to investigate its patterns. In this case, intuition means their painstaking years of experience, expertise, education background, insider information and other valuable resources unknown to an average employee. Intuition also helps them to integrate pieces of isolated data, facts and figures to a complete picture of the whole problem. If there is more than one possible solution to the problem, the manager will use their intuition as a check point to eliminate anti-intuitive decision and go with their gut feelings. One distinctive feature of this decision making model is that acting is a part of the process of defining and analyzing the problems. Managers usually “know” what to do first before they can explain the justification for their actions, and they use the results from their action to further their understanding about the problems.
Creative decision-making model
Another decision-making model is the creative decision-making model. This model is applied when the decision maker has to come up with an original and unique decision for a situation. In the decision-making process, after gathering information and insights about the problem and generating some initial ideas, the decision maker undergoes a period of incubation, in which he does not actively think about the solutions but let his unconscious mind take over the process. After quite some time, the answer just naturally comes to him in an “eureka” moment, and his next step is just to test and finalize it. The downside of this model is the success of it depends mainly on the decision maker's personal traits such as his creativity and the contextual situation.
Recognition-primed decision making model
This decision-making model was developed by Gary A. Klein in his book “Recognition-primed decision model”. This model incorporates contextual assessment and metal evaluation to come up with the best reaction to a problem. The characterizing element of this model is that decision makers consider only one option instead of weighing several choices at a time. After recognizing the problem, the manager identifies its characteristics including the goals, problem cues, expectations and typical actions to take, the situation. After that the manager will think through the plan, conducting a mental simulation of the scenario to see if it works and making suitable modifications if necessary. If he thinks the plan is sufficient, he makes it his final decision. An alternative is only assessed if the initial plan does not work out in the manager's opinion. Although this decision-making model can be applied when managers are under time pressure, its success rate correlates with managers’ experiences and expertise.
What is your most commonly-used decision-making approach?
Common decision-making traps: confidence bias
Obviously, each decision - making model has its own pros and cons. Moreover, there are also decision-making traps that decision makers should be aware of so that they can avoid letting those traps cloud their judgment. First of all, confidence bias is a very common problem, especially among seasoned managers. Clearly, it is very important that the manager should be confident, particularly in a critical time when the company requires pivotal decisions. However, if the manager is overconfident, and is blinded by his past success, he can become careless, oversimplify the situation or miss some key information, and end up making a risky decision or even a costly one for the company. Hence, before making any decisions based on past experiences and personal opinion, decision makers should spend some time to detach themselves from the situation and look at their decision with an objective attitude.
Common decision-making traps: Hindsight bias
Hindsight bias is also likely to obscure decision makers' judgment. After a problem occurs, detecting the person or event at fault that leads to the problem is an important part of finding the right solution. However, if holding a hindsight bias, the manager can blame the problem on the wrong person/ department because he only selectively looks back at certain events in the past instead of getting the whole picture of what really happened. This can cause internal conflict and endless accusations which are detrimental to an organization in the time of crisis. Moreover, by identifying the wrong cause, the manager increases the chances of making a faulty decision.
Common decision-making traps: anchoring bias
Next, anchoring bias can impede a decision maker. Researchers have shown that people have the tendency to just see what they want to see, and they make decisions only based on those pieces of information. This bias is very dangerous because it might make the situation appear brighter than it actually is, and it conceals other perspectives of the problems from the decision maker. In addition, if the decision maker only focuses on some specific information, he might overlook other possibilities or alternatives to decide on a more effective solution. Framing bias is another related trap when the decision maker is deceived by the way the problem is presented to him. Both of these biases distort the nature of the problems and hinder the decision maker's ability to think out of the box.
Common decision-making traps: escalation of commitment
Last but not least, escalation of commitment is often considered a fatal trap. Nobody wants to admit that his decision is a mistake, and managers are especially defensive of their decisions. Also, some managers believe that the plan does not work out yet just because they haven't spend enough time and efforts, and they want to commit further to it. However, once there is enough evidence to prove that the current decision is a bad move, continuing to execute it will only lead to more damages to the organization. A wise manager is someone who not only knows how to make good decisions but also recognizes a bad one and has the courage to abandon it and embark on a new track.
In order to become a successful decision maker, a person should learn to apply the appropriate decision-making model in each situation, and practice it frequently to master the use of it. More importantly, one should avoid the decision-making traps so that they will not cloud one's judgement. For senior managers whose decisions can impact the lives of hundreds of people, they should invest more time to explore more decision-making tools and techniques to prevent them from falling into those traps and make better decisions.