The 3 Main Types of Decision Making!

Decision-Making is one of the most frequent mental processes in an adult’s daily life. Whether in an organizational context or on a personal level, we are constantly bombarded with dozens of options and the need to make a choice.

But are we aware of the different types of Decision-Making and when would we benefit from its use?

Using the literature about this theme, we can describe the process as being “the judgment that leads to a choice between alternatives. It is rarely about choosing between what is right and what is wrong. It is a choice between the almost right and the probably wrong – but, in general, it is a choice between two possible actions, none of which is more correct than another” (Peter Drucker, 1967, quoted by Armstrong, 2005).

I believe that Decision-Making is a subject of great relevance not only for the Human Resources Management or Management positions but also for general employees and in our daily lives. Among other benefits, the knowledge of the Decision-Making process will lead to more conscious and effective decisions, as well as to the development of an organizational culture that can help the employees to develop innovative decisions and being aligned with the culture.

Let’s take a look to the three main types of possible Decision-Making processes:

Rational Decision-Making

This type of process is related to the idea of a decision being made by an individual that:

  1. Clearly identifies the problem;
  2. Identifies the criteria needed to take the decision;
  3. Attributes “weights” to those criteria;
  4. Identifies all the possible ways of action/options;
  5. Choose the best way of action in order to maximize the realization of certain ends.

This type of decision is, of course, dependent on the goals and preferences of the individual. That is why a decision is never completely rational. In order to control our pre-established theories and stereotypes as also help us taking “better” decisions, the focus should always be the defined goals of the issue itself and always look for information that can contradict what we take for certain. This is the optimal process in Organizational Decision-Making.

Limited Rationality

In this theory, the process is done through simplified cognitive models, once rationality is limited by our memory. It is humanly impossible to have, at all time, all the information we obtained during our lives. That way, it is impossible to evaluate all the possible solutions, or their advantages and disadvantages. The decision-maker does not seek the optimal solution to the problem, but rather concentrates on retaining the solution that considers being more satisfactory for the situation.

In an organizational perspective, it is studied that the organization provides general stimuli and specific directives that guide the behaviour of employees and stimulate their action in the direction intended by managers.

Decisions by Intuition

Iced or hot, latte or mocha, the river or the sea? This type of Decision-Making is the most frequent on a daily basis.

Taking into consideration the number of choices that an adult needs to take every day, it would not be possible to do them all based on the rational Decision-Making process, and that was when Snap decisions “were born”. They are made unconsciously and automatically through an unconscious process, based on previous experiences, heuristics and emotions of the individual.

In opposition to the expected, this process allows us to respond to situations in a quick and effective way, but only for short-term events. In an organizational perspective, it is important to learn how to identify and control our snap decisions since we tend to act according to pre-established ideas and ignore information that contradicts what we believe in.

According to a large number of inconsistencies caused by the change and volatility of the business world, it is important that the decision maker is often able to take into account information that does not seems to match and integrate it into the Decision-Making.

As a different example, until some years ago, the auditions for orchestras were performed in an open stage. During this time orchestras held about 5% of female elements. When the  Blind Auditions were introduced, without any details identifying their gender, age or race, the percentage of positions held by women rose to slightly above 50%. So, although the decision-makers believed they were selecting based on the technical quality of the performances, their intuition was actually betraying them and highlighting their prejudices.

As a conclusion, it is important to keep in mind that all the organization decisions should be well thought out and properly evaluated before moving forward, to the action.

With that awareness, we will be able to optimize our professional decisions and make sure that we are acting according to rational reasons.

So, do not forget, for important decisions: Snap out of it! 🙂

Inês Sardinha
The Smiley

Business vector created by freepik – www.freepik.com

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