when problem solving and making decisions your rational

The Ultimate Guide to Rational Decision-Making (With Steps)

Making decisions is an integral part of our lives. However, how many times do we really stop to think whether our choices are rational or not?

This article dives deep into the concept of rational decision-making, its importance, real-life examples, steps involved, factors influencing it, ways to enhance your skills, potential challenges, and how cognitive biases impact it. Let’s dive in.

What is Rational Decision-Making?

Rational decision-making, at its core, is a multi-step process used to make choices that are logical, informed, and objective. It involves identifying a decision problem, gathering information, evaluating alternatives, and selecting the most rational choice. This is a stark contrast to decisions based on subjectivity or intuition, which may often rely on feelings, emotions, or personal biases.

The goal of rational decision-making is to reach decisions that support your objectives in the most optimal way. The basis of this process is rationality—a concept that propels us to make decisions that provide the maximum benefit or, in other words, the best possible outcome. Rationality encourages us to follow a path that aligns with our goals and values while making decisions. It’s an antidote to impulsive choices or decisions clouded by bias and personal emotions.

While intuitive decisions can sometimes lead to effective outcomes, especially in situations demanding quick responses, rational decision-making allows us to consider all available options, analyze their potential consequences, and make an informed choice. This often leads to decisions that are more aligned with our long-term goals and less likely to result in unintended consequences.

Why is Rational Decision-Making Important?

Rational decision-making is the cornerstone of effective problem-solving and critical thinking. It helps us to make informed choices that are not only beneficial but also ethical, a crucial aspect in both personal and professional life.

In business, rational decision-making can lead to strategies that maximize profit, minimize risk, and promote organizational growth. It ensures resource optimization by aligning decisions with business objectives. Rationality ensures that every decision is data-driven, increasing the likelihood of successful outcomes.

On a personal level, rational decision-making can help us make better choices about our health, finances, relationships, and more. It enables us to make choices that align with our values and life goals, improving our overall quality of life.

Examples of Using Rational Decision-Making

Let’s see how rational decision-making manifests in various spheres.

Business: A company looking to launch a new product will employ rational decision-making. They’ll conduct market research, analyze competitor products, evaluate their resources, and predict potential profits before making a decision. This ensures the decision is based on facts and not just intuition.

Leadership: Leaders use rational decision-making while shaping policies or resolving conflicts. A school principal, for instance, may have to decide whether to enforce a strict no-mobile policy.

They’ll consider the pros and cons, consult with teachers, parents, and students, and make a decision that is most beneficial for the school’s academic environment.

Personal Finance: An individual considering their retirement savings plan would utilize rational decision-making. They might begin by understanding the importance of saving for retirement and gathering information about various options like 401(k)s, IRAs, or traditional savings accounts.

They would evaluate these alternatives, considering factors like potential growth, risk level, and tax benefits. The decision would be based on their financial situation, retirement goals, and risk tolerance, ensuring their choice is not impulsive but grounded in careful consideration and analysis.

Steps Involved in Rational Decision-Making

The rational decision-making process comprises several key steps. Here’s a rundown:

1. Identify the Decision

The first step in rational decision-making is acknowledging that a decision is required. The decision is usually a problem but can also be an opportunity. This is the foundational stage where the problem or situation is recognized, and the need for a decision becomes apparent.

You can’t make a rational decision unless you know exactly what the problem is and the context of the decision that needs to be made. Ask yourself questions such as:

• Why does a decision need to be made?
• What consequences will unfold if no decision is made?
• What desired outcome are we aiming for?
• What stands in the way of achieving it?

Take, for instance, a business observing declining profits. The company identifies the problem and realizes that strategic decisions need to be made to address this issue.

It might ask: What is the reason behind the decreasing profits? What will happen if the situation is not addressed? What are our financial goals, and what is impeding us from achieving them? This level of detailed understanding and clarity sets the stage for the subsequent steps of the decision-making process.

2. Gather Information

Once the decision has been identified, the next step is to gather relevant information about it. This could include data analysis, research, consultations with experts, surveys, etc.

Using the previous example, the business might look into financial statements, assess market trends, and consider feedback from customers. A thorough and unbiased collection of data is critical as it forms the backbone of a rational decision.

3. Identify Alternatives

The third step involves generating a list of potential alternatives. There is often more than one way to address a problem or situation, so it’s important to consider different approaches and options.

For the business facing decreasing profits, alternatives could include cost-cutting, investing in new marketing strategies, introducing new products, or even merging with another company. Creativity and open-mindedness are key in this stage to ensure a wide range of options.

4. Evaluate Alternatives

After generating alternatives, the next crucial step is to evaluate each one. This stage involves a systematic analysis of the pros and cons, feasibility, potential impact, and other factors pertinent to each option. Here, establishing your decision criteria—such as cost-effectiveness, scalability, risk level, and potential return—is key. Once established, these criteria need to be weighed based on their importance to solving the problem at hand.

For example, a business might establish criteria like cost, projected return, and alignment with company values. These criteria would be applied to evaluate the potential impact of different marketing strategies, the feasibility of cost-cutting measures, or the implications of a merger.

This systematic evaluation process, underpinned by established and weighted decision criteria, enables a business to compare and contrast different options effectively. It assists in determining which alternative aligns best with the defined criteria and thus holds the highest potential for success.

5. Choose an Alternative

This step involves making the actual decision among the evaluated alternatives. Typically, the best alternative is the one with the greatest likelihood of solving the issue, paired with the lowest degree of risk.

It’s where the business might choose the most cost-effective marketing strategy that is expected to reach the widest audience. While this stage concludes with a decision, the rational decision-making process is not yet complete.

6. Take Action

This is where the chosen alternative is implemented. It involves carrying out the decision and monitoring its progress.

For the business, this would mean launching the selected marketing strategy and keeping a close eye on metrics such as customer engagement, sales, and profit margins. It’s important to remember that this stage might involve overcoming obstacles and making adjustments as necessary.

7. Review the Decision

The final step of the process is to review and evaluate the results of the decision. This includes analyzing whether the decision has resolved the problem or situation and, if not, considering what adjustments need to be made.

In our business example, this could mean assessing whether the new marketing strategy has indeed increased profits. If it hasn’t, the business might need to revisit previous steps of the process to identify and implement a new decision.

These steps make up the backbone of the rational decision-making process, enabling us to systematically approach our choices, ensuring they are backed by logic and evidence.

Assumptions for Using a Rational Decision-Making Model

To effectively utilize the rational decision-making process, it’s necessary to make several key assumptions. These assumptions create a baseline for the decision-making process and help ensure its effective implementation:

• Complete Information: One must assume that all the information needed to make the decision is available and accessible. This includes details about the problem, potential solutions, and their outcomes.
• Decision-Maker Rationality: The person making the decision is assumed to be rational, meaning they are objective, logical, and aim to make the best choice based on the information available.
• Clear Objectives: The decision-maker is assumed to have clear and consistent objectives or goals that guide the decision-making process.
• Time and Resources: It’s assumed that the decision-maker has adequate time and resources to gather information, evaluate alternatives, and make a decision.
• Decision-Maker Independence: The decision-maker is assumed to have the freedom and authority to make the decision without undue influence or restrictions.
• Stable Environment: The environment in which the decision is being made is assumed to be stable, allowing for reliable predictions about the consequences of each alternative.
• Logical Evaluation: It’s assumed that the decision-maker can logically evaluate the pros and cons of each alternative, weigh them against each other, and make a rational choice.

Other Rational Decision-Making Models

While the steps above cover the basics of rational decision-making, there are several rational decision-making models that have been developed by scholars and researchers over the years.

These models provide structured approaches to making decisions based on logical reasoning and analysis. Here are a few examples:

• The Rational Economic Model: This model assumes that individuals make decisions by maximizing their utility or satisfaction, considering all available information, and weighing the costs and benefits of different alternatives.
• The Bounded Rationality Model: Proposed by Herbert Simon, this model recognizes that humans have limitations in processing information and making fully rational decisions. It suggests that individuals make decisions that are “good enough” rather than optimal, taking into account their cognitive constraints and the available information.
• The Normative Decision Model: This model focuses on the ideal decision-making process, providing a step-by-step framework for making rational decisions. It emphasizes gathering complete information, considering all alternatives, and evaluating the potential outcomes before selecting the best option.
• The Garbage Can Model: This model views decision-making as a chaotic process that occurs in organizations. It suggests that decisions often result from a combination of problems, solutions, participants, and circumstances coming together in a “garbage can” and being resolved opportunistically.
• The Prospect Theory: Proposed by Daniel Kahneman and Amos Tversky, this model challenges the assumptions of rational decision-making by considering how individuals assess and weigh potential gains and losses. It suggests that people tend to be risk-averse when it comes to gains but risk-seeking when it comes to losses.

These are just a few examples of rational decision-making models. Each model offers a unique perspective and set of principles for approaching decision-making tasks. The choice of model depends on the context, problem complexity, available information, and the decision-makers preferences and constraints.

Factors Influencing Rational Decision-Making

While the idea of making a completely rational decision sounds perfect, in reality, our decisions are often influenced by various factors.

• Information Availability: The amount and quality of information at our disposal can greatly influence our decisions. With limited or incorrect information, we may end up making less-than-optimal decisions.
• Time Constraints: Often, we are pressed for time while making decisions. Under such constraints, we might not go through the full rational decision-making process.
• Cognitive Limitations: Our cognitive capacity to process information and make decisions is limited. We can be overwhelmed with too many alternatives or complex decision scenarios.
• Emotions: Our emotions often play a part in our decisions. We might make irrational choices under emotional distress.

Impact of Cognitive Biases on Rational Decision-Making

Cognitive biases can seriously impact our rational decision-making abilities. These mental shortcuts or “biases” can lead us to make decisions that are not in our best interest.

For instance, confirmation bias can make us pay more attention to information that confirms our pre-existing beliefs and ignore contradicting evidence. Similarly, the anchoring bias can cause us to rely heavily on the first piece of information we receive when making decisions.

Cognitive biases often lead to irrational choices. Being aware of these biases is the first step towards mitigating their impact on our decision-making process.

Potential Challenges in Rational Decision-Making

Rational decision-making, despite its merits, isn’t without its challenges. Some of these include:

• Information Overload: In an age of data deluge, filtering through massive amounts of information to make decisions can be overwhelming.
• Analysis Paralysis: Overanalyzing or overthinking can lead to indecision or delays in decision-making.
• Unpredictable Outcomes: Even with a thorough analysis, outcomes can be unpredictable due to the dynamic nature of our environment.

Developing Rational Decision-Making Skills

Wondering how to become better at making rational decisions? Here are some tips to get you going:

• Improve Critical Thinking: Critical thinking allows us to objectively analyze information and logically derive conclusions. By developing your critical thinking skills, you can better evaluate decision alternatives.
• Practice Mindfulness: Being aware of your thoughts and emotions can help you identify when they are clouding your decision-making process.
• Use Decision-Making Models: Decision-making models can provide a structured approach to rational decision-making. They can help guide you through complex decision scenarios.

Remember, developing rational decision-making skills takes time and practice. Stay patient and keep practicing.

Frequently Asked Questions

Rational decision-making is a structured, logical process that uses evidence and analysis. Intuitive decision-making relies on instinct and gut feelings.

Yes, rational decision-making can be applied in personal situations like choosing a career, managing finances, or making health-related decisions.

Yes, decision-making models like SWOT analysis, decision trees, or cost-benefit analysis can provide structured approaches to enhance rationality.

Wrapping Up

Rational decision-making is a skill that can transform our personal and professional lives, steering us toward more informed and effective choices. Though challenges exist, with awareness and practice, we can significantly improve our decision-making prowess.

By understanding the nuances of rational decision-making, we not only enhance our decision-making abilities but also become better thinkers, planners, and problem-solvers. Now, isn’t that a step towards a more informed and empowered life?

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Rational Decision Making: The 7-Step Process for Making Logical Decisions

Published: October 17, 2023

Psychology tells us that emotions drive our behavior, while logic only justifies our actions after the fact . Marketing confirms this theory. Humans associate the same personality traits with brands as they do with people  — choosing your favorite brand is like choosing your best friend or significant other. We go with the option that makes us feel something.

But emotions can cloud your reasoning, especially when you need to do something that could cause internal pain, like giving constructive criticism, or moving on from something you’re attached to, like scrapping a favorite topic from your team's content calendar.

There’s a way to suppress this emotional bias, though. It’s a thought process that’s completely objective and data-driven. It's called the rational decision making model, and it will help you make logically sound decisions even in situations with major ramifications , like pivoting your entire blogging strategy.

But before we learn each step of this powerful process, let’s go over what exactly rational decision making is and why it’s important.

What is Rational Decision Making?

Rational decision making is a problem-solving methodology that factors in objectivity and logic instead of subjectivity and intuition to achieve a goal. The goal of rational decision making is to identify a problem, pick a solution between multiple alternatives, and find an answer.

Rational decision making is an important skill to possess, especially in the digital marketing industry. Humans are inherently emotional, so our biases and beliefs can blur our perception of reality. Fortunately, data sharpens our view. By showing us how our audience actually interacts with our brand, data liberates us from relying on our assumptions to determine what our audience likes about us.

Rational Decision Making Model: 7 Easy Steps(+ Examples)

1. Verify and define your problem.

To prove that you actually have a problem, you need evidence for it. Most marketers think data is the silver bullet that can diagnose any issue in our strategy, but you actually need to extract insights from your data to prove anything. If you don’t, you’re just looking at a bunch of numbers packed into a spreadsheet.

To pinpoint your specific problem, collect as much data from your area of need and analyze it to find any alarming patterns or trends.

“After analyzing our blog traffic report, we now know why our traffic has plateaued for the past year — our organic traffic increases slightly month over month but our email and social traffic decrease.”

2. Research and brainstorm possible solutions for your problem.

Expanding your pool of potential solutions boosts your chances of solving your problem. To find as many potential solutions as possible, you should gather plenty of information about your problem from your own knowledge and the internet. You can also brainstorm with others to uncover more possible solutions.

Potential Solution 1: “We could focus on growing organic, email, and social traffic all at the same time."

Potential Solution 2: “We could focus on growing email and social traffic at the same time — organic traffic already increases month over month while traffic from email and social decrease.”

Potential Solution 3: "We could solely focus on growing social traffic — growing social traffic is easier than growing email and organic traffic at the same time. We also have 2 million followers on Facebook, so we could push our posts to a ton of readers."

Potential Solution 4: "We could solely focus on growing email traffic — growing email traffic is easier than growing social and organic traffic at the same time. We also have 250,000 blog subscribers, so we could push our posts to a ton of readers."

Potential Solution 5: "We could solely focus on growing organic traffic — growing organic traffic is easier than growing social and email traffic at the same time. We also just implemented a pillar-cluster model to boost our domain’s authority, so we could attract a ton of readers from Google."

3. Set standards of success and failure for your potential solutions.

Setting a threshold to measure your solutions' success and failure lets you determine which ones can actually solve your problem. Your standard of success shouldn’t be too high, though. You’d never be able to find a solution. But if your standards are realistic, quantifiable, and focused, you’ll be able to find one.

“If one of our solutions increases our total traffic by 10%, we should consider it a practical way to overcome our traffic plateau.”

4. Flesh out the potential results of each solution.

Next, you should determine each of your solutions’ consequences. To do so, create a strength and weaknesses table for each alternative and compare them to each other. You should also prioritize your solutions in a list from best chance to solve the problem to worst chance.

Potential Result 1: ‘Growing organic, email, and social traffic at the same time could pay a lot of dividends, but our team doesn’t have enough time or resources to optimize all three channels.”

Potential Result 2: “Growing email and social traffic at the same time would marginally increase overall traffic — both channels only account for 20% of our total traffic."

Potential Result 3: “Growing social traffic by posting a blog post everyday on Facebook is challenging because the platform doesn’t elevate links in the news feed and the channel only accounts for 5% of our blog traffic. Focusing solely on social would produce minimal results.”

Potential Result 4: “Growing email traffic by sending two emails per day to our blog subscribers is challenging because we already send one email to subscribers everyday and the channel only accounts for 15% of our blog traffic. Focusing on email would produce minimal results.”

Potential Result 5: “Growing organic traffic by targeting high search volume keywords for all of our new posts is the easiest way to grow our blog’s overall traffic. We have a high domain authority, Google refers 80% of our total traffic, and we just implemented a pillar-cluster model. Focusing on organic would produce the most results.”

5. Choose the best solution and test it.

Based on the evaluation of your potential solutions, choose the best one and test it. You can start monitoring your preliminary results during this stage too.

“Focusing on organic traffic seems to be the most effective and realistic play for us. Let’s test an organic-only strategy where we only create new content that has current or potential search volume and fits into our pillar cluster model.”

6. Track and analyze the results of your test.

Track and analyze your results to see if your solution actually solved your problem.

“After a month of testing, our blog traffic has increased by 14% and our organic traffic has increased by 21%.”

7. Implement the solution or test a new one.

If your potential solution passed your test and solved your problem, then it’s the most rational decision you can make. You should implement it to completely solve your current problem or any other related problems in the future. If the solution didn’t solve your problem, then test another potential solution that you came up with.

“The results from solely focusing on organic surpassed our threshold of success. From now on, we’re pivoting to an organic-only strategy, where we’ll only create new blog content that has current or future search volume and fits into our pillar cluster model.”

Avoid Bias With A Rational Decision Making Process

As humans, it’s natural for our emotions to take over your decision making process. And that’s okay. Sometimes, emotional decisions are better than logical ones. But when you really need to prioritize logic over emotion, arming your mind with the rational decision making model can help you suppress your emotion bias and be as objective as possible.

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Mastering problem solving and decision making.

© Copyright Carter McNamara, MBA, PhD, Authenticity Consulting, LLC .

Sections of This Topic Include

• Test – What is Your Personal Decision-Making Style?
• Guidelines to Rational Problem Solving and Decision-Making
• Rational Versus Organic Approach to Problem Solving and Decision Making
• General Guidelines to Problem Solving and Decision-Making
• Various Methods and Tools for Problem-Solving and Decision Making
• General Resources for Problem-Solving and Decision Making

Also, consider

• Related Library Topics
• (Also see the closely related topics Decision Making , Group-Based Problem Solving, and Decision Making and Planning — Basics .)

What is Your Personal Decision-Making Style?

There are many styles of making decisions, ranging from very rational and linear to organic and unfolding. Take this online assessment to determine your own style.

Discover Your Decision-Making Style

Do you want to improve or polish your style? Consider the many guidelines included below.

Guidelines to Problem-Solving and Decision Making (Rational Approach)

Much of what people do is solve problems and make decisions. Often, they are “under the gun”, stressed, and very short of time. Consequently, when they encounter a new problem or decision they must make, they react with a decision that seemed to work before. It’s easy with this approach to get stuck in a circle of solving the same problem over and over again. Therefore, it’s often useful to get used to an organized approach to problem-solving and decision-making.

Not all problems can be solved and decisions made by the following, rather rational approach. However, the following basic guidelines will get you started. Don’t be intimidated by the length of the list of guidelines. After you’ve practiced them a few times, they’ll become second nature to you — enough that you can deepen and enrich them to suit your own needs and nature.

(Note that it might be more your nature to view a “problem” as an “opportunity”. Therefore, you might substitute “problem” for “opportunity” in the following guidelines.)

1. Define the problem

This is often where people struggle. They react to what they think the problem is. Instead, seek to understand more about why you think there’s a problem.

Define the problem: (with input from yourself and others). Ask yourself and others, the following questions:

• What can you see that causes you to think there’s a problem?
• Where is it happening?
• How is it happening?
• When is it happening?
• With whom is it happening? (HINT: Don’t jump to “Who is causing the problem?” When we’re stressed, blaming is often one of our first reactions. To be an effective manager, you need to address issues more than people.)
• Why is it happening?
• Write down a five-sentence description of the problem in terms of “The following should be happening, but isn’t …” or “The following is happening and should be: …” As much as possible, be specific in your description, including what is happening, where, how, with whom and why. (It may be helpful at this point to use a variety of research methods.)

Defining complex problems:

If the problem still seems overwhelming, break it down by repeating steps 1-7 until you have descriptions of several related problems.

Verifying your understanding of the problems:

It helps a great deal to verify your problem analysis for conferring with a peer or someone else.

Prioritize the problems:

If you discover that you are looking at several related problems, then prioritize which ones you should address first.

Note the difference between “important” and “urgent” problems. Often, what we consider to be important problems to consider are really just urgent problems. Important problems deserve more attention. For example, if you’re continually answering “urgent” phone calls, then you’ve probably got a more “important” problem and that’s to design a system that screens and prioritizes your phone calls.

Understand your role in the problem:

Your role in the problem can greatly influence how you perceive the role of others. For example, if you’re very stressed out, it’ll probably look like others are, too, or, you may resort too quickly to blaming and reprimanding others. Or, you are feel very guilty about your role in the problem, you may ignore the accountabilities of others.

2. Look at potential causes for the problem

• It’s amazing how much you don’t know about what you don’t know. Therefore, in this phase, it’s critical to get input from other people who notice the problem and who are affected by it.
• It’s often useful to collect input from other individuals one at a time (at least at first). Otherwise, people tend to be inhibited about offering their impressions of the real causes of problems.
• Write down your opinions and what you’ve heard from others.
• Regarding what you think might be performance problems associated with an employee, it’s often useful to seek advice from a peer or your supervisor in order to verify your impression of the problem.
• Write down a description of the cause of the problem in terms of what is happening, where, when, how, with whom, and why.

3. Identify alternatives for approaches to resolve the problem

At this point, it’s useful to keep others involved (unless you’re facing a personal and/or employee performance problem). Brainstorm for solutions to the problem. Very simply put, brainstorming is collecting as many ideas as possible, and then screening them to find the best idea. It’s critical when collecting the ideas to not pass any judgment on the ideas — just write them down as you hear them. (A wonderful set of skills used to identify the underlying cause of issues is Systems Thinking.)

4. Select an approach to resolve the problem

• When selecting the best approach, consider:
• Which approach is the most likely to solve the problem for the long term?
• Which approach is the most realistic to accomplish for now? Do you have the resources? Are they affordable? Do you have enough time to implement the approach?
• What is the extent of risk associated with each alternative?

(The nature of this step, in particular, in the problem solving process is why problem solving and decision making are highly integrated.)

5. Plan the implementation of the best alternative (this is your action plan)

• Carefully consider “What will the situation look like when the problem is solved?”
• What steps should be taken to implement the best alternative to solving the problem? What systems or processes should be changed in your organization, for example, a new policy or procedure? Don’t resort to solutions where someone is “just going to try harder”.
• How will you know if the steps are being followed or not? (these are your indicators of the success of your plan)
• What resources will you need in terms of people, money, and facilities?
• How much time will you need to implement the solution? Write a schedule that includes the start and stop times, and when you expect to see certain indicators of success.
• Who will primarily be responsible for ensuring the implementation of the plan?
• Write down the answers to the above questions and consider this as your action plan.
• Communicate the plan to those who will involved in implementing it and, at least, to your immediate supervisor.

(An important aspect of this step in the problem-solving process is continual observation and feedback.)

6. Monitor implementation of the plan

Monitor the indicators of success:

• Are you seeing what you would expect from the indicators?
• Will the plan be done according to schedule?
• If the plan is not being followed as expected, then consider: Was the plan realistic? Are there sufficient resources to accomplish the plan on schedule? Should more priority be placed on various aspects of the plan? Should the plan be changed?

7. Verify if the problem has been resolved or not

One of the best ways to verify if a problem has been solved or not is to resume normal operations in the organization. Still, you should consider:

• What changes should be made to avoid this type of problem in the future? Consider changes to policies and procedures, training, etc.
• Lastly, consider “What did you learn from this problem-solving?” Consider new knowledge, understanding, and/or skills.
• Consider writing a brief memo that highlights the success of the problem-solving effort, and what you learned as a result. Share it with your supervisor, peers and subordinates.

Rational Versus Organic Approach to Problem Solving

A person with this preference often prefers using a comprehensive and logical approach similar to the guidelines in the above section. For example, the rational approach, described below, is often used when addressing large, complex matters in strategic planning.

• Define the problem.
• Examine all potential causes for the problem.
• Identify all alternatives to resolve the problem.
• Carefully select an alternative.
• Develop an orderly implementation plan to implement the best alternative.
• Carefully monitor the implementation of the plan.
• Verify if the problem has been resolved or not.

A major advantage of this approach is that it gives a strong sense of order in an otherwise chaotic situation and provides a common frame of reference from which people can communicate in the situation. A major disadvantage of this approach is that it can take a long time to finish. Some people might argue, too, that the world is much too chaotic for the rational approach to be useful.

Some people assert that the dynamics of organizations and people are not nearly so mechanistic as to be improved by solving one problem after another. Often, the quality of an organization or life comes from how one handles being “on the road” itself, rather than the “arriving at the destination.” The quality comes from the ongoing process of trying, rather than from having fixed a lot of problems. For many people, it is an approach to organizational consulting. The following quote is often used when explaining the organic (or holistic) approach to problem solving.

“All the greatest and most important problems in life are fundamentally insoluble … They can never be solved, but only outgrown. This “outgrowing” proves that further investigation to require a new level of consciousness. Some higher or wider interest appeared on the horizon and through this broadening of outlook, the insoluble lost its urgency. It was not solved logically in its own terms, but faded when confronted with a new and stronger life urge.” From Jung, Carl, Psychological Types (Pantheon Books, 1923)

A major advantage of the organic approach is that it is highly adaptable to understanding and explaining the chaotic changes that occur in projects and everyday life. It also suits the nature of people who shun linear and mechanistic approaches to projects. The major disadvantage is that the approach often provides no clear frame of reference around which people can communicate, feel comfortable and measure progress toward solutions to problems.

Additional Guidelines for Problem-Solving and Decision Making

Recommended articles.

• Ten Tips for Beefing Up Your Problem-Solving Tool Box
• Problem Solving Techniques (extensive overview of various approaches)
• Key Questions to Ask Before Selecting a Solution to a Business Problem

Additional Articles

• Problem-solving and Decision-Making:
• Top 5 Tips to Improve Concentration
• Problem Solving and Decision Making – 12 Great Tips!
• Powerful Problem Solving
• Creative Problem-Solving
• Leadership Styles and Problem Solving (focus on creativity)
• Forget About Causes, Focus on Solutions
• Ten Tips for Beefing Up Your Problem-Solving ToolBox
• Coaching Tip: Four-Question Method for Proactive Problem Solving
• Coaching Tip — How to Bust Paralysis by Analysis
• Appreciative Inquiry
• Powerful Problem-Solving
• Problem-Solving Techniques
• Guidelines for Selecting An Appropriate Problem-Solving Approach
• Factors to Consider in Figuring Out What to Do About A Problem
• A Case for Reengineering the Problem-Solving Process (Somewhat Advanced)
• Courseware on Problemistics (The art & craft of problem dealing)
• Adapt your leadership style
• Organic Approach to Problem Solving
• Make Good Decisions, Avoid Bad Consequences
• Priority Management: Are You Doing the Right Things?

General Guidelines for Decision Making

• Decision-Making Tips
• How We Sometimes Fool Ourselves When Making Decisions (Traps We Can Fall Into)
• More of the Most Common Decision-Making Mistakes (more traps we can fall into)
• When Your Organization’s Decisions Are in the Hands of Devils
• Flawed Decision-making is Dangerous
• Five Tips for Making Better Decisions
• Study Says People Make Better Decisions With a Full Bladder
• What Everyone Should Know About Decision Making

Various Tools and Methods for Problem Solving and Decision Making

(Many people would agree that the following methods and tools are also for decision-making.)

• Cost Benefit Analysis (for deciding based on costs)
• De Bono Hats (for looking at a situation from many perspectives
• Delphi Decision Making (to collect the views of experts and distill expert-based solutions)
• Dialectic Decision Making (rigorous action planning via examining opposite points of view) Fishbone Diagram —
• 5 Steps to build Fishbone Diagram
• Fishbowls (for groups to learn by watching modeled behaviors)
• Grid Analysis (for choosing among many choices)
• Pareto Principle (for finding the options that will make the most difference — (20/80 rule”)
• For solving seemingly unsolvable contradictions
• Rational Decision Making
• SWOT Analysis (to analyze strengths, weaknesses, opportunities, and threats)
• Work Breakdown Structure (for organizing and relating many details)

General Resources for Problem Solving and Decision Making

• The Ultimate Problem-Solving Process Guide: 31 Steps and Resources
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• Mental Models (scan down to “Mental Models”)
• Questioning
• Research Methods
• Systems Thinking

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The SkillsYouNeed Guide to Interpersonal Skills

Making decisions and solving problems are two key areas in life, whether you are at home or at work. Whatever you’re doing, and wherever you are, you are faced with countless decisions and problems, both small and large, every day.

Many decisions and problems are so small that we may not even notice them. Even small decisions, however, can be overwhelming to some people. They may come to a halt as they consider their dilemma and try to decide what to do.

Small and Large Decisions

In your day-to-day life you're likely to encounter numerous 'small decisions', including, for example:

Tea or coffee?

What shall I have in my sandwich? Or should I have a salad instead today?

What shall I wear today?

Larger decisions may occur less frequently but may include:

Should we repaint the kitchen? If so, what colour?

Should we relocate?

Should I propose to my partner? Do I really want to spend the rest of my life with him/her?

These decisions, and others like them, may take considerable time and effort to make.

The relationship between decision-making and problem-solving is complex. Decision-making is perhaps best thought of as a key part of problem-solving: one part of the overall process.

Our approach at Skills You Need is to set out a framework to help guide you through the decision-making process. You won’t always need to use the whole framework, or even use it at all, but you may find it useful if you are a bit ‘stuck’ and need something to help you make a difficult decision.

Decision Making

Effective Decision-Making

This page provides information about ways of making a decision, including basing it on logic or emotion (‘gut feeling’). It also explains what can stop you making an effective decision, including too much or too little information, and not really caring about the outcome.

A Decision-Making Framework

This page sets out one possible framework for decision-making.

The framework described is quite extensive, and may seem quite formal. But it is also a helpful process to run through in a briefer form, for smaller problems, as it will help you to make sure that you really do have all the information that you need.

Problem Solving

Introduction to Problem-Solving

This page provides a general introduction to the idea of problem-solving. It explores the idea of goals (things that you want to achieve) and barriers (things that may prevent you from achieving your goals), and explains the problem-solving process at a broad level.

The first stage in solving any problem is to identify it, and then break it down into its component parts. Even the biggest, most intractable-seeming problems, can become much more manageable if they are broken down into smaller parts. This page provides some advice about techniques you can use to do so.

Sometimes, the possible options to address your problem are obvious. At other times, you may need to involve others, or think more laterally to find alternatives. This page explains some principles, and some tools and techniques to help you do so.

Having generated solutions, you need to decide which one to take, which is where decision-making meets problem-solving. But once decided, there is another step: to deliver on your decision, and then see if your chosen solution works. This page helps you through this process.

‘Social’ problems are those that we encounter in everyday life, including money trouble, problems with other people, health problems and crime. These problems, like any others, are best solved using a framework to identify the problem, work out the options for addressing it, and then deciding which option to use.

This page provides more information about the key skills needed for practical problem-solving in real life.

Further Reading from Skills You Need

The Skills You Need Guide to Interpersonal Skills eBooks.

Develop your interpersonal skills with our series of eBooks. Learn about and improve your communication skills, tackle conflict resolution, mediate in difficult situations, and develop your emotional intelligence.

Guiding you through the key skills needed in life

As always at Skills You Need, our approach to these key skills is to provide practical ways to manage the process, and to develop your skills.

Neither problem-solving nor decision-making is an intrinsically difficult process and we hope you will find our pages useful in developing your skills.

Start with: Decision Making Problem Solving

See also: Improving Communication Interpersonal Communication Skills Building Confidence

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Rational decision making

Satisficing and bounded rationality, intra-organizational political decision making.

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decision making , process and logic through which individuals arrive at a decision. Different models of decision making lead to dramatically different analyses and predictions. Decision-making theories range from objective rational decision making, which assumes that individuals will make the same decisions given the same information and preferences, to the more subjective logic of appropriateness , which assumes that specific institutional and organizational contexts matter in the decisions that individuals make.

(Read Steven Pinker’s Britannica entry on rationality.)

In modern Western societies the most common understanding of decision making is that it is rational—self-interested, purposeful, and efficient. During rational decision making, individuals will survey alternatives , evaluate consequences from each alternative , and finally do what they believe has the best consequences for themselves. The keys to a decision are the quality of information about alternatives and individual preferences. Modern economics is built on this understanding of how individuals make decisions.

Rational decision making becomes efficient when information is maximized and preferences are satisfied using the minimum of resources. In modern societies, rational decision making can occur in markets or firms. Both assume that individuals will act rationally, maximizing self-interest, but each works most efficiently under different conditions. Markets are most efficient when both buyers and sellers exist, when products or services are discrete so that the exchange can be one-time, when information about a product or service (such as its technology or means of evaluation) is broadly understood, and when there are enforced penalties for cheating.

Lacking these conditions, consensual exchange cannot occur, and rational individuals will try to cheat others to maximize their gain. In these cases a hierarchical organization is more efficient. The German sociologist Max Weber described how factories and bureaucracies became dramatically more efficient through growing technical expertise and, more importantly, a new division of labour , which divided work, specialized expertise, and coordinated individuals in a rule-based hierarchy . Bureaucracies decomposed complex technologies into manageable pieces, then allowed individuals to specialize and master a defined skill set. Using a clear hierarchy in which each position is controlled and supervised according to a stable and nonarbitrary system of rules, each individual’s work and expertise could be coordinated to achieve organizational goals, ranging from winning wars to making dresses.

In the 1940s, organization theorists began to challenge two assumptions necessary for rational decision making to occur, both of which were made obvious in cases where markets failed and hierarchies were necessary. First, information is never perfect, and individuals always make decisions based on imperfect information. Second, individuals do not evaluate all possible alternatives before making a choice. This behaviour is directly related to the costs of gathering information, because information becomes progressively more difficult and costly to gather. Instead of choosing the best alternative possible, individuals actually choose the first satisfactory alternative they find. The American social scientist Herbert Simon labeled this process “ satisficing” and concluded that human decision making could at best exhibit bounded rationality. Although objective rationality leads to only one possible rational conclusion, satisficing can lead to many rational conclusions, depending upon the information available and the imagination of the decision maker.

Simon argued that otherwise irrational individuals can behave rationally in the right context , particularly within a formal organization . Organizations can structure, or bound, individuals’ decisions by manipulating the premises on which decisions are made. Organizations can filter or emphasize information, bringing facts to an individual’s attention and identifying certain facts as important and legitimate . Individuals in hierarchies can take most of what happens around them for granted, concentrating only on a few key decisions. Hierarchies are efficient because they ensure that the correct information gets to the correct decision makers and that the correct person is making the decisions. At the same time, hierarchical organizations can socialize individuals to refrain from cheating by creating value decision premises that underlie decision makers’ judgments on what is right or good to do. These values, beliefs, or norms can come from family, from school, or from within the organization, but the organization can structure environments so that the most desirable value will be most salient at the time of decision.

Hierarchical organizations can structure factual and value decision premises so that the range of action becomes so narrow that only one alternative remains: the rational choice. Structuring decision premises can be done by directly managing information, selectively recruiting members, training members, and creating closed promotion patterns.

Organizations become rational in pursuing their missions through what Simon called ends-means chains. Leaders set the organizational mission, find a set of means for achieving the mission, take each of those means as a subgoal, and then find means for the subgoals and so on, until goals exist for every member of the organization. Leaders thus create a hierarchy of goals, in which each organizational level’s goals are an end relative to the levels below it and a means relative to the levels above it. Each individual’s work thus becomes a small part of accomplishing the organization’s mission.

Turning Simon’s bounded rationality on its head, other theorists argued that organizations are not purposeful cohesive actors but rather groups of competing coalitions made up of individuals with disparate interests. Individuals do not represent organizational interests; organizations represent individuals’ interests. Seen from this perspective, it is erroneous to ascribe a mission to an organization. Instead, organizations have goals set by a temporarily dominant coalition, which itself has no permanent goals and whose membership is subject to change. Members of the dominant coalition make decisions by bargaining, negotiating, and making side payments. Organizational decision making is the product of the game rather than a rational, goal-oriented process. Individual decision making is rational in the narrow sense that individuals pursue individual, self-interested goals, though this cannot always be accomplished directly. Individuals must pick their fights and use their influence carefully.

To understand and possibly predict what organizations will do, it is necessary to uncover and analyze the membership of the dominant coalition . The formal organizational chart is not a reliable map of organizational power. Instead, analysts must discover authority. Individuals gain authority by being able to resolve uncertainty. Individuals that can unravel technical problems, attract resources, or manage internal conflict demonstrate their usefulness to the rest of the organization and gain power. Working in concert with others who can perform similarly valuable functions, they become part of the dominant coalition. The size and composition of the dominant coalition depend on the types of environmental, technical, or coordinating uncertainty that must be resolved for the organization to survive. More technically complex, larger organizations in rapidly changing environments will tend to have larger dominant coalitions.

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Critical Thinking and Decision-Making  - What is Critical Thinking?

Critical thinking and decision-making  -, what is critical thinking, critical thinking and decision-making what is critical thinking.

Critical Thinking and Decision-Making: What is Critical Thinking?

Lesson 1: what is critical thinking, what is critical thinking.

Critical thinking is a term that gets thrown around a lot. You've probably heard it used often throughout the years whether it was in school, at work, or in everyday conversation. But when you stop to think about it, what exactly is critical thinking and how do you do it ?

Watch the video below to learn more about critical thinking.

Simply put, critical thinking is the act of deliberately analyzing information so that you can make better judgements and decisions . It involves using things like logic, reasoning, and creativity, to draw conclusions and generally understand things better.

This may sound like a pretty broad definition, and that's because critical thinking is a broad skill that can be applied to so many different situations. You can use it to prepare for a job interview, manage your time better, make decisions about purchasing things, and so much more.

The process

As humans, we are constantly thinking . It's something we can't turn off. But not all of it is critical thinking. No one thinks critically 100% of the time... that would be pretty exhausting! Instead, it's an intentional process , something that we consciously use when we're presented with difficult problems or important decisions.

Improving your critical thinking

In order to become a better critical thinker, it's important to ask questions when you're presented with a problem or decision, before jumping to any conclusions. You can start with simple ones like What do I currently know? and How do I know this? These can help to give you a better idea of what you're working with and, in some cases, simplify more complex issues.  

Real-world applications

Let's take a look at how we can use critical thinking to evaluate online information . Say a friend of yours posts a news article on social media and you're drawn to its headline. If you were to use your everyday automatic thinking, you might accept it as fact and move on. But if you were thinking critically, you would first analyze the available information and ask some questions :

• What's the source of this article?
• Is the headline potentially misleading?
• What are my friend's general beliefs?
• Do their beliefs inform why they might have shared this?

After analyzing all of this information, you can draw a conclusion about whether or not you think the article is trustworthy.

Critical thinking has a wide range of real-world applications . It can help you to make better decisions, become more hireable, and generally better understand the world around you.

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Rational Decision-Making Model: Meaning, Importance And Examples

What is the rational decision-making model? Rational decision-making is a method that organizations, businesses and individuals use to make the…

What is the rational decision-making model? Rational decision-making is a method that organizations, businesses and individuals use to make the best decisions. Rational decision-making, one of many decision-making tools, helps users come up with the most suitable course of action. In this blog, we will look at the meaning of rational decision-making, the importance of rational decision-making and study some rational decision-making examples.

Rational decision-making is a process in which decision-makers go through a set of steps and processes and choose the best solution to a problem. These decisions are based on data analysis and logic, eliminating intuition and subjectivity.

Rational decision-making means that every variable factor, every piece of information about all the available options, has been taken into account. 

What Is The Rational Decision-Making Model Used For?

What is the rational decision-making process, non-rational decision making.

The most basic use of the rational decision-making model is to ensure a consistent method of making decisions. This could be used as a standardized decision-making tool across an organization or to ensure that all managers receive the same information to make decisions. The rational decision-making process can be used to maintain a structured, step-by-step approach for every decision.

What Is The Rational Decision-Making Process ?

How the rational decision-making model is implemented can be explained in seven steps:

(There is also an example to help you understand the importance of rational decision-making)

1. Understand and define the scope

Just stating that a problem exists isn’t enough. Solid, accurate data is required to understand and analyze the problem in depth. This lets you know how much attention it requires.

It’s vital to collect as much relevant and accurate data around the problem as possible.

Here’s a rational decision-making example:

Your social media posts aren’t translating to conversions. What could the problem be? Once the analytics reports come in, you realize there isn’t enough engagement. The issue isn’t that your posts are not reaching the right audience, it’s that they don’t engage them. This sets up the next step: figuring out why the problem exists. Why is user engagement low?

2. Research and get feedback

The next step in the rational decision-making process is to delve into the problem. Find out what is causing the problem and how it can be solved. You could start with a brainstorming session and find out what your team thinks.

Rational decision-making example continued:

The budget is good, there are enough views and likes on the posts. So, why is there a lack of engagement? Why aren’t users interacting with the post? Why aren’t they clicking on the CTA?

You might need new types of posts; perhaps the current posts aren’t trendy. Maybe the posts don’t evoke an emotional response from the audience. Or they don’t convey what the product can do for the audience.

Now that you know what the causes could be, you are a step closer. It’s time to collate the data.

The team comes together with their opinions and findings. After a few customer surveys, the major issues are identified as follows:

• Potential consumers don’t know how the product will add value to their lives.
• Potential customers don’t understand the posts’ objectives and aren’t clear on what the product is.

3. List your choices

There are bound to be a host of opinions and innumerable choices about how to address the issue. Consider all of them so that you don’t create more problems later.

This is where you start to use rational decision-making:

Now that the problem has been understood, it’s time to list your options.

You could create a post that showcases what the product does.

You could have an informative GIF that shows that product in action.

You could create additional whitepapers to showcase how the product adds value and thus is beneficial for the customer to buy.

The analytics show that traffic isn’t the issue, so you don’t have to focus on garnering more traffic. Your focus has to be on conversions.

Your color schemes and CTA could be a little more impactful.

Maybe video clips are the way to go?

4. Analyze your options carefully

Now that you have all the options in front of you, cross out the ones that don’t add value or don’t solve the problem. Understand how each of the potential solutions could turn out and what other effects they could have.

Point 6 is about having a back up plan. Once you’ve chosen the plan that is likely to serve you the best, choose the second best option as well. You could use that as your back up, in case things don’t go according to plan.

While it’s great to get a quick solution to a real problem, the solution should be permanent or at least solve the majority of the issue.

The example of the rational decision-making process continued:

This is where you set about deciding the benefits of each of your choices mentioned above.

A video clip post would mean additional costs.

Redesigning the graphics may lead to more views and interaction but dilute your following.

A whitepaper is a good idea, but it doesn’t help with conversions. It’s ideal for customers to click on the CTA.

While GIFs are very popular, the image you choose has to convey the right information and be impactful. You may need to rework the branding for this to work.

While it would be great to have a post that showcases how the product works, it can’t be overly technical.

5. Understand the results you want

This is where the importance of rational decision-making comes into play. Understand what you expect from the solutions. There has to be a clear outcome because of the decision that is made. Knowing what you expect from your actions is important. It’s always a good idea to test the solution to see if it resolves the problem entirely.

Rational decision-making model example continued:

The best course of action might be to assign different teams for the different potential solutions.

One team could create a GIF, while the other works on the video clip and another on the ‘how to use’ post.

Once the teams have all made rough drafts, a productive critiquing session could be conducted. The teams can then look at each others’ solutions and point out the merits and drawbacks of each.

This way a general consensus can be reached and the best option or options can be selected. It is also advisable to use predictive social media tools. There are algorithms and equations that could help predict the success of a post to some degree.

6. Have a backup plan

While this may not always be necessary and can be a little cost-intensive, it may be worthwhile to have a backup plan if the solution doesn’t give you the intended results. This means that you should either have another strategy in place, created using the rational decision-making model .

Even though your plan has been made after careful thought, there is a chance that it either does not go as per plan or that an external factor interferes and throws your plan into chaos.

Try to have a back-up plan to make sure that your business isn’t impacted.

Now that you’ve decided to go with a combination of a GIF and an information-based post, go ahead and begin drafting your white paper as well.

7. Implement

Once the team has done all the work and created the solution, implement it. Implementing this plan means that everyone has to be on board. This means that everyone should be informed and be willing to contribute in executing the plan. The plan won’t work if everyone isn’t working toward the same goal.

As logic and data have been used to reach the decision, it’s likely going to be the most effective one.

Non -Rational Decision-Making

Non-rational decision-making is quite simply the opposite of rational decision-making . Non-rational decision-making is generally used when there isn’t enough information available or when there isn’t enough time to carry out the research and analysis required to employ rational decision-making methods.

Non-rational decision-making can be used when the person or team making the decisions has experienced that issue before or their collective experience allows them to predict what the outcome of their decision would be.

To sum it up, rational decision making can be the difference between a high performance culture driven by results and an unorganized setting. If you would like to drive decisions that guarantee results, you have to employ strategies that kindle organizational objectives based on real data. Let’s sum up the steps explained in this post about the importance of rational decision-making.

• Understand and define the scope
• Research and get feedback
• List your choices
• Analyze your options carefully
• Understand the results you want

Now that you have some idea of what the rational decision-making process is, you may be curious to find out how to make better decisions for your business. To understand more about the importance of rational decision-making , take a look at Harappa’s Making Decisions course. It delves deep into how the best decisions can be reached. The course is for you if you’re looking to get into business and learn how to use rational decision-making.

Explore Harappa Diaries to learn more about topics such as How To Define Problem , Steps involved in Ethical Decision Making , Importance Of Decision Making and How To Overcome Indecisiveness to classify problems and solve them efficiently.

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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 , we only get about 50% of our decisions in the workplace right! Half the time they are wrong, so there is clearly plenty of scope to improve on our decision making processes. Based on his research into over 300 decisions, made in a range of organizations, he discovered that

Some tactics with a good track record are commonly known, but uncommonly practiced.

Why? Well one reason that emerged from his research is that:

Too often, managers make bad tactical selections ….. because they believe that following recommended decision-making practices would take too much time and demand excessive cash outlays.

Nutt argues that using good decision making practices actually costs very little. (Even less in this case 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 to making the decision work?

Strengths and Weaknesses of the Rational Decision Making Model

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.

Paul C. Nutt’s research illustrates that bad decisions were usually bad because two things were missing:

• Adequate participation of stakeholders in the decision making process
• Sufficient time spent generating a range of possible solutions

Too often those who should have been involved weren’t, and solutions were proposed and acted upon too quickly. Often with disastrous effects!

A second weakness arises if we attempt to use the model in isolation. This is particularly important where complex or important decisions are involved.

The principle 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.

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.

Further Reading

Definition of decision making Intuition and decision making

>>> Return to the Decision Making Knowledge Hub

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How to Make Great Decisions, Quickly

• Martin G. Moore

It’s a skill that will set you apart.

As a new leader, learning to make good decisions without hesitation and procrastination is a capability that can set you apart from your peers. While others vacillate on tricky choices, your team could be hitting deadlines and producing the type of results that deliver true value. That’s something that will get you — and them — noticed. Here are a few of a great decision:

• Great decisions are shaped by consideration of many different viewpoints. This doesn’t mean you should seek out everyone’s opinion. The right people with the relevant expertise need to clearly articulate their views to help you broaden your perspective and make the best choice.
• Great decisions are made as close as possible to the action. Remember that the most powerful people at your company are rarely on the ground doing the hands-on work. Seek input and guidance from team members who are closest to the action.
• Great decisions address the root cause, not just the symptoms. Although you may need to urgently address the symptoms, once this is done you should always develop a plan to fix the root cause, or else the problem is likely to repeat itself.
• Great decisions balance short-term and long-term value. Finding the right balance between short-term and long-term risks and considerations is key to unlocking true value.
• Great decisions are timely. If you consider all of the elements listed above, then it’s simply a matter of addressing each one with a heightened sense of urgency.

Where your work meets your life. See more from Ascend here .

Like many young leaders, early in my career, I thought a great decision was one that attracted widespread approval. When my colleagues smiled and nodded their collective heads, it reinforced (in my mind, at least) that I was an excellent decision maker.

• MM Martin G. Moore is the founder of Your CEO Mentor and author of No Bullsh!t Leadership and host of the No Bullsh!t Leadership podcast. His purpose is to improve the quality of leaders globally through practical, real world leadership content. For more information, please visit, www.martingmoore.com.

Partner Center

Module 5: Decision Making

Rational decision making vs. other types of decision making, what you’ll learn to do: explain the concept of “rational decision making” and contrast it with prospect theory, bounded rationality, heuristics, and robust decisions.

Though everyone makes decisions, not everyone goes about the process in the same way. In fact, not everyone even uses a “process” to make decisions. There are various decision-making styles, and we will focus on the rational decision-making model. We will also become familiar with a common process that many groups and individuals follow when making decisions. Though almost everyone will agree that decision making should be rational, there are also some important contrasting ideas that often balance out the “rational” aspects to the process.

Learning Outcomes

• Summarize the steps in the rational decision-making process.
• Differentiate between prospect theory, bounded rationality, heuristics, and robust decisions.

The Rational Decision-Making Process

The rational decision-making process involves careful, methodical steps. The more carefully and strictly these steps are followed, the more rational the process is. We’ll look at each step in closer detail.

Step 1: Identify the Problem

Though this starting place might seem rather obvious, a failure to identify the problem clearly can derail the entire process. It can sometimes require serious thought to find the central issue that must be addressed. For example, you have taken a new job and you may initially decide you need to find a new car for commuting back and forth from work. However, the central problem is that you need a reliable way to commute to and from work.

Step 2: Establish Decision Criteria

In this step, the decision maker needs to determine what is relevant in making the decision. This step will bring the decision maker’s, and any other stakeholder’s, interests, values and preferences into the process. To continue our example, let’s assume you are married. Some of the criteria identified might include budget, safety, functionality, and reliability.

Step 3: Weigh Decision Criteria

Because the criteria identified will seldom be equally important, you will need to weight the criteria to create the correct priority in the decision. For example, you may have weighted budget, safety, and reliability as the most important criteria to consider, along with several other slightly less critical criteria.

Step 4: Generate Alternatives

Once you have identified the issue and gathered relevant information, now it is time to list potential options for how to decide what to do. Some of those alternatives will be common and fairly obvious options, but it is often helpful to be creative and name unusual solutions as well. The alternatives you generated could include the types of cars, as well as using public transportation, car pooling and a ride-hailing service.

Step 5: Evaluate Alternatives

After creating a somewhat full list of possible alternatives, each alternative can be evaluated. Which choice is most desirable and why? Are all of the options equally feasible, or are some unrealistic or impossible? Now is the time to identify both the merits and the challenges involved in each of the possible solutions.

Step 6: Select the Best Alternative

After a careful evaluation of alternatives, you must choose a solution. You should clearly state your decision so as to avoid confusion or uncertainty. The solution might be one of the particular options that was initially listed, an adaptation of one of those options, or a combination of different aspects from multiple suggestions. It is also possible that an entirely new solution will arise during the evaluation process.

Practice Question

Data, logic, and facts.

Rational decision making is defined not only by adherence to a careful process, but also by a logical, data-driven manner of following the steps of that process. The process can be time-consuming and costly. It is generally not worthwhile on everyday decisions. It is more useful for big decisions with many criteria that affect many people.

In the evaluation stage, the process usually requires numeric values.  The next stage will use these to calculate a score for each alternative. Some properties are not easily measured, and factors that rely on subjective judgment may not be trusted. If they are not fully weighted, the final analysis will lean toward whatever is easiest to measure. In a company, the final decision usually belongs to an executive, who takes the analysis as a guide but makes his own decision.

Ideas that Complement and Contrast with Rational Decision Making

Though most decision makers will recognize much that is commendable in the rational decision-making process, there are also reasons to consider complementary or even contrasting ideas. Taken to its extreme, the rational method might entirely discount factors that are of known and obvious value, such as emotions and feelings, experience, or even ethical principles. This danger, along with other limitations of the rational method, has led to the development of the following concepts to provide a more balanced and holistic approach to decision making:

Prospect Theory

Daniel Kahneman is one of the developers of prospect theory.

An epoch-making idea in the field of behavioral economics, prospect theory is a complex analysis of how individuals make decisions when there is risk involved. Most strictly rational approaches to questions of financial risk rely on the principle of expected value, where the probability of an event is multiplied by the resulting value should the event occur. Notice the numerical and logical approach to that analysis.

However, Daniel Kahneman and Amos Tversky, the developers of prospect theory, demonstrated through various experiments that most people alter that approach based on their subjective judgments in any given situation. One of the common examples of this is that many individuals think differently about the risk of financial loss than they do when considering situations where different levels of financial gain are concerned. In a purely rational approach, the numbers and calculations involved work the same way regardless of whether the situation is one involving potential gain or potential loss.

This graph shows how prospect theory describes individuals’ subjective valuations of profit and loss. Notice that the value curve is not a straight line and that the positive “gains” section of the curve is not symmetrical to the negative “losses” section of the curve.

Prospect theory is a description of how people made actual decisions in experiments. It doesn’t say whether this is right or wrong. It is in the hands of decision makers to determine whether these tendencies are justifiable or if they should be overridden by a rational approach.

Bounded Rationality

Another theory that suggests a modification of pure rationality is known as bounded rationality. This concept revolves on a recognition that human knowledge and capabilities are limited and imperfect. Three specific limitations are generally enumerated:

• Decision makers do not have access to all possible information relevant to the decision, and the information they do have is often flawed and imperfect.
• Decision makers have limited analytical and computational abilities. They are not capable of judging their information and alternatives perfectly. They will inevitably make misjudgments in the evaluation process.
• Decision makers do not have unlimited time to make decisions. Real-life situations provide time constraints in which decisions must be made.

In light of these limitations, the theory of bounded rationality suggests that decision makers must be willing to adapt their rational approach. For example, they must determine how much information is reasonable to pursue during the information-gathering stage; they cannot reasonably expect to gather and analyze all possible information.

Similarly, decision makers must content themselves with a consideration of only a certain number of alternative solutions to the decision.

Also, decision makers being far from perfect in their abilities to evaluate potential solutions must inevitably affect their approach. They must be aware of the possibility that their analysis is wrong and be willing to accept evidence to this effect. This especially includes situations in which they’re relying on predictions of an uncertain future. Uncertainty and inaccuracy often arise in efforts to predict the future. For example, your career decision is fraught with uncertainty as you don’t know if you will like the work or the work environment. What are decision makers to do when they are uncertain about potential results from their actions? This makes a strictly rational approach difficult and less reliable.

One of the approaches that might stem from a recognition of bounded rationality is the use of heuristics. These are analytical and decision-making tools that help simplify the analysis process by relying on tried and tested rules of thumb. A heuristic simplifies a complex situation and allows the decision maker to focus only on the most important pieces of information.

For example, a business might use their proven experiences and that of many other companies to conclude that a new product line requires a certain amount of time to gain market share and become profitable. Though there are many complex factors involved in market analysis, the business might use this proven rule to guide its decision making. When a proposed decision contradicts this rule, the company might discard it even if a complex and seemingly rational analysis might seem to support it.

Of course, there are exceptions to most rules, and the use of heuristics might prevent a company from following courses of action that would be beneficial. Likewise, heuristics that were once reliable rules might become obsolete because of changing markets and environments. Nonetheless, most analysts recognize heuristics as useful tools when used properly.

Robust Decisions

One final adaptation of the rational process that is becoming more prominent, especially in areas such as energy production and natural resource preservation, is the practice of making “robust” decisions.

Robust decisions revolve around the inability to predict the future with certainty. Rather than rely on an imperfect analysis to determine the “best” decision, a robust decision provides a plan that will work in light of numerous uncertainties. It supposes that a number of situations are all possible and provides a solution pathway that will be successful if any of those situations should arise. This pathway could potentially be a single solution that works in any of the likely future scenarios, or it might provide separate responses to be enacted depending on how the future uncertainties unfold.

PRactice Questions

Check your understanding.

Answer the question(s) below to see how well you understand the topics covered in the previous section. This short quiz does  not  count toward your grade in the class, and you can retake it an unlimited number of times.

Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.

• Rational Decision Making. Authored by : Aaron Spencer, David Thompson, PhD, and Lumen Learning. License : CC BY: Attribution
• Image: Rational Decision Making Process. Authored by : Aaron Spencer and Lumen Learning. License : CC BY: Attribution
• Image: DanielKahneman.jpg. Authored by : Unknown. Located at : https://en.wikipedia.org/wiki/File:Daniel_KAHNEMAN.jpg . License : Public Domain: No Known Copyright
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7 Ways to Improve Your Ethical Decision-Making

• 03 Aug 2023

Effective decision-making is the cornerstone of any thriving business. According to a survey of 760 companies cited in the Harvard Business Review , decision effectiveness and financial results correlated at a 95 percent confidence level across countries, industries, and organization sizes.

Yet, making ethical decisions can be difficult in the workplace and often requires dealing with ambiguous situations.

If you want to become a more effective leader , here’s an overview of why ethical decision-making is important in business and how to be better at it.

Access your free e-book today.

The Importance of Ethical Decision-Making

Any management position involves decision-making .

“Even with formal systems in place, managers have a great deal of discretion in making decisions that affect employees,” says Harvard Business School Professor Nien-hê Hsieh in the online course Leadership, Ethics, and Corporate Accountability . “This is because many of the activities companies need to carry out are too complex to specify in advance.”

This is where ethical decision-making comes in. As a leader, your decisions influence your company’s culture, employees’ motivation and productivity, and business processes’ effectiveness.

It also impacts your organization’s reputation—in terms of how customers, partners, investors, and prospective employees perceive it—and long-term success.

With such a large portion of your company’s performance relying on your guidance, here are seven ways to improve your ethical decision-making.

1. Gain Clarity Around Personal Commitments

You may be familiar with the saying, “Know thyself.” The first step to including ethics in your decision-making process is defining your personal commitments.

To gain clarity around those, Hsieh recommends asking:

• What’s core to my identity? How do I perceive myself?
• What lines or boundaries will I not cross?
• What kind of life do I want to live?
• What type of leader do I want to be?

Once you better understand your core beliefs, values, and ideals, it’s easier to commit to ethical guidelines in the workplace. If you get stuck when making challenging decisions, revisit those questions for guidance.

2. Overcome Biases

A bias is a systematic, often unconscious inclination toward a belief, opinion, perspective, or decision. It influences how you perceive and interpret information, make judgments, and behave.

Bias is often based on:

• Personal experience
• Cultural background
• Social conditioning
• Individual preference

It exists in the workplace as well.

“Most of the time, people try to act fairly, but personal beliefs or attitudes—both conscious and subconscious—affect our ability to do so,” Hsieh says in Leadership, Ethics, and Corporate Accountability .

There are two types of bias:

• Explicit: A bias you’re aware of, such as ageism.
• Implicit: A bias that operates outside your awareness, such as cultural conditioning.

Whether explicit or implicit, you must overcome bias to make ethical, fair decisions.

Related: How to Overcome Stereotypes in Your Organization

3. Reflect on Past Decisions

The next step is reflecting on previous decisions.

“By understanding different kinds of bias and how they can show themselves in the workplace, we can reflect on past decisions, experiences, and emotions to help identify problem areas,” Hsieh says in the course.

Reflect on your decisions’ processes and the outcomes. Were they favorable? What would you do differently? Did bias affect them?

Through analyzing prior experiences, you can learn lessons that help guide your ethical decision-making.

4. Be Compassionate

Decisions requiring an ethical lens are often difficult, such as terminating an employee.

“Termination decisions are some of the hardest that managers will ever have to make,” Hsieh says in Leadership, Ethics, and Corporate Accountability . “These decisions affect real people with whom we often work every day and who are likely to depend on their job for their livelihood.”

Such decisions require a compassionate approach. Try imagining yourself in the other person’s shoes, and think about what you would want to hear. Doing so allows you to approach decision-making with more empathy.

5. Focus on Fairness

Being “fair” in the workplace is often ambiguous, but it’s vital to ethical decision-making.

“Fairness is not only an ethical response to power asymmetries in the work environment,” Hsieh says in Leadership, Ethics, and Corporate Accountability . “Fairness–and having a successful organizational culture–can benefit the organization economically and legally as well.”

It’s particularly important to consider fairness in the context of your employees. According to Leadership, Ethics, and Corporate Accountability , operationalizing fairness in employment relationships requires:

• Legitimate expectations: Expectations stemming from a promise or regular practice that employees can anticipate and rely on.
• Procedural fairness: Concern with whether decisions are made and carried out impartially, consistently, and transparently.
• Distributive fairness: The fair allocation of opportunities, benefits, and burdens based on employees’ efforts or contributions.

Keeping these aspects of fairness in mind can be the difference between a harmonious team and an employment lawsuit. When in doubt, ask yourself: “If I or someone I loved was at the receiving end of this decision, what would I consider ‘fair’?”

6. Take an Individualized Approach

Not every employee is the same. Your relationships with team members, managers, and organizational leaders differ based on factors like context and personality types.

“Given the personal nature of employment relationships, your judgment and actions in these areas will often require adjustment according to each specific situation,” Hsieh explains in Leadership, Ethics, and Corporate Accountability .

One way to achieve this is by tailoring your decision-making based on employees’ values and beliefs. For example, if a colleague expresses concerns about a project’s environmental impact, explore eco-friendly approaches that align with their values.

Another way you can customize your ethical decision-making is by accommodating employees’ cultural differences. Doing so can foster a more inclusive work environment and boost your team’s performance .

7. Accept Feedback

Ethical decision-making is susceptible to gray areas and often met with dissent, so it’s critical to be approachable and open to feedback .

The benefits of receiving feedback include:

• Learning from mistakes.
• Having more opportunities to exhibit compassion, fairness, and transparency.
• Identifying blind spots you weren’t aware of.
• Bringing your team into the decision-making process.

While such conversations can be uncomfortable, don’t avoid them. Accepting feedback will not only make you a more effective leader but also help your employees gain a voice in the workplace.

Ethical Decision-Making Is a Continuous Learning Process

Ethical decision-making doesn’t come with right or wrong answers—it’s a continuous learning process.

“There often is no right answer, only imperfect solutions to difficult problems,” Hsieh says. “But even without a single ‘right’ answer, making thoughtful, ethical decisions can make a major difference in the lives of your employees and colleagues.”

By taking an online course, such as Leadership, Ethics, and Corporate Accountability , you can develop the frameworks and tools to make effective decisions that benefit all aspects of your business.

Ready to improve your ethical decision-making? Enroll in Leadership, Ethics, and Corporate Accountability —one of our online leadership and management courses —and download our free e-book on how to become a more effective leader.

About the Author

What is decision making?

Decisions, decisions. When was the last time you struggled with a choice? Maybe it was this morning, when you decided to hit the snooze button—again. Perhaps it was at a restaurant, with a miles-long menu and the server standing over you. Or maybe it was when you left your closet in a shambles after trying on seven different outfits before a big presentation. Often, making a decision—even a seemingly simple one—can be difficult. And people will go to great lengths—and pay serious sums of money—to avoid having to make a choice. The expensive tasting menu at the restaurant, for example. Or limiting your closet choices to black turtlenecks, à la Steve Jobs.

Get to know and directly engage with senior McKinsey experts on decision making

Aaron De Smet is a senior partner in McKinsey’s New Jersey office, Eileen Kelly Rinaudo  is McKinsey’s global director of advancing women executives and is based in the New York office, Frithjof Lund is a senior partner in the Oslo office, and Leigh Weiss is a senior adviser in the Boston office.

If you’ve ever wrestled with a decision at work, you’re definitely not alone. According to McKinsey research, executives spend a significant portion of their time— nearly 40 percent , on average—making decisions. Worse, they believe most of that time is poorly used. People struggle with decisions so much so that we actually get exhausted from having to decide too much, a phenomenon called decision fatigue.

But decision fatigue isn’t the only cost of ineffective decision making. According to a McKinsey survey of more than 1,200 global business leaders, inefficient decision making costs a typical Fortune 500 company 530,000 days  of managers’ time each year, equivalent to about $250 million in annual wages. That’s a lot of turtlenecks.

How can business leaders ease the burden of decision making and put this time and money to better use? Read on to learn the ins and outs of smart decision making—and how to put it to work.

Learn more about our People & Organizational Performance Practice .

How can organizations untangle ineffective decision-making processes?

McKinsey research has shown that agile is the ultimate solution for many organizations looking to streamline their decision making . Agile organizations are more likely to put decision making in the right hands, are faster at reacting to (or anticipating) shifts in the business environment, and often attract top talent who prefer working at companies with greater empowerment and fewer layers of management.

For organizations looking to become more agile, it’s possible to quickly boost decision-making efficiency by categorizing the type of decision to be made and adjusting the approach accordingly. In the next section, we review three types of decision making and how to optimize the process for each.

What are three keys to faster, better decisions?

Business leaders today have access to more sophisticated data than ever before. But it hasn’t necessarily made decision making any easier. For one thing, organizational dynamics—such as unclear roles, overreliance on consensus, and death by committee—can get in the way of straightforward decision making. And more data often means more decisions to be taken, which can become too much for one person, team, or department. This can make it more difficult for leaders to cleanly delegate, which in turn can lead to a decline in productivity.

Leaders are growing increasingly frustrated with broken decision-making processes, slow deliberations, and uneven decision-making outcomes. Fewer than half  of the 1,200 respondents of a McKinsey survey report that decisions are timely, and 61 percent say that at least half the time they spend making decisions is ineffective.

What’s the solution? According to McKinsey research, effective solutions center around categorizing decision types and organizing different processes to support each type. Further, each decision category should be assigned its own practice—stimulating debate, for example, or empowering employees—to yield improvements in effectiveness.

Here are the three decision categories  that matter most to senior leaders, and the standout practice that makes the biggest difference for each type of decision.

• Big-bet decisions are infrequent but high risk, such as acquisitions. These decisions carry the potential to shape the future of the company, and as a result are generally made by top leaders and the board. Spurring productive debate by assigning someone to argue the case for and against a potential decision can improve big-bet decision making.
• Cross-cutting decisions, such as pricing, can be frequent and high risk. These are usually made by business unit heads, in cross-functional forums as part of a collaborative process. These types of decisions can be improved by doubling down on process refinement. The ideal process should be one that helps clarify objectives, measures, and targets.
• Delegated decisions are frequent but low risk and are handled by an individual or working team with some input from others. Delegated decision making can be improved by ensuring that the responsibility for the decision is firmly in the hands of those closest to the work. This approach also enhances engagement and accountability.

In addition, business leaders can take the following four actions to help sustain rapid decision making :

• Focus on the game-changing decisions, ones that will help an organization create value and serve its purpose.
• Convene only necessary meetings, and eliminate lengthy reports. Turn unnecessary meetings into emails, and watch productivity bloom. For necessary meetings, provide short, well-prepared prereads to aid in decision making.
• Clarify the roles of decision makers and other voices. Who has a vote, and who has a voice?
• Push decision-making authority to the front line—and tolerate mistakes.

Introducing McKinsey Explainers : Direct answers to complex questions

How can business leaders effectively delegate decision making.

Business is more complex and dynamic than ever, meaning business leaders are faced with needing to make more decisions in less time. Decision making takes up an inordinate amount of management’s time—up to 70 percent for some executives—which leads to inefficiencies and opportunity costs.

As discussed above, organizations should treat different types of decisions differently . Decisions should be classified  according to their frequency, risk, and importance. Delegated decisions are the most mysterious for many organizations: they are the most frequent, and yet the least understood. Only about a quarter of survey respondents  report that their organizations make high-quality and speedy delegated decisions. And yet delegated decisions, because they happen so often, can have a big impact on organizational culture.

The key to better delegated decisions is to empower employees by giving them the authority and confidence to act. That means not simply telling employees which decisions they can or can’t make; it means giving employees the tools they need to make high-quality decisions and the right level of guidance as they do so.

Here’s how to support delegation and employee empowerment:

• Ensure that your organization has a well-defined, universally understood strategy. When the strategic intent of an organization is clear, empowerment is much easier because it allows teams to pull in the same direction.
• Clearly define roles and responsibilities. At the foundation of all empowerment efforts is a clear understanding of who is responsible for what, including who has input and who doesn’t.
• Invest in capability building (and coaching) up front. To help managers spend meaningful coaching time, organizations should also invest in managers’ leadership skills.
• Build an empowerment-oriented culture. Leaders should role model mindsets that promote empowerment, and managers should build the coaching skills they want to see. Managers and employees, in particular, will need to get comfortable with failure as a necessary step to success.
• Decide when to get involved. Managers should spend effort up front to decide what is worth their focused attention. They should know when it’s appropriate to provide close guidance and when not to.

How can you guard against bias in decision making?

Cognitive bias is real. We all fall prey, no matter how we try to guard ourselves against it. And cognitive and organizational bias undermines good decision making, whether you’re choosing what to have for lunch or whether to put in a bid to acquire another company.

Here are some of the most common cognitive biases and strategies for how to avoid them:

• Confirmation bias. Often, when we already believe something, our minds seek out information to support that belief—whether or not it is actually true. Confirmation bias  involves overweighting evidence that supports our belief, underweighting evidence against our belief, or even failing to search impartially for evidence in the first place. Confirmation bias is one of the most common traps organizational decision makers fall into. One famous—and painful—example of confirmation bias is when Blockbuster passed up the opportunity  to buy a fledgling Netflix for $50 million in 2000. (Actually, that’s putting it politely. Netflix executives remember being “laughed out” of Blockbuster’s offices.) Fresh off the dot-com bubble burst of 2000, Blockbuster executives likely concluded that Netflix had approached them out of desperation—not that Netflix actually had a baby unicorn on its hands.
• Herd mentality. First observed by Charles Mackay in his 1841 study of crowd psychology, herd mentality happens when information that’s available to the group is determined to be more useful than privately held knowledge. Individuals buy into this bias because there’s safety in the herd. But ignoring competing viewpoints might ultimately be costly. To counter this, try a teardown exercise , wherein two teams use scenarios, advanced analytics, and role-playing to identify how a herd might react to a decision, and to ensure they can refute public perceptions.
• Sunk-cost fallacy. Executives frequently hold onto underperforming business units or projects because of emotional or legacy attachment . Equally, business leaders hate shutting projects down . This, researchers say, is due to the ingrained belief that if everyone works hard enough, anything can be turned into gold. McKinsey research indicates two techniques for understanding when to hold on and when to let go. First, change the burden of proof from why an asset should be cut to why it should be retained. Next, categorize business investments according to whether they should be grown, maintained, or disposed of—and follow clearly differentiated investment rules  for each group.
• Ignoring unpleasant information. Researchers call this the “ostrich effect”—when people figuratively bury their heads in the sand , ignoring information that will make their lives more difficult. One study, for example, found that investors were more likely to check the value of their portfolios when the markets overall were rising, and less likely to do so when the markets were flat or falling. One way to help get around this is to engage in a readout process, where individuals or teams summarize discussions as they happen. This increases the likelihood that everyone leaves a meeting with the same understanding of what was said.
• Halo effect. Important personal and professional choices are frequently affected by people’s tendency to make specific judgments based on general impressions . Humans are tempted to use simple mental frames to understand complicated ideas, which means we frequently draw conclusions faster than we should. The halo effect is particularly common in hiring decisions. To avoid this bias, structured interviews can help mitigate the essentializing tendency. When candidates are measured against indicators, intuition is less likely to play a role.

For more common biases and how to beat them, check out McKinsey’s Bias Busters Collection .

Learn more about Strategy & Corporate Finance consulting  at McKinsey—and check out job opportunities related to decision making if you’re interested in working at McKinsey.

Articles referenced include:

• “ Bias busters: When the crowd isn’t necessarily wise ,” McKinsey Quarterly , May 23, 2022, Eileen Kelly Rinaudo , Tim Koller , and Derek Schatz
• “ Boards and decision making ,” April 8, 2021, Aaron De Smet , Frithjof Lund , Suzanne Nimocks, and Leigh Weiss
• “ To unlock better decision making, plan better meetings ,” November 9, 2020, Aaron De Smet , Simon London, and Leigh Weiss
• “ Reimagine decision making to improve speed and quality ,” September 14, 2020, Julie Hughes , J. R. Maxwell , and Leigh Weiss
• “ For smarter decisions, empower your employees ,” September 9, 2020, Aaron De Smet , Caitlin Hewes, and Leigh Weiss
• “ Bias busters: Lifting your head from the sand ,” McKinsey Quarterly , August 18, 2020, Eileen Kelly Rinaudo
• “ Decision making in uncertain times ,” March 24, 2020, Andrea Alexander, Aaron De Smet , and Leigh Weiss
• “ Bias busters: Avoiding snap judgments ,” McKinsey Quarterly , November 6, 2019, Tim Koller , Dan Lovallo, and Phil Rosenzweig
• “ Three keys to faster, better decisions ,” McKinsey Quarterly , May 1, 2019, Aaron De Smet , Gregor Jost , and Leigh Weiss
• “ Decision making in the age of urgency ,” April 30, 2019, Iskandar Aminov, Aaron De Smet , Gregor Jost , and David Mendelsohn
• “ Bias busters: Pruning projects proactively ,” McKinsey Quarterly , February 6, 2019, Tim Koller , Dan Lovallo, and Zane Williams
• “ Decision making in your organization: Cutting through the clutter ,” McKinsey Quarterly , January 16, 2018, Aaron De Smet , Simon London, and Leigh Weiss
• “ Untangling your organization’s decision making ,” McKinsey Quarterly , June 21, 2017, Aaron De Smet , Gerald Lackey, and Leigh Weiss
• “ Are you ready to decide? ,” McKinsey Quarterly , April 1, 2015, Philip Meissner, Olivier Sibony, and Torsten Wulf.

Want to know more about decision making?

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Turn your chatgpt prompts into ‘superprompts’ (10 science-backed ways).

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Turn your ChatGPT prompts into “superprompts” (10 science-backed ways)

There is a right and a wrong way to prompt ChatGPT, and doing it wrong means you waste time and don’t get great results. All prompts were not created equal. If you’re spending time using the AI tool for ideation , content creation and as your personal AI coach or business mentor, you might as well do it right.

Researchers at Singapore Management University, Southwest Jiaotong University, Singapore University of Technology and Design, and East China Normal University have joined forces to create research paper Plan-and-Solve Prompting: Improving Zero-Shot Chain-of-Thought Reasoning by Large Language Models . The paper shares proven tips to get better results from ChatGPT based on a new method called Plan-and-Solve (PS) prompting.

Applying these tips will help large language models (LLMs) like ChatGPT, Claude and Gemini tackle multi-step reasoning tasks more effectively, so entrepreneurs can use them more effectively for complex tasks.

Improve your prompting skills: ChatGPT tips for better results

Plan and solve.

Just as you would instruct a new member of your team, think step-by-step with ChatGPT. The paper advises that you start by making a plan that breaks the task into smaller steps. Then, solve each step one by one. This helps ChatGPT understand and handle complicated tasks better.

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Include this line within your prompt: “Let's first understand the problem and devise a plan to solve it step by step.”

Give clear instructions

Being ambiguous will not yield brilliant results, from ChatGPT or an employee. Instead of vagueness, use detailed instructions like "find the important numbers" and "do the calculations" to help ChatGPT avoid mistakes and give better answers.

Include specific guidance such as: “Extract the relevant variables” and give context as to which variables are relevant and why.

Focus on calculations

You can instruct ChatGPT where to focus, guiding its thinking process to ensure it doesn’t miss important information. Here’s where you tell ChatGPT to pay close attention to calculations, especially for data analysis or math-based challenges. This reduces errors and improves accuracy.

Explain that ChatGPT should: “Pay attention to the calculations and ensure accuracy.”

Don’t miss steps

This one should go without saying, but entrepreneurs sending long prompts to ChatGPT might find the response omits key information. Make sure ChatGPT includes all the steps needed to solve the problem. This prevents it from skipping important parts.

Specifically instruct ChatGPT to: “Include all necessary steps in the reasoning process.”

Combine planning with thinking

Stacking prompting best practice could mean results that are doubly as good. Use both the "plan and solve" method and the "think step by step" approach in turn by adding this line to your prompt:

“Devise a plan and then think through the solution step by step.”

Avoid confusion

Using simple and clear language in prompting will avoid misunderstandings and help ChatGPT provide more accurate answers. But it’s not just your prompt that should be clear. Ask ChatGPT to explain the solution clearly so you don’t misinterpret the response.

Ask ChatGPT to: “Explain the solution in clear and simple terms.”

Extract the final answer

After ChatGPT gives a detailed answer, ask it to extract the final answer clearly. For example, use "The answer is [number/response]." Do this by setting up the answer and requiring it to personalize the square brackets, for a short, sharp response that isn’t vague or waffly.

Here’s the line to use: “Conclude with ‘Therefore, the answer is [number/response].’”

Check for consistency

ChatGPT cannot make business decisions for you, but it can advise based on frequency. Ask ChatGPT to generate multiple answers and choose the one that appears most often. If you’re using ChatGPT+, ask that the internet search it performs before creating a response takes frequency into account.

Add this to your prompt to make the outcome more reliable: “Generate multiple solutions and choose the most frequent one as the answer.”

Add more instructions

For complex problems you want ChatGPT to figure out, use extra instructions (like PS prompting) to guide the LLM in detail. The paper says this helps improve the quality of its reasoning and answers.

Ask for this: “Follow detailed instructions to extract variables, calculate results, and solve the problem.”

Use benchmarks

In your prompt, ask that ChatGPT compares its response with standard datasets and industry benchmarks. The response will include how each component tallies with common literature or well-known information. This helps ensure reliability.

Add the line: “Compare the solution against standard benchmarks for accuracy.”

ChatGPT prompt improvements for solving complex problems with AI

By following these simple tips, entrepreneurs can get better results from ChatGPT, especially for complex tasks. This approach helps ChatGPT understand and solve problems more accurately, leading to smarter decisions and better business outcomes. Stop wasting time with suboptimal prompts. Develop this skill and keep improving. You’re going to need it.

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Skills that students must have when studying abroad

1. communication, 2. adaptability, 3. decision-making, 4. time management, 5. problem solving, 6. creativity, maximize your skills with the help of idp.

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Studying abroad is a great opportunity to gain new skills and experiences. It can also be difficult, however, with unexpected challenges that may make studying abroad more complicated than it seems, Students who have the right skills for studying abroad are better prepared for these challenges and will be able to adjust easily when life gets tough or unpredictable circumstances arise. These skills include:

Communication skills are key to a successful study abroad experience. You will need to speak and listen. Understand what is needed in the situation such that you won't have a hard time losing track of the flow. This is especially true for countries where you are not fluent in the language.

You will also need to write for class assignments or other purposes such as expressing yourself or answering questions at interviews. Writing is an important part of communication because it allows you to share your thoughts with others who may not understand what you're saying due to language barriers (this can be frustrating). 

Communication is an important skill for both students and teachers alike!

You must be able to adapt. Students must learn how to deal with new cultures and environments, adjust their learning styles, and adjust their time zone.

• Adaptability: students should be open-minded, flexible, and willing to try new things. They will have many opportunities for interaction with people from different countries, cultures, and backgrounds during their stay abroad in order to improve their skills in these areas as well as learn about other cultures through observation or conversation with locals who may have little knowledge about yours (which could also help you understand them better).
• Flexibility: being able to take advantage of any situation that comes your way is crucial for success abroad because it means being able keep up with all sorts of changes that occur throughout your stay - including something like moving from one country where it's 6pm when everyone else wants dinner at 5pm! To avoid feeling overwhelmed while going through this transition period where everything seems so fast paced but just feels like normal everyday life once again after leaving home behind forevermore; think ahead before making decisions instead

Students should be able to make decisions on their own. This is especially important when studying abroad, where students may be faced with many different situations and opportunities. They must therefore be able to choose the best option for themselves and their future. For example:

• If you're planning on going out at night but don't have a valid ID card (which is required), it's best to call an Uber car instead of walking home alone late at night in an unfamiliar city or country where there are no streetlights or other safety features around you.
• If someone else offers you something (like food) but doesn't charge anything for it because they're feeling generous, then politely decline by saying "no thank you" instead of saying yes when your stomach starts growling loudly from hunger.

Time management is one of the most important skills to develop while studying abroad. Students must be able to manage their time wisely and in a way that allows them to study, work and have fun. They need to plan their time and stick with their plan so they can accomplish everything they set out for themselves on campus.

Problem solving skills are a must-have when you study abroad. You will need to be able to solve problems that arise in your studies, but also unexpected and even difficult situations.

For example: if you're living with other students who don't speak the same language as you, or if there are no cafés nearby where you can buy food or drink water from—you'll have to figure out how best to get by without those things! Or maybe there's an issue with your roommate about noise level or cleanliness of their room? You could help them solve these issues by finding solutions together (like asking them not leave doors open so much) or just talking about what needs fixed before moving forward with other options such as moving out altogether (which might be necessary depending on the severity).

Creativity is the ability to think of something new or different. If you're used to thinking the same way, it will be difficult for you to come up with original ideas. This skill can help students who have difficulty finding their place in an unfamiliar environment or who are worried about making friends because they don't know how their personalities will match up with those around them. It also helps people who want more out of life—for example, artists who want to express themselves through art instead of just having a job where they've been told what exactly is expected from them by management (which might not even require any creativity at all).

Studying abroad is a great way to experience new things and make new friends. However, it’s also very important that students are aware of some of the challenges they may face when studying abroad. make sure you have these skills so that you can be more prepared when things don’t go as planned.

Other than the skills mentioned above, IDP can help you out with any of your concerns for studying abroad. Consult with our advisors on how to make your study abroad life easier!

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