Let’s say that you’re the general manager at a nice hotel. Suddenly, you notice that customers are rating your property two and three stars instead of the customary five stars you and the team are used to earning. You need to decide on the next steps to solve this issue. Let’s start right at the top of the rational decision-making model.
Understand the issue. The issue is clear to you. Customers are rating their experience at your property online, and they’re not happy. This will surely damage your team’s efforts to generate new business. You need to find a way to earn better customer ratings. Define the problem. You and your team sit down and read the last twenty or thirty customer reviews on three different travel sites. It turns out that customers’ unhappiness coincides with a recent increase in rates. They no longer feel they’re getting good value for their money. Define the objectives. What criteria will your solution have to meet? Your want to start getting better ratings from customers. You don’t want to see customers complaining about anything online. Your objective is 100% happiness, 100% five-star ratings. Diagnose the problem. This is the stage where you look to determine and understand the root causes of your issue. Perhaps you decide that all customer-facing staff report daily on quality issues. And maybe you consult with operations on additional perks that can be incorporated into the guest experience without giving away too much margin. Develop alternatives. You ultimately want to create a lengthy list of alternatives and not decide on one too quickly. You look over your employees’ reports on quality. You wait on operations for recommendations on extra perks. You collect all the data. Evaluate alternatives. Once you have all your alternatives on the table, you can start to make a choice. Every employee suggestion, every operations recommendation should be in front of you, and you consider each option carefully. Select an alternative. One of your employees has suggested two additional members for the housekeeping staff, as the current level of staff is having difficulty keeping up with the increase precipitated by an office building opening up down the street. A member of your operations team has suggested providing a continental breakfast for business travelers in response to the increase in that customer type. Both seem like good ideas. Which will provide the bigger impact? Implement alternative. You decide to hire the two additional members for the housekeeping staff, understanding that your customers view quality in clean rooms and common spaces. You get the budget approved and post for those two jobs. You make a plan to check-in at the thirty-day mark to see if customers’ ratings have improved.
Organizations make decisions every day, and, as we mentioned earlier, the better and quicker they do so, the more successful they will be. But what kind of techniques and tools do organizations employ to make good decisions? What are the obstacles and how can a good, creative decision give an organization a leg up on the competition?
The Decision Making Process
“To be or not to be: that is the question.” Hamlet lamented.
“Should I stay or should I go now?” The Clash asked.
“Two roads diverged in a yellow wood,” Robert Frost pointed out.
If you’re struggling to make a decision, you’re in good company. Literature, poetry and pop culture provide plenty of sympathy for your plight. Sadly, while they understand your pain, they don’t always sing you to the correct resolution. When it comes to making a decision, in business or in life, how can you be sure you’re doing the right thing?
Well, we wouldn’t be writing songs about making decisions if it were an easy task. That said, researchers have studied the decision-making process as much as anything else, and they’ve come away with some different ideas and models that help us understand how we can make decisions more carefully and successfully. Let’s take a look at the five best known of those decision making models.
Rational Decision Making
The rational decision making model assumes decisions are based on an objective, orderly, structured information gathering and analysis. The model encourages the decision maker to understand the situation, organize and interpret the information, and then take action. There are eight steps in the rational decision making process.
