Learn about organizational decision models and identify the ideal standard for your work environment
The current context experienced by most companies, considering the economic, political, and social aspects, consists of a globalized environment with fierce competition and constant technological updates. This forces professionals to make more assertive decisions in a short period of time. Therefore, it is increasingly necessary to understand and establish organizational decision-making models that offer better usability of techniques and rules.
Decision model expert Chun Wei Choo, who holds a Master's degree in Engineering from the University of Cambridge and a Master's degree in Information Systems from the London School of Economics, states that the decision-making process is a set of actions and factors that begin with the identification of a stimulus and end with a specific commitment to action.
Choo proposes three models of decision making in organizations. O Rational model, which values planning, the Organizational process model that prioritizes crisis execution and response and the political-bureaucratic model, that focuses on testing new decisions based on the political relationships of those involved.
According to Priscila Nogueira, director of strategic alliances at Stratec, there is no ideal decision-making model. Each model brings positive and negative aspects, and reflects the organization's moment and culture.
In the rational model, decision-making takes place because of a problem and is guided by objectives, and the choice of what to do is normally regulated by norms and routines already ingrained in the company, making the action and decision intentionally rational. Priscila adds that this model is ideal when the organization is planning and evaluating different courses of action. “Various mathematical and statistical models can support the rational process, aimed at maximizing or optimizing capital and its return. Decision-making thus becomes based on facts and data, with previously defined rules, and action plans are built to execute the decision and disseminate it within the organization,” she says. The director of strategic alliances also points out that, in addition to facts and data, the organization will take its culture and values into account. “I therefore understand that the rational model can work very well when it comes to planning. However, not everything can be planned by the organization. On a day-to-day basis, situations arise that need new information, new assessments, before a decision can be made,” he comments.
In the procedural model, decision-making goes through three phases: identification, when the need to make a decision is recognized; development, when a diagnosis is made and options for action and their consequences are processed; and finally, the selection phase, where it is determined which action should be taken. Priscila believes that this model is suitable when new responses are created for unexpected situations. At this point, the organization prepares to overcome crises or take advantage of opportunities that arise from changes in the market or the system in which they are located. “Decisions are made in a series of interactions and attempts, as not all knowledge is available,” explains Priscila.
In the political model, political relationships are considered determinants for decision-making, taking into account the different degrees of influence of the actors involved in the process. Decisions are made in this case depending on the bargaining power of those involved, making it a less rational and more political choice. Priscila comments that in these situations there are conflicting objectives, and whoever has more strength and influence ends up deciding. According to her, this type of decision-making process can be more commonly observed in family businesses and political organizations. “Regarding the political process, it is always important to remember that information is power! Thus, argumentation based on information and knowledge is always a way to increase our influence and, therefore, our political power,” emphasizes Priscila.
The director of strategic alliances further comments that for the decision-making process in the rational model, the availability of facts and data is fundamental. It is important to know the results already achieved to, vis-a-vis the proposed scenarios and desired goals, evaluate which path should be followed. It is important to understand what the performance gaps are in order to evaluate the effort required to achieve the desired goals.
Stratec's Strategic Management software provides users and managers with goals, indicators, performance evaluation, and action plans, supporting organizational decision-making models. “Especially within the rational decision-making model, action plans serve as ‘procedures’ that will guide how the organization should act throughout strategy execution,” states Priscila.
Furthermore, in the event of changes in the external environment that necessitate a review of the course of action, trial-and-error decisions can once again be supported by phenomenon analyses, generated from data already captured and monitored through the software. Thus, new action plans can be developed, with their results once again tracked through the system.
