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Making Rational Decisions
Checklist 015
Introduction
This checklist provides an outline framework for making rational decisions (a simple decision making
framework is provided on page 4). It is therefore relevant to all managers.
The nature of the decision-making process within an organisation is influenced by its culture and structure
and a number of theoretical models have been developed. One well-known method for individual decision
making was developed by Charles Kepner and Benjamin Tregoe in their book "The New Rational Manager"
published in 1981. Specific techniques used in decision-making include heuristics and decision trees.
Computer systems designed to assist managerial decision making are known as decision support systems.
The rational model for decision-making:
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will provide evidence and support for how the decision was made
is particularly suitable for complex or fuzzy situations
is thorough and systematic
relies on effective information-gathering, rather than preconceived ideas
is an effective technique for determining a course of action and securing commitment to it.
It is worth noting that information gathering should not be confused with facts. It is a key feature of
successful decision-making that you identify preconceptions and assumptions, ask why they exist, what
their use is and treat them as valuable information as well.
There can, however be drawbacks, because the method:
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can be very time-consuming and resource-intensive especially in fast-moving situations
relies heavily on information which may prove difficult to gather
requires fairly strict adherence if the outcome is to be a rational decision
highlights the possibility that a rational decision may not be the right one!
It is extremely useful and rational behaviour for managers not to ignore their gut feelings. But it is important
to note that is not equivalent to actually ACTING on those feelings.
Definition
Decision making is the process of choosing between alternative courses of action. It may take place at an
individual or organisational level
Action checklist
1. Define the decision to be made
Be clear on the exact decision to make. This first step helps to clarify thinking, aids communications and
provides a record for the future. It may lead to the discovery that assumptions have been made previously
which have muddied the water.
For example - A decision needs to be made regarding which computer to buy.
2. Establish the objectives
The objectives (different to goals) are things that are desired from the decision and should be measurable
wherever possible. It is not necessary to worry at this stage if there are apparent incompatibilities between
the objectives. This stage involves consultation, information searching and checking including establishing
all stakeholders who have an interest/objective in the matter.
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Your objectives may be: a computer which can access the internet anywhere, run CD-ROMs and DVDs, do
word-processing, spreadsheets and graphics, have a large hard drive, and be affordable. The computer
must have wireless internet access, USB ports, CD-ROM/DVD drive, adequate RAM, large hard drive,
standard software packages and be within budget.
3. Classify the objectives
Differentiate between the essential requirements (the "musts") and the desirable (the "wants"). The
fundamental difference between musts and wants is that if one of the decision alternatives does not meet a
"must", then that option should be rejected. Failure to meet a "want" should not mean automatic rejection.
The process for considering "wants" is dealt with at point 5.
Musts: Maximum price / Minimum RAM memory capacity / Minimum hard drive capacity.
Wants: Wireless internet, CD-ROM/DVD drive, USB ports, software packages.
4. Define the "musts"
To be a valid "must", an objective should have a quantitative measure or an objective standard. Assign
quantitative measures to the "musts"; maximum price £600, minimum 1GB RAM memory, minimum 100GB
hard drive. This means that if an option presented for purchase is either: over £600, or less than 1GB RAM
or has less than a 100GB hard drive, it should be rejected.
5. Define the "wants"
Examine the "wants" for importance and give a numerical weighting out of 10 (10 for the most important,
less than 10 for something less important). For example if the software packages are the most important
feature after the "musts", then software would be weighted 10. If an option includes all of spreadsheet,
database, graphics and word processing then it may well score 10 out of 10; if one is missing, it might only
score 8. An extremely fast modem with built-in error correction may have a weight of 10; an option with a
modem not so fast or sophisticated may only score 6 out of 10.
Wireless internet
10
Complete software package 10
Inbuilt CDROM/DVD
9
Extra USB ports
8
6. Generate the alternatives
With information requirements established, next seek and obtain the appropriate information. In this case
sources may include PC suppliers the trade press and "informed" colleagues.
7. Apply the alternatives to the requirements
The information - or options obtained - should be recorded for each alternative against each "must"
objective.
8. Test the alternatives against the "musts"
Reject those options that do not meet the "musts". Do any of the alternatives not match against the "musts"
on price, storage or processor? If negative, it is logical to reject that alternative.
If either you do not wish, or something else prevents rejection of an alternative which has failed on "musts",
then the "musts" are either proving unsatisfactory, or you are not adhering to the rational process. In either
case, re-start at Step 3.
9. Score the remaining alternatives against the "wants"
Score the remaining options against each of the "wants" in turn. The alternative that meets the "want" best
should be scored highest and others allocated proportionate scores. For example:
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Wireless internet
6
2 out 4 software elements missing 5
No CDROM/DVD drive
0
2 extra memory slots
8
10. Multiply the weights by the scores
Weights should be multiplied by scores and the results added for each alternative. For example, as in
Steps 5 and 9 above:
Wireless internet
10 x 6 = 60
2 out 4 software elements missing 10 x 5 = 50
No CDROM/DVD
2 extra memory slots
Total =
9x0=0
8 x 8 = 64
174
11. Come to a provisional decision
The totals will enable you to come to a provisional decision. With the totals compared it is usually possible
to make statements such as:
• alternative A is clearly the best
• alternatives D and E are not worth considering
• there is little to choose between alternatives B and C.
12. The final decision
The analysis will not provide an automatic decision, unless all alternatives but one fail the "musts". Where
several alternatives have similar totals, it is particularly important to re-examine scores and weights and the
evidence on which they have been based. The analysis will provide a sound framework for clear
examination. It is not always necessary to use the entire process described above, especially for simple
binary (yes/no) decisions. However, each element in the process can be used separately to improve the
efficiency of a decision. Some initial assumptions have to be made in our decision process. Make sure you
review all of the assumptions before proceeding to the analysis described above. In our computer example,
a technological assumption we make at the beginning is that we need 4 MB RAM maximum. Once the
assumption is made, it will condition our choice and we need to be sure the assumption is correct.
Managers should avoid:
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jumping too quickly to an "apparently" obvious decision
letting a preconceived notion influence the process
cutting corners, especially if the decision has far-reaching implications
letting personal preferences cloud the process
taking the provisional decision as final
ignoring their instinct
using this approach for solving problems!
Simple Decision Making Framework
For less complex decisions or when qualitative data are considered, you can use the following
table:
Desired Result
Possible
Solution
#1
Pros
Cons
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Possible
Solution
#2
Pros
Cons
Possible
Solution
#3
Pros
Cons
Recommendation & Rationale
National Occupational Standards for Management and Leadership
This checklist has relevance to the following standards:
B: Providing direction; C: Faciliating change; E: Using resources;
F: Achieving results.
Additional resources
Books
John Adair's 100 greatest ideas for smart decision making, by John Adair
Chichester: Capstone, 2011
The decision book: fifty models for strategic thinking, by Mikael Krogerus and Roman Tschappeler
London: Profile Books, 2011
Decide and deliver: 5 steps to breakthrough performance in your organization, by Marcia W Blenko,
Michael C Mankins, Michael C and Paul Rogers
Boston Mass, Harvard Business Review Press, 2010
Think twice: harnessing the power of counterintuition, by Michael J Mauboussin
Boston Mass, Harvard Business School, 2009
Making better business decisions: understanding and improving critical thinking and problem
solving skills, by Steve W Williams
Thousand Oaks Calif: Sage, 2006
Problem solving and decision making: hard soft and creative approaches, 2nd ed, by Michael J Hicks
London: Thomson Learning, 2004
The new rational manager, Charles H Kepner and Benjamin B Tregoe
London: John Martin, 1981
This is a selection of books available for loan to members from CMI's library. Go to CMI Library to place
your requests.
Related checklist
Solving problems (012)
Revised July 2011
This publication is for general guidance only. The publisher and expert contributors disclaim all liability for
any errors or omissions. You should make appropriate inquiries and seek appropriate advice before making
any business, legal or other decisions. Where legal or regulatory frameworks or references are mentioned
these relate to the UK only.
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