The 4 decision-making strategies in the company

There are a series of models and techniques that propose decision-making strategies in the company, and that have the objective of simplifying certain decisions.

When we make decisions, we must bear in mind that there are many variables that we can control, but many others that will not depend on us. Furthermore, at the probabilistic level, there will always be a degree of uncertainty in any decision we make.

In this article we will learn about different decision-making models and other strategies that can be implemented in the company.

• Related article: "Work and organizational psychology: a profession with a future"

Decision-making strategies in the company: models

The models that we will review below, and that contemplate the decision-making strategies in an organization, intend, among other things, reduce the cost / benefit impact of the "wrong" decisions, to finally achieve the objective set by the company.

These models help to choose the best option within the available options when deciding taking into account that degree of uncertainty or possibility of making a mistake, which will always be present (although it can be reduced, as we have saying).

1. Maximin (or Wald's) model

The Maximin or Wald model proposes that, when making a decision, we focus or fixate on the lowest (bad) ratings of all possible solutions. That is, "graphically" it would look like this: the lowest evaluations would be 1 for solution A, 2 for B and 3 for C. Thus, within this range we would choose C, since it is the “highest among the worst” solutions.

However, choosing through this model does not ensure that we make a 100% “correct” decision, since we can lose important information by not taking into account the other solutions. That makes the "best option among the worst" it does not always have to be the best or the one that perfectly fits our problem.

According to Wald, this is a "pessimistic" decision-making model.

2. Maximax model

The Maximax model would be the opposite of the previous one (it is therefore an "optimistic" model); proposes choose or work with the data or solutions that have obtained the highest score.

For example, if in our data table solution A has obtained 8 points, and instead B has 10 points, and C 9 points, according to the Maximam model, we would choose B as the best solution, since its score is the highest, and therefore superior to all the the rest. That is, we would base our decision on this reasoning.

In the same way as in the previous model, choose through this model does not assure us of a correct decision, since we "put aside" a lot of information (solutions with fewer scores) and we may be choosing a decision that in practice is not the best.

Other strategies to choose the best solution

Apart from these models that we have seen, there are other decision-making techniques or strategies in the company. Some of them are:

1. Assess the global situation

To make a decision, so that we reduce as much as possible the degree of uncertainty of which speak, another strategy that we can use is to assess the situation in its entirety, in a way general, taking into account the most relevant intervening variables.

For this, it is important to take a certain perspective in relation to the problem or situation, to try to see it from the "outside", assessing the situation in the most objective way possible. In addition to focusing on the present situation, it will be important to look beyond, understanding the causes past events that may have generated the situation, and visualizing possible short and long-term solutions term.

In this way, a comprehensive view of the situation will help us to shuffle all possible options more objectively.

2. Generate alternatives in parallel

This second of the decision-making strategies in the company that we propose focuses on having a plan B (even a plan C) in case plan A will fail; that is to say, on the one hand, logically we will have to bet heavily on plan A, for our decision, and trust that it will work. However, it never hurts to have alternatives in case things didn't turn out the way we expected.

There will always be variables, no matter how minimal (whether from the organization itself, from the workers, of competitors, etc.), which will cost us to control, or that we will not directly have the option of do it. Therefore, having other options in the pipeline will allow us to act with a certain sense of security, since, if plan A fails, there are other options that we have already considered. In addition, plan B or plan C can be circumstantial or temporary, that is, they can be solutions to be applied while the situation is not resolved definitively.

A) Yes, if we use a strategy of creating alternatives in parallel, it will be easier to adapt to the problems that arise and not having to paralyze the entire project.

Conclution

Deciding, after all, implies being able to plan for the future and organize all the elements involved in it in order to achieve specific purposes.

The fact that companies have to constantly decide between one or other options, and that they have to act in different areas of the organization (workers, investments, profitability, business plan, income and costs, etc.) to ensure that everything works as a perfectly geared, makes the decision-making process frankly important, and the situation must be carefully considered in each case.

However, making mistakes is part of the process, and it should be seen as something possible and what to learn from in order to move forward day by day.

Bibliographic references:

• González, R. (2013). Decision-making models: Maximin or Wald, Maximax, Hurwicz, Laplace and Savage. PDCA Home.
• Randstad. (2017). HR strategy and management. The process of decision making.
• Management challenges. (2017). Strategies for making business decisions. EAE Business School, Harvard Deusto.