The 5 Levels of Decision-Making for Leaders

It’s essential for leaders to excel when it comes to effective decision-making for their organizations. Here are 5 levels of decision-making all leaders should know.

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The 5 Levels of Decision-Making for Leaders

Here's what you need to know:

  • It's helpful to get to know the different levels of decision-making so you can work on making the best decisions for yourself, your team, and your company
  • The 5 levels of decision-making for leaders include instinctual, emotional, and rational decision-making
  • Value-based and intuitive decision-making are additional levels

It’s essential for leaders to excel when it comes to effective decision-making for their organizations. As it turns out, that’s not so easy to do. There are layers and levels when it comes to decision-making. That’s what we’ll explore here.

We will go over the 5 levels of decision-making that every leader should know. We’ll also show you when to implement them.

What are the 5 levels of decision-making for leaders?

If you want to be an effective leader, you will need to make good decisions. You are making decisions on a daily basis — so it’s important to have good strategies in place.

There are actually 5 levels of decision-making. It’s helpful to get to know them so you can work on making the best decisions for yourself, your team, and your entire company.

Instinctual decision-making

With instinctual decision-making, the input that you receive from the environment doesn’t even get into your brain. It’s a simple instinctual reaction.

Imagine a doctor checking your knee by hitting it and you automatically respond. This level of decision-making is pretty much automatic and out of our control.

Emotional decision-making

This is where things get interesting.

Emotional decision-making happens when we receive input, either external or internal. Then we react to it according to our own emotions about what just happened.

An example of external input would be 1 of our team members coming to us. They would tell us that they’ve missed a deadline on an important task. This could cause anger.

Internal input usually comes from our own thoughts, concerns, or worries. We start feeling nervous (internal input) so we start biting our nails or fidgeting in the chair.

All of these examples are ways we do emotional decision-making. When it comes to emotional decision-making, it’s not all bad. When we’re happy about a project’s success, we tend to share that happiness with others around us.

But the problem happens when the leaders of the team let their emotions lead the team. Nobody can control what emotions will rise up in them, but they can control how they react to them.

A leader can feel anger. However, that doesn’t mean that they can freely shout at their team members because they’re angry. A presence of emotion that caused a certain action doesn’t justify it.

Good leaders need to know how to steer their emotions into productive and effective actions.

Good leaders need to know how to steer their emotions into productive and effective actions. That will help team members become better.

Rational decision-making

Rational decision-making happens when a leader is aware that they can’t lead their team on emotions and they use their rational mind to make decisions. This is a quality of an effective leader.

With rational decision-making, the team leader will value input from different team members to come up with the best possible decision. A leader who uses rational decision-making will understand that they need to do what has the most rational sense for themselves, their team members, and their organization.

This is an upgrade to emotional decision-making, but rational decision-making has its problems and they’re best seen in the next level of decision-making.

Value-based decision-making

Value-based decision-making means that the leader is making decisions not based on their own emotions or pure rational thought, but on the values that guide the organization and them.

This type of decision-making is all about finding out what the purpose of the organization is and how the organization tends to uphold that purpose (values) and then rigorously implement it.

This can, oftentimes, collide with rational decision-making. Here’s a good example.

A company that has ecological values and wants to save the planet from further contamination has the following options: Keep their current packaging of products that provides them with a bigger profit margin or change their packaging so it reflects their values, but provides a lesser profit margin.

Leaders who are using rational decision-making would choose the option that provides the bigger profit margin because “profit is good for the organization.” However, leaders who are using value-based decision-making also know that profit is good for the organization, but that’s not the only thing.

They will gladly take a smaller profit margin if that means upholding their values because they’re using their values as a decision-making tool and guidelines. A company can’t live without a profit, but profit isn’t the only thing that fuels a company.

Value-based decision-making requires constant questions from the leaders and team members of the company about the actions they’re doing. “Is this action helping me implement the values of my organization?”

With value-based decision-making, leaders will have to remind team members to uphold the company values constantly.

That’s why training team members “on the way things are done” is essential if you want everyone to uphold the organization’s values. All team members must know what the values are if they’re to implement them on a daily basis.

Intuitive decision-making

Intuitive decision-making is sometimes mistaken for emotional decision-making, but they’re worlds apart. This type of decision-making is all about making the decision according to the values that you already have, but you don’t need to have them explicitly written somewhere to know that you’re upholding them.

You’re already living the values of your organization on a daily basis and they’re completely integrated into your core being (subconsciousness) so that you can make decisions based on your intuition.

The following example will help you understand intuitive decision-making better:

Imagine a bag designer who’s working for Louis Vuitton and they’ve been making handbags for 15 years already. They have absorbed everything there is to making handbags; from how they’re structured to how they’re sewn. They’ve been living the experience for over 15 years now.

Now, a group of scientists puts that person in a room with someone who doesn’t know anything about handbags. They’re both presented with 20 handbags and they have to say which ones are fake and which ones are real.

The handbag designer won’t be able to explain every single time why a handbag is fake, but they will intuitively know (their subconsciousness will “tell” them) which ones are fake. A person with no experience will simply be guessing which ones are real and which ones are fake.

Intuitive decisions can’t always be rationally explained (like value-based decision-making can), but it works since the person integrated those values into their core being.

A leader who has mastered intuitive decision-making will be the embodiment of the values of an organization (Yvon Chouinard, founder of Patagonia) or of a movement (Mahatma Gandhi).

Master the 5 levels of decision-making as a leader

A leader who wants to lead their team members through the good and the bad needs to work on mastering the 5 levels of decision-making.

To learn more about how to empower your team members and include them in the decision-making process, check out this post: How to Get Your Employees Involved in Decision-Making.

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