Impediments to Good Decision Making - Essay Example

Impediments to good decision making Name Institution Date Introduction Decision making continues to take the central role in management and leadership. For the managers, some decisions seem effortless and are done easily, while some make them agonize and second guess repeatedly. In the current business world, making such decisions has become even more complex. Decision making now requires special judgement and consideration of options in an effort to ensure that the best decisions are arrived at. It is also evident that managers and other decision makers of businesses and organizations are faced with several impediments that influence their decision making. This paper seeks to investigate these barriers to good decision making. While discussing these barriers, the paper also tries to find out why managers continue to be challenged when making decisions even with the availability of a wide range of information to base their decisions on. Impediments to Good Decision Making Campbell et al (2009) note that in reality, it is surprising that significant decisions that are made by responsible, intelligent people who have access to the best information and intensions are sometimes hopelessly flawed. It is therefore evident that there are certain conditions that promote error of judgement and therefore act as barriers to proper decision making. The business psychology consulting (2013) argue that many people claim to follow the rational model of decision making while in reality this is rarely the case. The model generally assumes that decision makers are equipped with all relevant information and the information is completely accurate. It also assumes that the decision maker has within his reach an exhaustive list of other alternatives from where he may choose. In the real world, however, the decision making process remains very complex since the decision makers may in the first place be looking at imperfect information or sometimes an incomplete list of alternatives. After analyzing the possible reasons behind good leaders making improper judgements and decisions, Campbell et al (2009) identified three factors that either distorted the leaders’ emotional tags or encouraged them to see a false pattern. First is the presence of inappropriate self-interests. White (2009) also argues that most people are not even aware that self-interest operates at a subconscious level. They may not even realise how self interested they are. Campbell et al (2009) further point out that research has confirmed that even well intentioned professionals, like doctors and auditors are not able to keep self interest away from influencing their judgements about which medicines to prescribe or which opinion to give during an audit. Secondly, decision makers may be greatly influenced by the presence of distorting attachments. These leaders, just like everyone else may get attached to people, things, and places. These bonds are likely to affect the judgement about the situation at hand as well as the most appropriate actions to be taken. An example would the reluctance a manager may feel to sell a unit or any other product that he has spent a long time working on. As White (2009) adds, these attachments would certainly influence a decision maker’s judgement. Again, managers are affected by the presence of misleading memories. This category includes memories that will usually seem relevant and comparable to the situation at hand and which may cause one’s thinking to go down the wrong way. Such memories are likely to cause managers to undervalue or overlook some vital differentiating factors. The probability of being influenced by memories is further intensified by whatever emotional tags one has attached to the experiences of the past. If a manager’s previous decision in a similar experience turned out successful, he/she will be more likely to overlook any key differences (Campbell et al, 2009). Researchers argue that vigilance and full execution of the 6 stage decision making process are exceptions rather than the rule. They again add that when managers employ such rational processes, they are bound to make good decisions and are more effective (Dean & Sharfman, 1996). However, people rarely invoke such rational process in their decision making. This is because the problem at hand may not be properly defined or the goals misidentified. Not enough alternative may be generated, or still, the alternatives may be incompletely evaluated. It is common that a satisfying choice may be made rather than a maximizing one and again the implementation poorly executed, with inadequate monitoring. According to Nisbett & Ross (1980), decision makers are rarely objective in the manner they gather, consider, and apply information in making their choices. Individual biases have a huge influence on people’s objective rationality. The illusion of control, which is a belief that makes one feel that he/she can influence events even when it is evident that he/she has little or no control over what will happen. With such overconfidence, decision makers usually end up into failure since they ignore risks, failing to objectively evaluate the odds of success. Other researchers believe that a decision will also be influenced by how decision alternatives are presented and phrased as well as how these influences are able to override objective facts. Managers are likely to show interest in a course of action reported to have 70% chance of profit than one reported to have a 30% chance of loss. While these choices are equivalent in terms of their chances of success, the manner of expression greatly influences the decision (Bateman & Zeithaml, 1989). Again, managers will generally weigh short-term costs and benefits more heavily than they would long term costs and benefits. While the management may consider expansions into new investments risky and costly in the short term, these investments may turn out a breakthrough for the firm in the long run. The managers may also overlook the need for investing in research and training, while these may turn out to be of greater benefit for the firm in the future. In these circumstances, the management give importance to saving money for the firm but do not consider the importance of future benefits of their decisions. Managers are also faced with more difficulty in decision making given the rapidly changing business environment. They are forced to hurry up in their evaluation of data and judgement. Systematic and properly thought out decisions may take too long and may turn out to be irrelevant for the firm. In an effort to keep up with time, managers may have to skimp on analysis and make decisions with less or no consultations at all with other managers or other employees in the organization. While this may result to quick decisions, the strategies may lead to poor decisions that are uninformed and misleading. As Perlow et al (2002) point out, the speed trap may turn out to be just as dangerous as moving too slowly. The question is how these managers will be able to keep up with time and still make sound decisions. Several firms now base their decision making on real time information as opposed to old data. They do not consider long range planning and future possibilities. Their real time information is easily accessible and in a form that is readily put to use. According to The business psychology consulting (2013), many decision makers select their favourite alternative much earlier in the decision making process. They therefore continue to evaluate additional alternatives with a preset line of thought. The result is that subsequent alternatives are distorted perceptually. The evaluation is then based on a decision criterion that shows superiority of their preferred solution. A situation where one is asked to choose a site for the new plant is a good example. The individual may quickly show preference for the place where he has always wanted to live. He may subsequently unconsciously take steps to see to it that the city is prominent among the available alternatives and is therefore biased in his final choice. This factor is closely related to White (2009)’s prejudgements. She notes that leaders sometimes make prejudgements in relation to their businesses that may sometimes turn out to have negative impacts on their businesses. At the same time, lack of creativity presents yet another impediment to good decision making. Creativity enables one to generate ideas that are functional and innovative. This is particularly important when one has to make non routine decisions. In reality, creativity is not given as much attention as it deserves in industry. Organizations generally rely on policies and procedures that are designed to promote order, uniformity and consistency, thereby limiting creativity. Again, management is fast paced and action oriented while creativity requires enough time for preparation and inspiration. Interestingly, researchers have found out that decisions made in a group may fail to utilize the combined reasoning which has the potential of attracting many reasonable alternatives. Such decisions may turn out to be more risky. This is because no single individual remains responsible for the decision and there may be no one to shoulders the consequences of the decision. Groups may also ignore individual inputs and expertise, and may opt for group consensus. Such groups are also likely to be dominated by individuals with strong personalities as well as those with high status. Strongly cohesive groups may also develop groupthink mode of reasoning with a norm of concurrence seeking behaviour (The business psychology consulting, 2013). Such symptoms will usually arise when group members are critical about ideas outside of the group but have preference to group ideas and focus heavily on development of concurrence in the group. In conclusion, it is evident in the discussion above that several factors exist and surround decision makers, factors which greatly influence their ability to make good decisions. It is important, however, to understand that leaders make decisions largely by means of unconscious process called pattern recognition and emotional tagging. While these processes usually result to quick and effective decisions, they are susceptible to distortion by emotional attachments, self interests, misleading memories and a host of other factors. It is therefore paramount that managers and other decision makers find ways to effectively recognise sources of such biases and design safeguards that will make the process more analytical, with stronger debate or stronger governance Own experiences After the discussion above, I begin to understand the outcomes of some of the decisions I have made. My chosen carrier path and the decision that led to this choice must have been influenced by prior attachments as well as my predetermined mind. I had grown within a neighbourhood where one of the neighbours had become successful in the field. While I had developed an initial liking for this guy, I never believed that he could have influenced my choice. While I was still young, he told me and his kids about their experiences on job. While these did not stick in my mind at the time, I had already started to like what he did. When it was time to decide what I wanted to become, I convinced myself that the choice was solely dependent on my passion and capabilities but it is true that I did not consider the other options with equal importance as my final choice. The other time I had to make an important decision, I sought for an independent opinion before I made the decision. This time I was planning to buy my laptop. While each of my friends had advised me to pick a brand similar to theirs, I had to make inquiries from qualified specialists about the specifications and price considerations while keeping in mind the level of service I needed from it. The sales specialists explained all the technicalities as well as the capabilities of several brands before I made the choice that was affordable and again suitable for the service I needed from it. While I have never regretted the choices I made, I now understand that these were two different approaches and decision processes. I now appreciate the importance of a thoroughly and systematically thought out decision process that is supported by facts and informed judgements. References Campbell A., Whitehead J., and Finkelstein S. (2009). Why Good Leaders Make Bad Decisions. Boston: Harvard business school Publishing Corporation. Dean J. W. and Sharfman M. (1996). Does Decision Process Matter? A Study of Strategic Decision-Making Effectiveness. Academy of Management Journal; 39, pp. 368–96. Bateman T. and Zeithaml C. (1989). The Psychological Context of Strategic Decisions: A Model and Convergent Experimental Findings. Strategic Management Journal; 10, pp. 59–74. Nisbett R. and Ross L. (1980). Human Inference: Strategies and Shortcomings. Englewood Cliffs, NJ: Prentice-Hall. White E. (2009). Why Good Managers Make Bad Decisions. The Wall Street Journal. Retrieved on 20th January 2014 from Perlow L., Okhuysen G., & Repenning N. (2002). The Speed Trap: Exploring the Relationship between Decision Making and Temporal Context. Academy of Management Journal; 45 pp. 931–55. The business psychology consulting. (2013). Psychological barriers to effective decision making. Retrieved on 20th January 2014 from Read More