Decision-making plays a vital role in an organization since it facilitates the process of planning and unifying different departments; thereby, enhancing interaction between them. However, while different individuals in an institution rely on various approaches to settle on particular decisions, the uniqueness in making these decisions leads to a rise in the biases. A highlight of this is provided in a scenario where the department heads have to rate employee performance. In such a case, their actions may be guided by the recency error prompting them to rate employees well or poorly on the basis of their immediate performance.
There are various prominent decision-making styles being applied today. The most notable of these are directive, analytical, behavioral and conceptual (Bavol’ár, 2015; Etzioni, 2014). Under directive style, the manager uses their own knowledge without having to seek for more information before making the decision. This is different from analytical decision-making style, where the managers seek more information before making a decision. Moreover, there is behavioral decision making which focuses on inclusivity as leaders seek suggestions from the subordinates’ before making a decision. Lastly, conceptual decision making prompts the managers to find comfort in ambiguity and open-ended options. In the attached case, Swan is a behavioral decision maker because she involves other people to make decisions to restructure the culture of the company.
Often managers make decision in an illogical way prompted by various errors. These biases can twist and completely disrupt the main objective. The most common decision making biases are confirmation, anchoring, hallo effect ,and overconfidence bias (Montibeller & von Winterfeldt, 2015). Under confirmation bias, managers interpret information based on existing believes. This is different from anchoring bias where the managers over-rely on the first piece of information to make a conclusion. The halo effect bias arises when the managers make decisions based on the overall impression of the person or a product. Lastly, overconfidence bias arises whenever managers overestimate their skills and intellect to make a decision. In the case, Swan has halo effect bias, because she decided to continue working with her team on the basis of working with them remotely, rather than hiring a director.
Bavol’ár, J. (2015). Decision-making styles and their associations with decision-making competencies and mental health. In Judgment and Decision Making (Vol. 10, Issue 1).
Etzioni, A. (2014). Humble Decision-Making Theory. Public Management Review, 16(5), 611–619. https://doi.org/10.1080/14719037.2013.875392
Montibeller, G., & von Winterfeldt, D. (2015). Cognitive and Motivational Biases in Decision and Risk Analysis. Risk Analysis, 35(7), 1230–1251. https://doi.org/10.1111/risa.12360