There are several barriers to effective decision making. Competent managers are aware of these potential obstacles and try to overcome them as much as possible.
Table of Contents
Bounded rationality
While we’d like to think we can make completely rational decisions, that’s often unrealistic given the complex issues managers face.
Non-rational decision making is common, especially in the case of unplanned decisions. Since we haven’t faced a particular situation before, we don’t always know what questions to ask or what information to gather.
Read Also: Top 14 Role of Entrepreneurship in Economic Development
Even when we have gathered all possible information, we may not be able to make rational sense of all that information, or accurately predict our chosen outcomes.
Bounded rationality is the idea that, for complex problems, we cannot be fully rational because we cannot fully understand all possible alternatives, nor understand all the implications of each possible alternative. Our brains have limits in terms of the amount of information they can process.
Moreover, even when managers have the cognitive ability to process all relevant information, they often have to make decisions without having time to collect all relevant data first, so their information is incomplete.
Read Also: The Human Relations Movement
Growing commitment
Given the lack of complete information, managers don’t always make the right decision initially, and it may not be obvious that a decision was wrong until some time has passed.
For example, imagine a manager who must choose between two competing software that his organization will use daily to improve its efficiency.
He initially chooses the product developed by a larger and more established company, thinking that it will have more financial resources to guarantee the quality of the technology.
Read Also: The Roles Managers Play
However, after a while it becomes clear that the competing software will be significantly superior. While the smaller company’s product could be integrated into the organization’s existing systems with little additional expense, the larger company’s product will require a much larger initial investment, as well as substantial ongoing costs to maintain it.
At this point, however, let’s assume that the maintainer has already paid for the larger (lower quality) company’s software. Will he abandon this path, accept the loss on the money already invested and move on to the best software? Or will he continue to invest time and money trying to make the first product work?
Growing commitment is the tendency of decision makers to stay committed to a bad decision, even if it leads to increasingly negative outcomes. Once we commit to a decision, it can be difficult to rationally reassess it.
Read Also: Transaction cost theory (Ronald, Coase and Williamson)
It may seem easier to “keep going the same way” than to admit (or acknowledge) that a decision was wrong. It is important to recognize that not all decisions will be good, despite our best efforts.
Effective managers recognize that progress in the wrong direction is not really progress, and they are willing to re-evaluate their decisions and change course when necessary.
Time constraints
Managers often face time constraints that make effective decision-making difficult. When there is little time available to gather information and process it rationally, we are much less likely to make a good unplanned decision.
Read Also: How to build a strength-based teams in organisation ?
Time pressures can cause us to rely on heuristics rather than engage in deep processing. Although heuristics save time, they do not necessarily lead to the best possible solution.
The best managers constantly weigh the risks of acting too quickly against those of not reacting quickly enough.
Uncertainty
Moreover, managers frequently make decisions under conditions of uncertainty, that is, they cannot know the outcome of each alternative until they have actually chosen that alternative.
For example, imagine a manager trying to decide between two possible marketing campaigns. The first is more conservative but is consistent with what the organization has done in the past.
The second is more modern and daring, and could yield much better results… or it could be a spectacular failure.
area. The manager making the decision will ultimately have to choose one campaign and see what happens, never knowing what the results would have been with the other campaign.
This uncertainty can make decision-making difficult for some managers, because committing to one option means giving up other options.
Personal biases
Our decision-making is also limited by our own biases. We tend to be more comfortable with ideas, concepts, things, and people that are familiar to us or look like us.
We tend to be less comfortable with the unfamiliar, new and different. One of the most common biases we have as humans is the tendency to like other people who we think are similar to us (because we like ourselves).
These similarities may be observable (based on demographic characteristics such as race, gender, and age), but they may also be the result of shared experiences (such as attending the same university) or common interests (such as making part of a book club).
This “similar to me” bias and preference for the familiar can lead to various problems for managers: hiring less qualified candidates because they are similar to the manager in some way, paying more attention to the opinions of certain employees and ignoring or underestimating those of others, choosing a familiar technology rather than a new superior one, sticking to a known supplier rather than a supplier offering better quality, and so on.
It can be extremely difficult to overcome our biases because of how our brains work. The brain excels at organizing information into categories and dislikes the effort of rearranging it once the categories are established.
Therefore, we tend to pay more attention to information that confirms our existing beliefs and less attention to information that contradicts our beliefs, a flaw known as confirmation bias.
In reality, we don’t like our existing beliefs to be challenged. These questionings seem to be a threat, which pushes our brain towards the reactive system and prevents us from logically processing new information through the reflective system.
It is difficult to change people’s opinion about something if they are already convinced of their beliefs. For example, when a manager hires a new employee whom he likes very much and whom he is convinced will be excellent, he will tend to pay attention to examples of excellent performance and ignore examples of poor performance (or to attribute these events to circumstances beyond the employee’s control).
The manager will also tend to trust this employee and accept their explanations for poor performance without verifying the truth or accuracy of these statements. The opposite is also true: if we don’t like someone, we will pay attention to their negative aspects and ignore or minimize their positive aspects.
We will be less inclined to trust them or believe what they say without verification. This is why politics tends to become very polarized and adversarial in a two-party system.
It can be very difficult to have an accurate perception of who we like and who we dislike. An effective manager will try to assess situations from different angles and gather multiple opinions to compensate for this bias when making decisions.
Conflict
Finally, effective decision-making can be difficult due to conflict. Most individuals dislike conflict and avoid it as much as possible. However, the best decision may be one that involves some conflict.
Consider a manager with a subordinate who often arrives late for work, causing others to interrupt their responsibilities to make up for the late employee’s absence.
The manager needs to have a conversation with this employee to correct his behavior, but the employee will not appreciate this conversation and may react negatively. Both will be uncomfortable.
The situation is likely to involve conflict, which most people find stressful. Yet the correct call is still to have that conversation, even if it (or especially if it) makes the employee otherwise valuable to the department.
If the bad behavior is not corrected, it will persist, causing more long-term problems in the workplace. Other employees may find that this behavior is allowed and may also begin to show up late for work or engage in other negative behaviors.
Eventually, some employees may become frustrated enough to look for another job. It should be noted that in this situation, the best employees will find new jobs faster.
It is important for managers to recognize that while conflict can be uncomfortable (especially in the short term), there are times when it is necessary for the group, department, or organization to function effectively in the long term.
It is also useful to think of conflict in terms of process conflict or relational conflict. Process conflict, the conflict over the best way to do something, can actually lead to improved performance as individuals explore different options together in order to identify superior solutions.
Relationship conflict is conflict between individuals that is more personal and involves personal attacks rather than an idea. This type of conflict is usually harmful and should be resolved when possible.
The damage caused by relationship conflict is partly because feeling personally attacked causes an individual to revert to the reactive system of the brain.
Effective managers should be especially aware of the possibility of relational conflict when giving feedback and should keep feedback focused on behaviors and activities (how things are done) rather than the individual.
Being aware of and dealing with relational conflict highlights why emotional intelligence and empathy are beneficial for organizational leaders.
These leaders are more likely to be alert to the harmful consequences of relational conflict.
The “Managerial Leadership” segment shows how a CEO encourages empathetic collaboration and how this initiative turns out to be beneficial.
Conclusion
There are many barriers to effective decision making. Managers are limited in their ability to collect complete information and they are limited in their ability to cognitively process all available information.
Managers cannot always know all the possible outcomes of all possible options, and they often face time constraints that limit their ability to gather all the information they would like to have.
In addition, managers, like all humans, have biases that influence their decision-making, and which can prevent them from making good decisions.
One of the most common biases that can confuse decision-making is confirmation bias, a person’s tendency to pay attention to information that confirms their existing beliefs and ignore information that conflicts with those existing beliefs. .
Finally, conflicts between individuals within organizations can make it difficult to make a good decision.