Decision-Making in Management

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Making decisions is a difficult task since several interests are at play. Towards developing a sound strategy, executives need to follow a disciplined approach in order to arrive at the right choices (Kahneman, Lovallo & Sibony 2011). In this regard, observing a good decision-making process is desirable as opposed to putting trust in genius decision makers.

Moreover, international management has assumed greater importance in the recent times as managers need to address issues of decision-making across different cultures. Since different cultures place various pressures on management, managers should prepare well to tackle problems that may arise out of the differences.

Executives make big decisions in organizations (Martinsons 2001). In making the decisions, the executives heavily rely on judgment of teams, which prepare proposals (Kahneman, Lovallo & Sibony 2011). The teams normally carry research before fronting a proposal to executives. Although teams have time to conduct research before developing a proposal, it is noticeable that the element of bias may arise in the deliberations.

If a team is characterized by bias, then chances are that thinking or reasoning of such a group would be distorted. As an illustration, when a team makes a suggestion, it is expected that such a group would do anything to support the idea irrespective of any evidence presented in opposition to the idea.

This realization demands that executives should scrutinize team proposals and ensure that the decision-making process was fair and free from personal biases. Although Kahneman, Lovallo & Sibony (2011) propose that managers should scrutinize decisions to eliminate biases, they fail to realize that the same managers are also subject to personal biases.

When reviewing recommendations, executives need to have all the relevant information (Kahneman, Lovallo & Sibony 2011). In addition, the executives should judge if the individuals making the recommendations are free from bias. Finally, executives should use their personal experience, reasoning and knowledge to gauge whether the recommendations are viable.

In light of this revelation, it is important to point out that possessing all the necessary facts regarding a case is rarely possible. In practice, it is difficult to get all the information concerning a scenario. This lies on the idea that committees or workers who come up with recommendations may not have enough time or resources to grasp all the information surrounding an issue.

Additionally, Kahneman, Lovallo & Sibony (2011) point out that individual biases are likely to compound the decision-making process. It is also worth noting that, knowledge deficiencies imply that it is highly unlikely to have complete information on any aspect. As such, it is not feasible to gather all information. The only commendable thing to do is to collect as much information as possible before taking a decision.

Regarding the role of bias in organizational deliberations, it is important to note that each individual has a background (Kahneman, Lovallo & Sibony 2011). The background informs the individuals on how to act in certain circumstances. Although, people hide under professionalism as they purport that such is an antidote to bias, in practice it is difficult to escape from the distortions that arise from personal biases (Gelderen 2001).

Kahneman, Lovallo & Sibony (2011) allege that the executives cannot do much towards correcting their biases but they remain in good positions to mitigate those of their teams. This requires setting up organizational decision-making structures that negate personal biases that are likely to undermine the process. It is true that each individual has a background; however, it is wrong to assume that such places elements of bias in people.

Avoiding bias is perhaps one of the most challenging aspects in decision-making. This realization rests on the idea that it is difficult for people to note their biases (Blackhart & Kline 2005). Cognitive scientists further augment this view by expounding the reflective and the intuitive way of thinking. Although the two ways of thinking differ, the intuitive part influences the reflective part (Hitt 2001).

As such, memories, associations, goals, etc influence the way people think (Kahneman & Tversky 2000). It is thus little surprising that when people make decisions they do so with biases but they do not notice whether they are being biased. If this is the case, then decision-making is an avenue fraught with biases.

More precisely, individual memories, goals and associations blur the vision of decision makers as they fail to see possible alternatives to what they propose.

The twelve questions posed by Kahneman, Lovallo &Sibony (2011) are useful in guiding the decision making process. As the first question reflects, it is important to determine if a team is making errors based on the forces of self-interest.

In practice, when a team stands to gain from a recommendation, then chances are always high that they would factor in their selfish gains in coming up with the final proposal. Such interests as reputation, power, career aspirations, etc always emerge as crucial factors in decision-making.

The second question on the checklist borders on the association between the decision-makers and the decisions. Often, individuals seem intent to exaggerate the benefits of a decision while downplaying the potential weaknesses (Kahneman, Lovallo &Sibony 2011; Robert 2007).

However, this refers to assessments on what one likes. On the contrary, when reviewing an aspect one does not like, the tendency is to do the opposite. This point helps magnify how biases influence decision-making. Nevertheless, since teams propose decisions, it is highly unlikely that the one person would hold other members to ransom.

However, it does happen that even big groups are captive to few dominant individuals (Daft 2009). As such, the idea that a group may help in overcoming personal biases does not go away. This view is held in light of the idea that few individuals dominate even big groups.

As the last question on the checklist establishes, recommendation teams at times become overly cautious (Kahneman, Lovallo & Sibony 2011). This follows from the notion that executives complain that teams lack creativity, or ambition to succeed. However, the main reason rests on the idea that teams do not want to make decisions that would lead an organization into making losses (Monahan 2000).

Quality control is central to decision-making (Kahneman, Lovallo & Sibony 2011). In order to arrive at quality decisions, it is important to have a clear separation between the executive and the team that makes decisions. In most instances, it is understandable that the executive will either attempt to covertly or overtly influence the recommendation teams.

This is made easier as the executive normally appoints members to the decision-making team. As such, it is possible that the executive would pick members that share his/her ideas.

If this happens, then, after the team makes recommendations, the executive does not focus on the details since s/he had an insider in the decision-making process (Godwin & Wright 2004). It would thus appear that the executive makes the decisions and implements them.

As the article points out, it is important to explore alternatives before proposing one approach to the executives. It is also necessary to gather all necessary information regarding a scenario before making a decision regarding a course of action. The team also needs to separate itself from self-interests. In this regard, elements such as attachment to previous decisions and overconfidence should be avoided.

Paying attention to the issues raised above assists executives to develop a culture of objectivity and reduce the chances of using biased choices. This holds the potential of increasing the quality of decisions made in an organization.

It is however necessary to draw a distinction between the decision makers and the executives if an organisation is to benefit from sound decision-making. It also emerges that doing away with bias is central towards making sound decisions in international management.

Reference List

Blackhart, GC and Kline, JP 2005, Individual differences in anterior EEG asymmetry between high and low defensive individuals during a rumination/distraction task, Personality and Individual Differences, 39 (3), p. 427–437.

Daft, R 2009, Organization Theory and Design, Cengage Learning, New York.

Gelderen, M et al. 2001, Strategies, uncertainty and performance of small business start-ups, Small Business Economics, 15 (5), p. 165-181.

Godwin, P and Wright, G 2004, Decision Analysis for Management Judgment, Chichester, Wiley.

Hitt, MR 2001, Strategic entrepreneurship: entrepreneurial strategies for wealth creation, Strategic Management Journal, 22 (4), p. 479-491.

Kahneman, D, Lovallo, D and Sibony, O 2011, The Big Idea: Before You Make That Big Decision, Harvard Business Review, Harvard Business School.

Kahneman, D and Tversky, A 2000, Choice, Values, Frames. The Cambridge University Press, Cambridge.

Martinsons, MG 2001, Comparing the Decision Styles of American, Chinese and Japanese Business Leaders. Best Paper Proceedings of Academy of Management Meetings, Washington, DC.

Monahan, G 2000, Management Decision Making. Cambridge University Press, Cambridge.

Robert, C 2007, The Bayesian Choice, New York: Springer.

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Decision-Making in Management

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