Poor Decision Making

Poor Decision Making is Commonplace- Corporations

Today in class, we talked about decision making in the workplace. It was mentioned in class (and in the article above) that about half of decisions that are made end up failing. According to Paul Nutt, who is a professor at Ohio State, there are three main issues that managers do when making decisions: make quick decisions, use resources incorrectly, and continue practices that are bound to fail.

He looked at 400 decisions that were made in organizations in the United States, Canada, and Europe, and according to the article, after 2 years, not even half of the decisions were being fully used--while a third of them were never used at all.

Why do so many decisions fail? In chapter 11, there are five ways to make defective decisions. Managers may have overconfidence bias (having a strong belief on what the outcome will be without actually knowing it) or even the opposite of that which is hindsight bias--this occurs when managers look back at the decision they made and seeing the mistakes were quite evident. Other poor decision making practices include anchoring--this is when a manager takes one piece of the puzzle and relies solely on in, framing bias--this occurs when looking at pieces of the problem, but not the entire problem. Framing bias happens when the problem is phrased in a certain light. These first four can be connected with Nutt's idea that managers make quick decisions without using resources correctly. If managers had more time and even money, they may be able to explore more alternatives before going through with a decision. And the final practice is escalation of commitment--this goes along with Paul Nutt's  idea of continuing practices that are bound to fail. Managers need to know when it is time to cut their losses and move one.

Has there ever been a time that you used a faulty way of making decisions--in school or even on the job? Have you ever had a job where your managers practiced any of these?

Posted by: Jenny Liechti