As managers, most of actions are based on decisions we make. There are some hidden traps that we ought to avoid whilst making the decisions. These hidden traps may affect its quality because our minds may be biased.
We all like to believe that we make decisions rationally and objectively. But the fact is, we all carry biases, and those biases influence the choices we make.
There are some psychological traps that are likely to deter and undermine business decisions. Managers should try to avoid them. The best way to avoid them is by understanding when not to use them.
Some of these hidden traps are:
- The Anchoring Trap
This type of trap is a situation where in considering a decision, the mind gives disproportionate weight to the first information it receives. Initial impressions, estimates, or data anchor subsequent thoughts and judgement.
This form of hidden trap places the first information received on high priority. The danger in this trap on managers is that it may not give you an unbiased mind to weigh other alternatives in decision-making.
Managers always fall into this trap.
Some of the techniques to avoid falling into this trap are:
- Always view a problem different from your perspective.
- Think about the problem on your own before consulting others in order to avoid becoming anchored by their ideas.
- Seek information and opinion from a variety of people to widen your frame of reference.
- Be vigilant to avoid anchoring your advisers from whom you solicit information and counsel.
- The status -quo Trap
This is a strong bias towards alternatives that perpetuate the status quo. People generally find the status quo comfortable, and they avoid taking action that will deviate from it. The source of the status quo trap lies deep in our psyches, in our desire to protect our egos from damage.
For example, A group of 10 people were given gifts each 5 of very high value, and 5 of lower value. They were unaware of what each other got. When randomly asked if they wanted to exchange their gifts, only 1 wanted to. That fear of the unknown drives people to rather remain in the status quo.
Some techniques to use to avoid falling into this trap are.
- Always remind yourself of the objectives and examine how they would be served by the status quo. The elements of the situation may serve as a barrier to your goal.
- Never think of the status quo as your only alternative.
- Ask yourself if you would have chosen the status quo alternative if, in fact it was not the status quo.
- Avoid exaggerating the effort or cost involved in switching from the status quo.
- The sunk-cost Trap
This is a bias where we make choices in a way that justifies past choices, even when the past choices no longer seem valid. For example, spending a lot of money to fix a car we know we should not have acquired. We know rationally that sunk cost are irrelevant to the present decision, but they prey on our minds, leading us to make inappropriate decisions.
Some Techniques to avoid falling under this trap are:
- Listen carefully to the views of people who were uninvolved with the earlier decision.
- Examine why admitting to an earlier mistake distresses you. If the problem lies with your self-esteem, address it.
- Be on the lookout for the influence of sunk-cost biases in the decisions and recommendations made by subordinates. Reassign responsibilities where necessary.
- Do not cultivate a failure-fearing culture that leads employees to perpetuate these mistakes.
These are the first four traps that were addressed in our ABP class, the others would be continued in my second write up.