As managers we make lots of decisions, most times, that is the core of our job function. These decisions can make or mar our career or even our company. But why do we make bad decision despite our knowledge and experiences? Simply put, bad decision is as a result of the traps we fall into while making decision. It could be the mind of the decision maker; the mind is hard wired with traps which include our biases, distortions and sometimes psychological traps. It can also be faulty decision making process.
The truth is, we can’t do away with these biases but we can learn to be aware of them so as to compensate for them. We will highlight some of these traps, examples and how to avoid them.
TYPES OF DECISION MAKING TRAPS
ANCHORING: In this instance, we are trapped based on the first information or criteria that catches our attention. We give this first information a high weight that we barely consider other things while making the decision.
For example, you enter a store to buy a shirt, then you saw a splash price tag of ‘75% off’; without further question or probing you rush to pay for the shirt. You didn’t consider what the 25% is, is the 25% within your budget? what about the quality of the shirt? etc. You did not give much thought to those questions simply because you were anchored or attracted by the ‘75% splash’.
How do we avoid anchoring trap?
- Don’t be carried away with the first information you get in respect to what you about to decide on, pursue other lines of thought.
- Think through the problem on your own first, then consult. Seek information from variety of sources.
- Be wary of anchors during negotiations. The juicy part of the offer will definitely be presented to you first and that can anchor your decision, so beware!
- View a problem from different perspectives.
You already made a bad decision in the past; now you are making new decisions in order to justify or cover up that initial bad decision. You are trapped by the past decision, even when the past decision may no longer be valid. The past decision you are trying to justify is a sunk cost. You must be brave enough to let go of it otherwise you will waste more time and resources trying to fix what is beyond repair.
An example is spending so much resources in trying to improve the performance of an employee who should not have been hired in the first place.
This trap here, tries to play on your ego. Are you willing to accept your mistake or you want to appear right at all times? If you are afraid of making mistake, you most likely will often fall into this trap.
How to deal with sunk cost traps
- Get the view point of others who are not part of your initial decision
- Always remember that even the best managers make mistakes,
- so don’t be afraid of making mistakes
Lets us continue of this tomorrow.
Reference: John H, Ralph L., and Howard R. (2003), The hidden traps in decision making.