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Common biases that influence decision-making

| Updated: February 17, 2022 21:13:46

Common biases that influence decision-making

Often managers get biased with the recent effects while recommending someone for a promotion. They can make biased decisions heavily due to higher experiences from the past, impulses and gut feelings very commonly.

In the Literature of Management and Organisational Behaviour, these biases and errors in individual and organisational decision making are theorised.

Knowing about these biases not only fix one's view as an employee but also helps to make a decision in a better way.

Managers, supervisors or employers should be aware of certain common biases including the recency effects which distort decision making, even in the famous companies and among their employee-boss.

Anchoring bias: The tendency of the boss to fixate on initial information often leads him to deny the subsequent information, simply going by - “First impression is the last impression.’’

You may have forgotten to wear a tie on your first day but your boss might have had the impact of you being unprepared that will affect your future rewards in the company.

Confirmation Bias: The tendency to seek the information which reaffirms past choices and discount the information which are contradictory to the managers past judgments.

Well, one may find it smart enough to take risks in his new job or generate new ideas but what if the boss sticks to his past judgment? She or he definitely may face difficulties even to bring positive results.

Availability Bias: Human beings tend to seek information which are readily available to them just like the recency effect. Bosses often forget to delve deep into the employee profiles to go beyond recent information only.

Randomness error: The managers or even employees can have such biases of believing that they can predict the outcome of random events. Mostly, superstitious people tend to have this.

This type of bias includes - not wearing red or any specific colours on meeting days or on important days or even not holding any important meeting on particular days. Even though it might sound ridiculous, these are quite common among people.

Risk Aversion: Many employees do their routine work for the last 10-20 years without taking the risk of trying out something new for the organisation or benefit for themselves. Mostly these are the risk-averse employees in a company. Less ambitious and stability prone people are more likely to have this type of tendencies.

Stressful situations make them vulnerable and they seek an environment where there is routine based regular work only.

Hindsight Bias: The tendency to say falsely that the outcome of an event was known and one would have actually predicted the outcome. Some managers tend to push the negative outcomes on their employees and take credit for the positive outcome.

Overconfidence Bias: Intellectual and ambitious bosses with over smart tendencies might take decisions being too confident. Often they seem to deny their wrong deeds due to overconfidence with higher experiences.

Apart from these, according to San Diego State University’s researcher Stephen P. Robbins, personality, gender and cultural differences can affect the manager's decision making on their employees as well.

He believes- men are more likely to make egocentric and risky decisions as bosses whereas women are likely to take time even over-analyzing a situation before giving their decisions and so on.

On the other hand, when it comes to cultures, the Japanese are more prone to take group-oriented collective decisions in their organisation.

But in the United States, decision making is done in an individualistic way where the employees need to depend on their CEOs just like Mark Zuckerberg from Facebook or Jeff Bezos from Amazon.

Human beings have a limited ability to process information. Often complex problems are not easily readable to them while making important decisions.

To avoid that overlooking problem, managers need to be aware of the biases they can be trapped in and assess their decision making criteria.

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