Decision-making plays one of the key roles in a company’s operation: it assists in utilizing the resources that are normally used as a means to achieve the initially set goals. Naturally, the faster is the process of decision-making, the better is the utilization of resources. Rational decisions help an organization to reach the goals with minimum time and efforts applied (Haque, Liu, & TitiAmayah, 2017). Moreover, they contribute to the increase of productivity and higher performance of the entire staff. Organizational efficiency, which is determined by the relation between costs and returns, totally depends on managers’ decisions. However, the quality of the latter quite often depends on such factors as biases, emotions, and communication techniques one resorts to in his or her management practice. Those can, in fact, be regarded as additional objectives for a manager to aim at. Accomplishing them would allow one to utilize resources without the slightest procrastination. Meanwhile, skipping these goals would create serious challenges for a company to retain its competitiveness.
Common Biases in Decision-Making
Common biases appear to be decisions that cannot be regarded as balanced or fair (Montibeller & Winterfeldt, 2015). They are known to be divided into several types, each being impacted by various factors and environments. The first type is an overconfidence bias, which is characterized by managers’ higher confidence in their skills compared to the actual situation. The second one is a hindsight bias. This type is marked by managers’ false belief in the results’ prediction. An anchoring bias is the third type, which is preconditioned by managers’ relying on a single source of information and neglecting the other sources.
The fourth type, a confirmation bias, involves using only those data that confirm one’s decisions. And finally, an availability bias, which is viewed as an overestimation of chances for some particular events to occur. Each one of the mentioned biases can create serious obstacles for effective decision-making. As Montibeller and Winterfeldt (2015) point out, biases “can seriously reduce the quality of the model and resulting analysis” (p. 1230). It is, therefore, of primary importance to know them and reduce their occurrence to the minimum. Otherwise, the decisions managers make can hurt the company’s development.
Reflective and Expedient Decision-Making
As stated in qualitative research made by Haque et al. (2017), decision-makers are divided into two major groups: Western and Eastern. Western decision-making is based on the belief that “time is money” and, therefore, it makes an accent on a fast reaction and the experience. Eastern entrepreneurs, however, appear to be more patient and reflective. Thus, a reflective decision-maker considers both short- and long-term payoffs (Haque et al., 2017). Time perception arrives as the main differentiator between the two types of business situations, with each type being inherent to the particular cultures (Dane & Sonenshein, 2015).
The Role of Emotions, Fairness, and Technology in Decision-Making
According to the research made by Matta, Erol‐Korkmaz, Johnson, and Biçaksiz (2014), emotions and logic are closely interrelated, thus, demonstrating a strongly-pronounced tendency to influence human behavior. Therefore, the role of emotions is immense when it comes to making important decisions. It is known that their influence on the process of decision-making always has a dual nature since it concerns both integral and incidental emotions. Integral emotions (negative emotions) usually provoke rejections since they are caused by unfair suggestions. As opposed to integral, incidental emotions are influenced by fairness in decisions and evoke a positive perception of a situation. Decisions, in this case, are supported by quantitative data analysis tools, such as charts, tables, annual reports, and other means assisting in fair suggestions (Anderson, Sweeney, Williams, Camm, & Cochran, 2015). As Zott and Amit (2013) point out, technologies currently provide plenty of opportunities for a quick and effective collection of data through predictive analytic workbenches and automated service-oriented architectures. It is, therefore, of great importance to use all of them to make the process of decision-making fair.
Ethical Issues in Business
Ethics, within the business context, presupposes making decisions that balance between the sense of “right and wrong.” Today’s business environment is full of examples of ethical issues. One of them is discrimination, which often occurs when representatives of one sex make remarks regarding the appearance or behavior of the opposite sex. In this particular case, the manager is forced to sanction those who are responsible for the offense. The situation leads to the dilemma of whether one should be just in one’s decision to punish the violator or should keep every company worker satisfied. Naturally, the manager cannot allow the discipline to be violated. Thus, one needs to resort to disciplinary action as a possible solution to the matter.
Another issue occurs when one needs to cooperate with low-performance partners. There are occasions when some managers make less contribution to business progress compared to others. The desire to take their names off the bank accounts is at times too strong to resist. In that particular case, one is supposed to buy out a partner’s interest in business and cease communication with a person (Zott & Amit, 2013).
Conclusion
The process of making business decisions is always accompanied by plenty of dilemmas that are normally associated with biases, emotions, and ethical issues. Resolving dilemmas is the key task of every manager willing to form a clear company vision. This vision is usually derived from the outlines of a chosen company’s course and the values that guide that course. It often tends to determine the company’s mission: the reason why it exists. Defining both these principles helps managers to form the company’s strategy, which is distinguished from vision and mission by the presence of short- and long-term goals.
References
Anderson, D. R., Sweeney, D. J., Williams, T. A., Camm, J. D., & Cochran, J. J. (2015). An introduction to management science: Quantitative approaches to decision making. Boston, MA: Cengage learning.
Dane, E., & Sonenshein, S. (2015). On the role of experience in ethical decision making at work: An ethical expertise perspective. Organizational Psychology Review, 5(1), 74-96.
Haque, M. D., Liu, L., & TitiAmayah, A. (2017). The role of patience as a decision-making heuristic in leadership. Qualitative Research in Organizations and Management: An International Journal, 12(2), 111-129.
Matta, F. K., Erol‐Korkmaz, H. T., Johnson, R. E., & Biçaksiz, P. (2014). Significant work events and counterproductive work behavior: The role of fairness, emotions, and emotion regulation. Journal of Organizational Behavior, 35(7), 920-944.
Montibeller, G., & Winterfeldt, D. (2015). Cognitive and motivational biases in decision and risk analysis. Risk Analysis, 35(7), 1230-1251.
Zott, C., & Amit, R. (2013). The business model: A theoretically anchored robust construct for strategic analysis. Strategic Organization, 11(4), 403-411.