Psychological Traps in Decision Making
The purpose of this article synthesis and summary is to highlight six traps managers are susceptible to when making decisions. (Duening & Ivancevich, 2006) A decision can be defined as a conscious choice among alternatives followed by action to implement the choice. Effective decision making combines the use of knowledge, experience, creative thinking, and risk taking to move an organization forward. Managers typically find themselves making decisions every day. The choices we make can have a wide variety of outcomes. Good decisions can take individuals, teams and even companies to the next level of greatness; however a bad decision of course will do the exact opposite destroying in some cases careers and business sometimes irreparably. ARTICLE SUMMARY
The article “Hidden Traps in Decision Making” (Hammond, Kenney & Raiffa, 2006) notes that often times good or bad decisions lie not in the decision making process but rather in the mind of the decision maker. When managers examine their decision making process from a psychological stand point it becomes clearer how they came to their final conclusion. Hammond, Kenney and Raiffa identified six traps all of which could be dangerous individually as well as combined building upon one another to work against the decision maker. These psychological traps have a unique tendency to affect any level of management; however the best defense against these traps is awareness.
Managers who effectively familiarize themselves with the traps will be more confident in the decisions they make, likewise the recommendations proposed by subordinates are ensured to be more reliable. Each trap has its own unique qualities. First the Anchoring trap guides you to the mindset that your first choice is the wisest to follow, hindering our ability to thoroughly evaluate other options. Secondly the Status Quo trap suggests that if it isn’t broke do not try to fix it and do not tear it up. This mindset leads us to believe that any change is not a good idea. Third the Sunk Cost trap leads us to make current decisions based on our past decisions through a process of justification. Forth the Confirming Evidence trap suggests that our ideas or point of view is the best while avoiding or ignoring any ideas that conflict with it. Fifth the Framing trap uses the mindsets associated with anchoring and the status quo to give a more favorable decision. Lastly the Estimating and Forecasting trap distorts our thinking in uncertain situations by clouding our ability to assess probabilities. Completely avoiding these psychological traps is inevitable, however research over the last few decades has assisted with developing ways to identify and manage their effectiveness on a manager’s decision. ARTICLE SYNTHESIS
As a manager becomes more aware of the traps they began to develop a strategy to make a more sound decision each time. Duening & Ivancevich in chapter 6 explained strategic thinking as the determination of the basic long term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out the goals. Technically, strategic thinking is the process that comes from having a strategy. “By failing to prepare you are preparing to fail” – Benjamin Franklin.
Once we have implemented our strategy we must revisit it often to maintain effectiveness. In addition to strategic thinking, Duening & Ivancevich in chapter 6 also cited strategic planning accounts for the unexpected events, randomness and chaos in organizations. A strategic plan develops a unity of purpose across the organization, thus taking information from the environment and deciding upon an organizational mission, objectives, strategies and strategic architecture. Once the strategic thinking and planning hierarchies are in place for an organization, all levels of management have...
References: 1. CHELST, K. (2013). The soft side of making decisions. Industrial Engineer: IE, 45(1), 35
2. Duening, T.N., & Ivancevich, J.M. (2006). Managing organizations. Principles and guidelines
3. Hammond, J.S., Kenney, R.L., & Raiffa, H. (2006). The hidden traps in decision making. Harvard Business Review, 84(1), 118-126
4. Kahneman, D., Lovallo, D., & Sibony, O. (2011). Before You Make That Big Decision.. Harvard Business Review, 89(6), 50-60.
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