Regardless of the decision-making model used, or how competent and conscientious a decision-maker is, making decisions involves risk. Some risks are associated with the individual or group making the decision. Others relate to the information used to make the decision. Still others are related to the way that this information is employed in the decision-making process.
Often, the realization of some risks increases the probability of realizing others; they are deeply intertwined. Fortunately, awareness of these risks and their interplay is often sufficient to mitigate them. To this end, several decision-making perils and predicaments are discussed below.
Group decision-making can become quite time-consuming. The iterative, and sometimes combative, nature of group processes can cause a conclusion to seem rather elusive. This risk can be reduced through careful consideration of the group’s membership prior to any discussion or debate (see “Who should be in the decision-making group?” in Vol. IV).
To reduce the time required to reach a decision, a unilateral decision may be made (see “Who should make the final decision?” in Vol. IV). This decision rule, however, is fraught with risk. The type of person that would insist on making a unilateral decision is the same type that often suffers from overconfidence. Overconfidence can be a byproduct of pure arrogance, but could also have less loathsome origins. Underdeveloped judgment, or limited context-specific experience may cause a decision-maker to miss important cues or underestimate the severity of a situation.
Another source of overconfidence is unreliable or inappropriate heuristics. Prior satisfactory results using such methods could be merely coincidental, but lead to the application of heuristics to an ever-wider range of situations. Once their limit of applicability – the range often being quite narrow – has been exceeded, heuristics can become dangerous, particularly when they build confidence without building competence.
Whatever the source of overconfidence, it may lead a decision-maker to accept incomplete, or even suspect, information and limit analysis of the information available. The overconfident decision-maker believes s/he can overcome these limitations with his/her superior wisdom and insight. Unfortunately, this is rarely true.
If a leader chooses not to make a decision, s/he may delegate the responsibility to a subordinate. Delegating carelessly could have serious consequences. The delegate could suffer from inexperience and overconfidence, could be ethically challenged or unduly influenced by politics (office or otherwise), “celebrity,” or other irrelevant factor. Delegate responsibly! (See “Of Delegating and Dumping”).
The framing of a decision is a source of significant risk. A decision definition that cites problems and risks typically prompts a very different response than one described in terms of challenges and opportunities. Framing that influences a decision may be inadvertent, but may also be a deliberate attempt to manipulate decision-makers. Those that present a situation to decision-makers may be able to predict their responses based on known affinities, biases, or obligations. Using this insight, the subordinate can prime decision-makers to act in the manner the subordinate finds most favorable by framing the decision in such a way that triggers a bias, creates the impression of a potential violation of an obligation, or otherwise guides their thinking. This is a tactic used to “tip the scales” toward the desired outcome while making the ostensible decision-maker an unwitting accomplice.
A decision-maker may anchor on a solution early in the process. It may be the first idea s/he heard, or the most glamorous, high-tech solution available. It could be the solution that requires his/her particular expertise and is, therefore, the most familiar or comfortable. It could also be the solution that s/he was primed to choose by the presentation of the problem and solution options. Anchoring often leads to confirmation bias, where the decision-maker accepts only information that is confirmatory of the foregone conclusion. If the decision-maker cannot be dislodged from an anchor, it usually results in a suboptimal, or satisficing, solution.
Employing a decision-making method such as the Analytic Hierarchy Process (AHP) (see Vol. III), can facilitate an anchor-free decision. The pairwise comparisons used in AHP are difficult to manipulate in order to reach a predetermined outcome. As decision complexity, or number of criteria, increases, the difficulty of manipulation increases rapidly.
Failure to recognize that “do nothing” is a valid option to be considered in many scenarios can place a satisfactory outcome in jeopardy. As mentioned in Vol. I, there may be no alternative under consideration that will result in an improvement relative to the status quo. The decision to implement something could result in the waste of significant resources – time, energy, and money. Incurring these opportunity costs may preclude the pursuit of advantageous projects in favor of misguided endeavors, or “optics.”
Even after a decision is made, perils remain. Hindsight bias manifests in similar fashion to confirmation bias. While confirmation bias causes the selective acceptance of information concurrent with the decision-making process, hindsight bias causes selective acceptance of historical information to justify a past decision. This usually occurs when an investigation of the causes of unsatisfactory results is initiated; the decision-maker wants to defend his/her decision as “correct” despite a disappointing outcome.
Defense of past decisions – to “save face” or other reasons – can lead to an escalation of commitment, where future decisions are influenced by those made in the past rather than objective analysis. This is closely related to the sunk costs fallacy, where continued commitment is justified – irrationally – by past expenditures. Both assume that conditions will change in such a way that will turn a failing endeavor into a success, or that it can be turned around if only it receives more investment. It is important to learn from “bad” decisions, cut your losses, and move on.
If you’d like to add to this list of decision-making perils and predicaments, feel free to leave a comment below. Personal insights that help the community learn and grow are always welcome.
For a directory of “Making Decisions” volumes on “The Third Degree,” see “Vol. I: Introduction and Terminology.”
[Link] “An Overview of Decision-Making Models.” Hanh Vu, ToughNickel, February 23, 2019.
Jody W. Phelps, MSc, PMP®, MBA
JayWink Solutions, LLC
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