Question

Decision Making Gone Awry

Sometimes social influences and societal pressures can influence decision making for the better and sometimes for the worse. In addition to these pressures, there are risks that need to be evaluated and measured when making decisions. In this assignment, you will reflect on decisions you made using social influence, persuasion, and risk taking that went awry.

Examine a time when you were involved in decision making that went awry as a result of protocols, social norms, or persuasive techniques. If you do not want to use an example from your business or personal experience, you can select a journal article on which you can base your assignment. Here are some key words to help you find an article for this assignment:

Decision making

Risk taking

Persuasion

Social heuristics

Write a 3–5-page paper in Word format that addresses the following:

Describe a decision-making scenario using your business experience, personal decision making or cited journal article; include an example of the decision-making process, describe the risk, and whether persuasion was used. What were the social heuristics?

Explain the incentives in this scenario. Were they effective?

Identify the risks and the potential decision biases in your scenario. Propose the corrective steps that should have been taken to overcome these biases. If a risk assessment was conducted how did this affect the decision-making process?

Analyze your scenario for what happened in terms of social heuristics. Explain how decisions were made and the social factors that shaped the decision-making environment.

Discuss the greatest challenges to sound decision-making in your scenario.

Critique the decision-making process used by the sponsor(s) and leader(s) of the decision. Identify the mistakes made by the sponsor(s), leader(s), and team members or others impacted by the decision during the implementation of the decision.

Answer 1

According to the Bounded Rationality Model or Administrative Man Model decision making involves that the decision-maker understands the alternative courses of action for reaching the goals i.e. follows rationality. He/ she should have full information and should be able enough to analyze alternatives. The motive should be to choose the best alternative.

Herbert A. Simon defines rationality in terms of objective and intelligent action. It is characterized by behavioral nexus between ends and means. If appropriate means are chosen to reach desired ends the decision is rational.

Instead, it assumes that people, while they may seek the best solution, normally settle for much less, because the decisions they confront typically demand greater information, time, processing capabilities than they possess. They settle for “bounded rationality or limited rationality in decisions. This model is based on certain basic concepts such as Sequential Attention to alternative solution, Heuristic and Satisficing which suggest that while the rational or classic model indicates how decisions should be made (i.e. it works as a prescriptive model), it falls somewhat short concerning how decisions are actually made (i.e. as a descriptive model).

As an example let us consider a decision making process muddied by heuristics like cognitive biases and persuasion.

The declining sales were posing a problem and the management team was contemplating to shut 3 out of 5 plants which would resulted in a loss of jobs as well. I was a part of the key decision making team with power of a vote.

The operations and client delight head was called and requested to present the team with facts for performance of various plants. Instead of showing the declining customer satisfaction trends he chose to bring in a satisfied customer sharing her story. The whole team was instantly gratified and even considered postponing the decision to the next quarter. But the CXO knew better. He suggested that we tend to be influenced by the most recent interactions and evaluations. Hence the recent interaction shouldn’t form a basis to retain operations in that particular geography. We further requested him to show us trends of customer satisfaction of the 3 regions that we were contemplating closing. Post this the whole team was clear that we had averted making a biased decision where persuasion was being used as a tool to guide us in making a subnormal decision.

The next came the operations head of all the 5 plants. He was requested to show the revenue numbers and scenarios displaying clearly the loss in jobs and margins as a metric. What he showed us resulted in 70% of us making a suboptimal and riskier decision. Just to illustrate we were presented with the following two choices:

Plan A: This plan will save one of the three plants and 2000 jobs associated with it

Plan B: This plan has a third chance of saving all three plants and all 6000 jobs but twice as much probability of saving no plants and no jobs.

Result: 4 out of 10 choose Plan A. Post internal decision due to group bias at play another 3 of us were convinced to choose Plan A. The head pointed us to the fact that the either choice would result in the same job loss probability. We delved deeper to create more scenarios and basically decided to close 2 plans and re-absorb 2/3 of employees for a period of 6 months which gave them enough time to search for jobs. But before we actually took this decision, the head CXO presiding over the meeting gave us 2 options to choose from:

Plan C: Resulting in loss of 2 plants and 4000 jobs

Plan D: Two-third probability of resulting in loss of all three plants and all 6000 jobs and a third probability of losing no plants and no jobs.

We soon realized that this was an activity based on our earlier cognitive bias. Both the plans were actually ditto in terms of outcome and either one could have been chosen but then the CXO chose to practice another method i.e. use his influence to actually motivate us to consider plan C citing it was an obvious right choice. By framing a proposal as a gain or a loss most decisions can be influenced. Some of us couldn’t get the obvious biasing technique but most of us just ended up learning through this.

So among all this were we able to make a decision in time? Yes, as elaborated earlier, but the process had been intense with a steep learning curve.

I am still unsure that the whole decision making process was devoid of any biases. I suspect another possible bias: Anchoring. When you speak up in meetings first, you have the power to actaully anchor people and lead the discussions. The CXO supervising the whole desion making process anchored us to consider closing 3 plants. He could have started the meeting citing loss of revenue and margins as a reason to evaluate our value chain and consider leaner operations.

Retrospectively, I should have taken the lead to actually verify and analyse the basics first. in next 3 years, the company opened a major facility in an emerginig global market. This came to me as a surprise as our clear vision was to make local operations sustainable. Finally I realized how much bias can creep into our decisions even if we have adequate degrees and experience in the domain with the right data.