Managerial decision making is one of the most challenging activities of corporate America. As the business world becomes more competitive due to the establishment of a level platform with the advancement in technology and communication, managers are consistently under pressure to make sound decisions for the survival of their enterprises. With this regard, various strategies have been developed to aid managers in the decision making process. This paper will aim at revealing the various sound strategies and how to use them as a manager and deliver stellar performance (Bridge & Dodds, 1975). The strategies involve the use of various decision analysis tools, acquisition of expertise, de-biasing of our judgment, analogical reasoning, the incorporation of an outsider’s view, understanding the other person’s biases, and to nudge for ethically wise decisions.
More optimal decisions can be achieved by the use of standard procedures and decision analysis tools. The wide field of decision analysis is meant to guide in the conceptualization of sound decision advice through the use of the expected values. Decision analysis widely uses linear models in the formulation of quantitative predictions that are superior compared to other methods. Because biases impair human judgement, linear model scan be used to sidestep these biases. Decision analysis tools which comprise of an array of tests and procedures used in the decision making process are indeed a sound guide that each manager should adopt in order to deliver above par results (Bazerman & Moore, 2013).
Most novice researchers are more disadvantaged when making serious decisions in the corporate managerial positions when compared to experts who are advantaged in the same. A seasoned researcher should aim at becoming an expert in the decision making process on top of gaining the necessary experience. Experience is not synonymous with expertise because it is repeated feedback while expertise is the development of a strategic conceptualization of the factors that makeup a rational decision making procedure and the ability to recognize the various biases that hinder rationality (Bazerman & Moore, 2013).
All judgment should be de-biased with the aim of making rational decisions. It involves the elimination of biases from the various cognitive methods of the manager. Managers and researchers should be familiar with the possibility of bias, provision of feedback, provision with the direction of the bias, and learning to advance their judgment. There are many factors that prevent people from changing their behavior such as contentment with status quo, preference biases, and risk aversion (Bridge & Dodds, 1975). Managers are called upon to go through the three processes of de-biasing which are unfreezing, changing and refreezing processes.
Analogical reasoning can be defined as a process by which common lessons are learned from two or more than two situations. A generalizable insight can be created from abstracting various similar lessons from two or more episodes within the same concept. Learning various general principles improves both the ability f transferring learned principles and simultaneously discriminating their levels of appropriateness (Bazerman & Moore, 2013). In order to attain greater expertise, a manager should acquire a diverse analogical training in order to understand how various strategies are applicable in different situations.
A savvy manager should also consider the view of an outsider when making important decisions in the company. The manager is a biased decisionmaker and is inclined to view each decision as unique, but the outsider is unbiased and generalizes across a spectrum of situations by identifying similarities. Eventually, the outsider yields better estimates and decisions than the insider. The outsider can incorporate most of the relevant data from many prior decisions unlike an insider who fails to do so due to overconfidence and optimism (Bridge & Dodds, 1975).
Understanding the biases of others is also a critical strategy in the decision making process. It differs from the examination and audit of one’s own behavior. It is done by selecting a comparison group, assessing its distribution, incorporating intuitive approximation and subsequently adjusting the intuitive estimate. Finally, the manager should always nudge for ethical and wiser decisions by consistently thinking beyond human barriers to a meaningful and wise decision (Bazerman & Moore, 2013). He should be actively involved in the designing of various systems that will yield more positive results instead of dedicating time and effort to less yielding activities. Ethical decisions yield better organizational performance by making minor changes in how managers make common decisions in businesses.
John Bridge, J. C. Dodds (1975) Managerial Decision Making Croom Helm
Max H. Bazerman Don Moore (2013) Improving Decision Making Judgement in Managerial Decision Making