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At one time or another, everybody is vulnerable to personal prejudice, and these prejudices frequently contribute to poor decisions (Bolland, E., & Fletcher, F. 2012). These choices do not sound wrong when they are taken, but they turn out to be bad when examined later. We should not lose sight of the fact that the wrong decisions can be taken by high-ranking administrators and managers who are usually expected to make sound decisions regularly. Such poor judgments are affected by biases such as overconfidence bias, self-confirmation, and hindsight bias.
I have encountered a bad decision by my manager as a result of the self-confirming bias. Kourdi, J. (2011) defines bias as the tendency to seek out information that confirms an individual's held belief. I was working under a manger as a junior Human Resource assistant manager, and my main role was to run checks on the potential candidates. Unfortunately, my manager already liked a particular candidate based on his conviction about her.
This decision was bad since, instead of running a neutral check on the potential candidate, the manager decided to look for recommendations that would only satisfy his wish. In fact, the candidate tested positive to drug tests despite the fact that the manager had cleared her health report. This decision was, therefore, a bad one because the manager was biased.
Bolland, E., & Fletcher, F. (2012) define overconfidence bias as an error which is normally made when calculating statistical probabilities and therefore arises when someone has a higher confidence in himself or herself than the skills or abilities he or she possesses.
My managers at an agricultural firm made a bad decision based on the overconfidence bias. With the rise in the level of technology and innovation in the agricultural industry, our competitors were growing and enlarging their market share. It was evident that they would pose a stiff competition if we did not act as fast as they did.
However, the management declined to heed to my ideas in which I proposed the incorporation of the new technology in the production and distribution of our products. The management felt that the firm was big enough and could not face competition from any other “small’ firm in the sector. This was a bad decision since the competitors, using new technology and innovations, managed to outdo our firm in the market share of the agricultural sector.
This bias is also known as the “knew-it-all-along effect.” This bias is a tendency of individuals to see past results as easily predictable even when they were not foreseeable. Because of this bias, people often view events as more predictable than they are and they easily forget the uncertainty that existed before the event happened (Kourdi, J. 2011).
Using the above scenario of the agricultural firm decision, the management realized that the competitors had overtaken us and they had to constitute a team to review the decisions and suggests a way forward. The team mentioned that the management declined to be more innovative and adopt new technology in production and distribution.
However, the management blatantly refused to accept the recommendation and rather said that they knew all along that their products were not good enough in the market. They instead blamed it on the inadequate resources at the firm. This was a bad decision because had they admitted their mistake, the review team would have had an opportunity to come up with better recommendations.
I would recommend my supervisor to read Bolland, E., & Fletcher, F. (2012) to be aware of various biases that a leader is prone to and how to deal with these biases as and when they arise.
Bolland, E., & Fletcher, F. (2012). Solutions: Business problem-solving. (Available from Trident Online Library. Read only the relevant chapters.)
Kourdi, J. (2011). Chapter 10: Avoiding the pitfalls and developing an action plan. Effective Decision Making: 10 Steps to Better Decision Making and Problem Solving. London: Marshall Cavendish International [Asia] Pte Ltd. [eBook Business Collection]
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