Critical Literature Synthesis: Organizational Decision-Making
Table of Contents
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- Heuristics and Psychological Obstacles
- Decision-Making Traps
- Lack of Relevant and Logical Methodology
- Inadequate Information
- Levels of Decision Making Process
- Related Free Management Essays
The chief executive officer (CEO) is a vital leader in any organization. He coordinates all the operations of the company, and ensures that the organization achieves its goals and every stakeholder is satisfied. As such, when the CEO is not performing ones duties appropriately, the company may be at a great risk because the decisions will not be consistent with the objectives of the organization. In our case, the workplace problem, which has been applied in the previous synthesis, has been the weak leadership approaches by the organization’s chief executive officer. The weak leadership has majorly been attributed to the application of traditional leadership styles, and does not involve important stakeholders like employees in decision-making process. The major concern evidently presents itself as decisions of leaders in a company should not be influenced by personal biases. Decisions that demand cautious judgment may at times be affected by individual’s personal judgment, and this creates the need for leaders to learn the best methods to overcome such personal biases in managing the organization.
Groupthink comes in handy when tackling the issue of decision-making by CEO’s. Poor management as a result of leader’s personal judgment and poor decision-making have attracted the concerns of several authors. They have written books addressing and offering professional solutions to such poor decisions done by such leaders. It has been noted that overconfidence is a major issue in a company’s decision-making process. Moreover, heuristics and psychological traps may have great influences in manager’s decision-making. This critical literature synthesis is a collection of the entire research causes, guidance and solutions offered for better decision-making by CEOs.
According to Bezerman & Moore (2008), overconfidence can result in prejudgment which occurs when leaders chose to ignore other vital information or people. The two views critically analyze judgments that are made by leaders in the process of decision-making. They note the causes and influences that overconfidence by leaders may have in the entire process of decision-making (Crocker & Park, 2004). As a result of overconfidence, such leaders believe that they can settle for nothing but the right decisions without consultation. The same view is confirmed by Drummond (2001), who states that the illusion of over control is a significant influence on poor decision-making by leaders. Drummond (2001) defines illusion of control is the internal feeling that an individual is in full control, and that one’s decision is not only right but final. As such, leaders, who are overconfident in decision-making, have no second thought about their decision, and this can be a potential risk to the organization (Andersen, 2003). He is also keen to offer current organizational mistakes that leaders have caused. In addition, he indicates that there are negative consequences of such illusions as well as overconfidence decisions (Hammond Keeny & Raiffa, 1998).
Heuristics and Psychological Obstacles
Hammond, Keeny & Raiffa (1998) identified that there are certain heuristics along with psychological obstacles that have roles in the process of decision-making. They continued to highlight that there is a need to change approaches used in decision-making as a way of avoiding those obstacles and address the difficulties that leaders encounter in decision-making. The authors were keen to mention that red flag situations including inappropriate self-interest, distorting attachments and misleading memories. Availability of ineffective self-interest tends to raise biases that in turn increase the importance that leaders put on their information. It has been deduced that self-interest inappropriateness has led to biased decisions that even professional leaders have been unable to handle. Croker & Park (2004) also indicated that the availability of distorting attachments by managers can lead to poor decision-making. They mentioned that people have the tendency being attached to others, places as well as things and such bonds influence the manner in which they engage in decision-making. In addition, they highlighted in their work that misleading memories have a huge influence on poor decisions made by leaders (Leavitt, 1974). Such memories eventually seem to be relevant and comparable to the present situations being faced by the leaders meaning that their thinking can be diverted to the wrong paths.
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Furthermore, Langer (1975) added information regarding illusion of control highlighting that psychology factors such as personality and societal influences have huge impacts on decisions made by leaders. Such leaders tend to behave in such a way that indicates that chance events are easily accessible to their personal control. Langer (1975) illustrated that the prominent illusion of control causes individuals to behave in such a way as if they can coordinate chance situations whereby skill cues are available. In that case, the author used skill cues to indicate the elements of a situation that are associated with exercising a skill. On another note, Pfeffer & Fong (2005) went ahead to provide information on the need for self-enhancement focus along the elements of power and influence (Andersen, 2003). The authors strived to indicate that there is a crucial need for leaders to understand the extent to which they can use their power and influence in order to impact operations in organizations. Poor understanding of such elements can result in poor decision-making that has been noted in several organizations.
The lack of sufficient time for a decision-making process is also a decision-making trap that has led to weak leadership results. The process of making decisions in an organization is a process that requires adequate time (Hammond, Keeney & Raiffa, 1998). The presence of adequate time for the process leads to the creation of better and informed decisions that will benefit an organization. Once there is not enough time, the process of making decisions in an organization is affected by the high probability of errors in the process. Therefore, a wrong decision is most likely to have several challenges. Evasion of the trap of the lack of adequate time is solved by finding time to make a decision (Laureate Education, 2012). Once the time for decision-making is allocated, quality decisions will be realized the organization, hence, will be successful.
An unclear criterion for decision-making is another decision-making trap that CEOs face. The criterion of decision-making influences the prioritization of ideas in the process. Therefore, the criteria, which are to be applied, should be enhanced by priority settings (Laureate Education Inc, 2012). If an organization applies a criterion that is not friendly to the decision-making process, the organization is most likely to fall into a decision-making trap (Bazerman & Moore, 2008). The remedy for the criterion trap is involvement of all parties with a stake in the decision in the determination of the best criterion to apply. The important concept of the criterion chosen is that the criterion should fall in organizational strategy of the organization (Drummond, 2001).
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Lack of Relevant and Logical Methodology
Drummond (2001) recognized that the main decision-making trap is the lack of relevant and logical methodology that enhances effective steps. Decision-making process requires an efficient methodology that will facilitate a quick and conclusive procedure. The methodology applied to an organization should be polished to ensure that there is no error that occurs at any step in the process. Irrelevant decision-making methodology is a common error that most organizations have committed (Gwo-Hshiung, 2010). An organization with an irrelevant decision-making process has unorganized steps of making choices. In such a case, prioritization is a problem for the organization. Logical methodologies for decision-making should be implemented carefully to ensure that the organization is stable in its activities (Bazerman & Moore, 2008). Illogical decision-making can be easily sorted out by a company. The methodology should be enhancing steps that are collaborative in decision-generating process (Bazerman & Moore, 2008). For relevancy, the process should have a win-win or a principle-based system driven by negation. In addition, for a permanent solution, delegation and majority voting should be involved in the process (Drummond, 2001).
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According to Andersen (2003), biasness is a representation of another trap that is a risk in the decision-making process. The parties involved in the decision-making process are sensitive in determining whether the process is biased or not (Bazerman & Witkins, 2008). Biases of parties in a meeting are mainly contributed by taking prior stands by people in the meeting (Bazerman & Watkins, 2008). The positions taken by the members in a meeting is a sentimental factor for the nature of the decisions an organization makes. In order to evade the risk of the biases trap in an organization, the parties in an organization’s meeting should avoid being overwhelmed by their positions in the meeting (Bazerman & Watkins, 2008). The members of the meeting should be selectively chosen to ensure that the meeting is not biased-based.
Inadequate information is a trap that occurs in the decision-making process (Bazerman & Moore, 2008). Decision-making should be a process based on rich information sources that are highly dependable. If a decision-making process lacks adequate information, weak leadership will likely venture into it (Langer, 1975). Therefore, a remedy to inadequate information source is a provision of information sources to the organization in the decision-making process. Once the information in the decision-making process is availed, the organization will be at a high ability to evade uninformed decision-making (Leavitt, 1974).
Levels of Decision Making Process
The lack of understanding the level of decision-making is also another trap for the process. Decision-making process should be structured in different levels. The process is made much easier through the structuring process whereby division of the decision-making process is enhanced (Andersen, 2003). As a remedy to the misunderstandings at the level of decision-making, input and feedbacks should be adequately enhanced. The continuum of empowerment at the level of decision-making should be understood to clear the misunderstandings (Bazerman & Moore 2008).
Closely related to decision-making in a company is groupthink. According to Janis (1973), groupthink is a social psychological occurrence in a group of people that may transform harmony in a group leading to dysfunctional decision-making. Groupthink is a good technique to apply in an organization’s decision-making process, but it ought to be highly controlled.
Brindle & Hasty (2010) mentioned that symptoms of groupthink are the side effects that show to the group members in terms of its destructive part. According to Irving research, he discovered various symptoms of groupthink. The symptoms included overestimation of the group symptom, closed mindedness symptom and pressures towards uniformity symptom (Whyte, 1991). Overestimation of the group symptoms is a wide category of symptoms that includes illusion of invulnerability and belief in inherent morality of the group. Closed mindedness affects the irrationalism and stereotypes within the group to negative effects. The symptoms of groupthink signify that the group is heading in the wrong direction in terms of decision-making. Therefore, an ability to recognize the symptoms of groupthink is needed for a group’s success (Janis, 1982). The ability is not gotten from researched techniques, but it ought to be developed in the group.
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The leaders may develop abilities to detect symptoms of groupthink within the group members by making them sensitive to the symptoms. Once the leader involves the members of the group in each activity of decision-making in the group, the members will easily familiarize themselves with the decision-making process (Brindle & Hasty, 2010). Therefore, the group members would intensively know the decision-making process. Therefore, once an anomaly occurs in the group’s decision-making process, the members will easily realize it, hence, increasing their ability to detect symptoms of groupthink. Therefore, involvement of the group members by the leaders of the group would be a significant way of developing the ability to detect the symptoms of groupthink in an organization (Eisenhardt, 1989).
Balancing of the symptoms of groupthink is a crucial process for the success of the group’s decision-making process. Because the symptoms of groupthink are inevitable in a group, the balancing process for the symptoms is highly needed for the group (Eisenhardt, 1989). The balancing process makes the decisions in the group effective. Therefore, the learning process of balancing the symptoms should be a key concept in the group (Bazermanm & Moore, 2008). Exploration of the group’s objectives is the key learning element on how to balance the symptoms (Drummond, 2001). The balancing process should be in line with the group’s objectives. Therefore, the objectives exploration would be a crucial way to learn how to balance the symptoms.
Gathering of relevant information is also a mean to learn how to balance the symptoms. Once a person, i.e. a group leader has the required information of groupthink and its symptoms, the learning process of balancing of the symptoms is made effective (Brindle & Hasty, 2010). Therefore, the information gathered can place the group at a better position to deal with the groupthink symptoms. As a result, decision-making is effective due to the balancing of groupthink’s symptoms.
In conclusion, it can be deduced that several factors trigger poor decision-making by managers. Such factors include illusion of control that eventually results in overconfidence. Moreover, the decision-making process should be cleared off the traps to ensure that weak leadership is eliminated. The main reason for finding a remedy to the decision-making trap is to ensure that there is smooth running of the organization. Therefore, workplace problems should be upheld for better decision-making in the organization. Groupthink is yet another factor that can enable CEO’s make rational decisions when appropriately applied.