Why do leaders make bad decisions? How to make good decisions?

Making decisions is a critical part of any leadership role, and as a manager, your choices can significantly impact your team and your career. However, with so many factors to consider and much pressure to get things right, it can take time to make mistakes. This blog will explore why managers sometimes make bad decisions and provide practical tips for making better choices. From considering all your options and aligning with your long-term goals to eliminating stress and trusting your intuition, we’ll give you the tools you need to make informed and effective decisions. So if you want to become a more confident and capable manager, read on!

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Why do leaders make bad decisions? How to make good decisions?
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Impact of bad decisions taken by the manager

Bad decisions taken by a manager can have significant impacts on a team:

Decreased productivity: Poor decision-making can lead to inefficient allocation of resources, leading to reduced efficiency and productivity.
Decreased morale: If employees perceive that their manager’s decisions are unfair or incorrect, it can decrease confidence and job satisfaction.
Increased turnover: Employees may leave the organization if they are dissatisfied with their manager’s decisions or leadership style.
Financial losses: Incorrect decisions regarding finances or investments can result in monetary losses for the organization.
Damaged reputation: If a manager’s bad decisions are made public, it can damage the team’s reputation and hurt its prospects.
Lost opportunities: Poor decision-making can result in missed opportunities for growth and expansion.
Decreased innovation: If a manager is unwilling to take risks and make bold decisions, the organization may miss out on opportunities for growth and innovation.
Decreased customer satisfaction: If a manager’s decisions negatively impact the customer experience, it can lead to reduced customer satisfaction and loyalty.

Why do managers make bad decisions?

Inexperience in leadership: Lack of experience can result in a manager making poor decisions. This could be due to a lack of exposure to different situations or training in decision-making.
Personal life pressures: Personal life problems such as financial difficulties, family issues, or health problems can significantly impact a manager’s decision-making abilities and lead to poor decisions.
Time pressure: Managers may feel pressure to make a decision quickly, resulting in insufficient time for careful consideration of all options. This can lead to hasty or poorly thought-out decisions.
Stress and overwork: High levels of stress and overwork can lead to burnout, impairing a manager’s ability to make effective decisions.
Senior leadership pressure: Managers may feel pressure from senior leadership to make decisions that align with the organization’s overall strategy, even if those decisions may not be in the best interest of their department or team.
Pressure from individual team members: Managers may also feel pressure from individual team members, who may have vested interests and agendas.
No clear personal values: Without a clear set of personal values and beliefs, managers may struggle to make decisions that align with their ethics and principles.
No solid decision-making process: A manager’s lack of systematic and structured decision-making can result in poor decision-making.
Ego and power: Ego and a desire for power can sometimes cloud a manager’s judgment and lead them to make poor decisions.
Lack of balance between emotion and logic: Poor decision-making can occur if a manager relies too heavily on emotions rather than logical thinking and analysis. This can result in decisions that are not well thought-out or not in the organization’s best interest.

These are signs that as a manager you may be about to make a bad decision

If you make decisions too quickly: If you are not taking the time to carefully consider all options and weigh the potential consequences, it may indicate a hasty decision that could have negative consequences.
If you don’t take others’ opinions into inconsideration: If you are not seeking input from others or not considering it while making a decision, you may be missing out on essential perspectives that could help you make a more informed decision.
If you have limited information: If you do not have access to all the relevant information, your decision may not be based on a complete understanding of the situation.
If you’re too emotional: If your emotions cloud your judgment, you may be unable to make a rational and objective decision.
If you only follow your gut: While intuition can be valuable, relying solely on gut feelings without considering other factors can lead to poor decisions.

In general, it’s important to approach decision-making objectively, seeking input from others and considering all relevant information to minimize the risk of making a bad decision.

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Examples of bad decisions at work

Hiring the wrong person for a job
Making impulsive decisions without considering the consequences
Ignoring important data or feedback from employees
Refusing to delegate tasks or responsibilities
Failing to adapt to change or new technology
Cutting corners or taking shortcuts to meet deadlines
Prioritizing short-term gains over long-term success
Micromanaging employees or not giving them enough autonomy
Focusing too much on profit over employee satisfaction
Not correctly communicating with employees
Ignoring workplace values or ethical considerations
Failing to provide adequate training or resources to employees
Making decisions based on personal biases or prejudices
Refusing to listen to diverse perspectives or opinions
Making unilateral decisions without consulting with others or seeking input.

Steps to make good decision as a manager

Weigh all the options: Take the time to consider all relevant options and weigh their potential outcomes. Don’t decide too quickly, but take the time to think things through.
Make sure the decision aligns with the teams’ long-term goals: Ensure that the decision you make aligns with your overall organizational goals and strategies.
Eliminate stress: Try to manage stress and reduce its impact on decision-making. A calm and relaxed mind can make informed and thoughtful decisions.
Ask the difficult questions: Be bold and ask tough questions and seek input from others. This can help you identify potential problems or challenges before deciding.
Give importance to the data: Use data and analytics to make your decisions whenever possible. This can help you to make more informed and objective decisions.
Trust your intuition: While data and analysis are important, it’s also important to trust your intuition and instincts. This can help you make decisions that align with your personal values and goals.

Framework for managers to make better decisions

These are a set of questions the manager should ask themselves next time before making a decision, and they should only move ahead with the decision when they have a clear answer for each question.

What is the problem?
Why am I making this decision?
What is my decision?
What other choices do I have?
What will be the results of my decision? Short-term and long-term?
How will my decision impact other team members?
Who will be in support of this decision?
Who will help me in the execution of my decision?
Do I have the resources to implement my decision?
How can I minimize potential harms associated with the decision?
What if my plan fails? Do I have a different option?

Conclusion

In conclusion, making good decisions is essential to successful leadership and requires careful consideration, data-driven analysis, and a focus on organizational goals and values. You can become a more confident and influential leader by understanding the common reasons why managers make bad decisions and taking steps to mitigate these risks. Whether you are looking to improve your decision-making skills or avoid common pitfalls, this blog has provided valuable insights and practical tips to help you achieve your goals. So take these lessons, and start making the decisions to help you and your team succeed.

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5 Biases In Decision Making That Every Manager Should Know

There is an old saying that ‘opinions are like noses, everyone has one.’ While opinions are subjective and may differ from person to person, biases are some of the most common factors that affect decision-making. These biases have been studied extensively, and managers can use them to their advantage in decision-making. In this blog, we will talk about biases in decision-making and how you can overcome them as a manager.

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10 Biases In Decision Making That Every Manager Should Know
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What are the common biases in decision making?

Biases can lead to faulty decisions that can have long-term consequences. First, however, good managers must be aware of their preferences and work to counter them. Common biases in decision making include recency bias, proximity bias, and halo and horn effects. Managers should be willing to revisit past decisions and reconsider their assumptions as new information comes in. The more aware you are of your biases in the workplace and how they can influence your decisions, the better prepared you will be to make intelligent choices and avoid common errors in judgment.

How do biases affect decision making?

The impact of biases on decision making can be significant and far-reaching. Some of the most common effects of biases on decision making include the following:

Inaccurate decisions: Biases can cause individuals to ignore vital information and make decisions based on incomplete or false information, leading to poor and incorrect choices.
Unfair treatment: Biases can cause individuals to make decisions that are not based on merit or objective criteria, leading to unfair treatment and discrimination.
Decreased productivity: Biases can cause individuals to overlook important information and make decisions based on incomplete or inaccurate information, leading to reduced productivity and inefficiency.
Missed opportunities: Biases can cause individuals to overlook important information, ignore new ideas, and fail to recognize potential opportunities, leading to missed opportunities and decreased innovation.
Damage to reputation: Biases can cause individuals to make decisions that are not in the best interests of the team, leading to adverse outcomes and damage to reputation.
Decreased trust: Biases can cause individuals to make decisions that are not transparent or based on objective criteria, leading to reduced trust in leaders and the decision-making process.

Overall, biases in decision making create a significant impact by causing individuals to make decisions based on incomplete or inaccurate information, leading to poor, unfair, and inefficient decisions, and decreasing trust and confidence in leaders and decision-making.

How can managers overcome the impact of biases in decision making?

Overcoming the halo and horn effect

The halo and horn effect is a bias that affects the perception of a manager towards their team members based on the first impression. In case the view is negative, it is termed as horn effect. Conversely, a positive perception toward a team member is called a halo effect.

Use clear and objective criteria: Clearly define the criteria for evaluating performance and ensure that it is based on accurate and relevant measures.
Provide regular and comprehensive training: Provide regular training to managers on evaluating performance objectively and free from personal biases.
Encourage self-reflection: Managers should reflect on their preferences and consider alternative perspectives when assessing performance.
Use multiple raters: Consider using multiple raters, such as peers or subordinates, to evaluate performance and reduce the influence of any one individual’s biases.
Regularly assess and adjust the evaluation process: Regularly evaluate the performance evaluation process to ensure it is free from halo and horn effects and adjust as necessary.

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Overcoming the proximity bias

The proximity bias is the tendency for people to prefer things that are nearby or within reach. This bias can significantly impact our decision-making processes, particularly when it comes to making choices about what information to believe and how to act on that information. In addition, it can seriously cause hybrid teams that cannot maintain equal communication between in-person and remote employees.

Consider a broader geographical and temporal scope: Encourage team members to consider a more comprehensive range of information from different geographic locations and periods.
Use objective data: Use objective data and be less susceptible to biases in decision making, such as performance metrics or financial data.
Encourage diverse perspectives: Encourage team members to seek out diverse views and opinions, which can help to broaden the range of information considered.
Build resilient communication processes: Build resilient communication processes that can help you overcome proximity bias. Otherwise, in-person team members’ communication can overpower remote team members’ ideas.

Overcoming the recency bias

The recency bias is the tendency to overweight recent events or experiences in making decisions. It can lead people to make rash or hasty decisions based on what they have seen recently rather than basing their decisions on longer-term evidence. The recency bias can be a problem when making decisions about personal or professional matters, as it can lead people to make decisions based on limited information or viewpoints.

Use objective data: Use objective data less susceptible to bias, such as performance metrics or financial data.
Encourage diverse perspectives: Encourage team members to seek out diverse views and opinions, which can help to broaden the range of information considered.
Use forecasting tools: Consider using forecasting tools or simulations to help predict future outcomes based on historical data and other relevant information.
Regularly reassess: Encourage team members to periodically reassess their decisions and consider new information or events that may have an impact.
Give time to decisions: To overcome the recency bias, take time before making decisions with your team so that you can think through them instead of hurrying.

Overcoming the central tendency bias

The central tendency bias happens when managers tend to give ratings toward the center of the scale. It prevents effective performance reviews as most candidates are rated towards the middle – leaving extremely well-performers and low-performers unaddressed. The biases in decision making can have negative consequences, such as leading people to make decisions based on inaccurate information or making assumptions about other people’s behavior.

Consider a range of data: Encourage team members to provide multiple points of view and consider a range of data.
Use more robust data: Consider less sensitive data to outliers or extreme values, such as the median or interquartile range.
Encourage creativity and divergent thinking: Encourage team members to consider different and non-traditional approaches to problem-solving.
Use outside sources: Consider obtaining information from external sources to broaden the range of data considered.
Regularly question assumptions: Encourage team members to challenge assumptions and biases periodically and to consider alternative perspectives.

Overcoming the idiosyncratic rater bias

The idiosyncratic rater bias is the tendency of people to give higher ratings to items they have personally experienced or own than they would to items they have not experienced or do not own. This bias can impact how people perceive and rate products, services, and other experiences – which are critical inputs for any manager’s decisions for their teams.

Use clear and objective criteria: Clearly define the criteria for evaluating performance and ensure that it is based on accurate and relevant measures. Setting expectations is the key.
Provide regular and comprehensive training: Provide regular training to managers on evaluating performance objectively and free from personal biases.
Encourage self-reflection: Managers should reflect on their preferences and consider alternative perspectives when evaluating performance.
Use multiple raters: Consider using multiple raters, such as peers or subordinates, to evaluate performance and reduce the influence of any one individual’s biases.
Regularly assess and adjust the evaluation process: Regularly evaluate the performance evaluation process to ensure it is free from idiosyncratic rater bias and adjust as necessary.

Conclusion

Every decision maker faces biases. Despite that, biases in decision making can be understood and managed. The first step is to recognize biases in decision making for better decision-making. Managers can work around them by using structured decision making processes if they can understand biases. However, the next step is to train decision-makers and leaders to manage biases in decision making better. If you want to learn more about bias-based decision making, here’s a blog that you can read.

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Tag: Bad decision making by leaders

Why do leaders make bad decisions? How to make good decisions?

Why do leaders make bad decisions? How to make good decisions?

Impact of bad decisions taken by the manager

Why do managers make bad decisions?

These are signs that as a manager you may be about to make a bad decision

Examples of bad decisions at work

Steps to make good decision as a manager

Framework for managers to make better decisions

Conclusion

Wondering how to avoid bad decisions that hurt your team?

10 Signs You’re Struggling with Analysis Paralysis at Work

Evidence Based Decision Making: 4 Proven Hacks For Managers

6 Best Books On Decision Making For Managers

Best Decision Coaches To Guide You Toward Great Choices