How Ethics & Biases May Affect Strategic Decision Making

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Decisions involve many personal preferences.
Decisions involve many personal preferences. (Image: Photos.com/Photos.com/Getty Images)

Strategic decisions are purely rational and objective in theory, but in the real world are always affected by the personal experiences of the decision maker. The ethical structure and preconceptions of an individual are part of the structure of his mind, making it impossible to make decisions that are completely objective and impersonal.

Ethics

Ethics are a positive form of bias in which a person exhibits a preference for the good. Ethics are generally viewed by society as a positive characteristic, and a bias toward doing things that are beneficial or harmless is considered an acceptable bias. Within the realm of strategic decision making, ethical individuals will tend to avoid decisions that lead to illegal, unethical or harmful consequences. Some businesses place strategy before ethics, resulting in fiascos such as the Enron collapse of 2002.

Biases

A bias is a preference for one manner of thought or action over another. While many biases are perfectly legitimate, others are based on faulty thinking. People generally use the word 'bias' in the latter sense, when someone is behaving in a prejudiced or unbalanced way. Unfounded biases can prejudice strategic decision making to the point where it is unsound and counterproductive. Because many biases are not visible to those who hold them, this can and does happen without the decision maker's knowledge, even when it is clear to others.

Optimism

Studies have repeatedly shown that people tend to have a bias toward optimism about their own performance and future. Some researchers believe that this is a survival mechanism, because people are better able to cope when they are more confident than they really have reason to be. In strategic situations, a bias toward optimism can be helpful if it encourages hard work and innovation, but can also lead to trouble if it blinds people to the presence of problems and potential roadblocks. A bias against pessimism and "negativity" sometimes leads to being blindsided by unseen complications.

Inaction

Strategic decision making can be derailed by a tendency toward inaction. Hesitation to engage in action can be prompted by either ethics or biases, depending on the interpretation of the planned action by the decision maker. The inaction may be based on an inability to make a decision, or on a prudent postponement of decision making until situations clarify. Successful organizers and business people are those who are able to remain inactive when it makes sense, and then to act without hesitation when the right time comes. A lack of bias in the perception of reality can help people to achieve this mental state.

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