BARRIERS TO DECISION MAKING AND

OVERCOMING THOSE BARRIERS

- A brief study

Submitted to : Submitted by

Dr. R.K. Pandey Prachi Prabha Chauhan

MBA-IB (1st SEM)

 Important barriers to decision making :

 Inappropriate Goals

 Improper reward system

 Dynamic and complex Environment

  Reluctance to establish goals

 Resistance to change

 Cognitive and personal biases

 Differences in thinking and decision-making processes

 Fear of Failure

 Implicit Favorites

 Lack Of creativity

 Search for the best

 Previous commitments

 Bounded rationality

 Emotional aspect

INAPPROPRIATE GOALS :

Inappropriate goals come in many forms. Paying large dividend to the stockholders at the expense of
research and development . Goals may be inappropriate if they are unattainable. If Kmart were to set
a goal of having more revenues than the Walmart next year , people at the company would probably
be embarrassed, because achieving such a goal would be impossible. Goals may also be inappropriate
if they place too much emphasis on either quantitative or qualitative measures of success. Some goals,
especially those relating to financial areas are quantifiable , objective and verifiable . Other goals , such
as employee satisfaction and development are difficult if not impossible to quantify . Organizations are
asking for trouble if they put too much emphasis on one type of goal to the exclusion of the other .

IMPROPER REWARD SYSTEM :

In some settings, an improper reward system acts as a barrier to the goal setting and planning. For
Example people may inadvertently be rewarded for poor goal setting behavior or go unrewarded or
even be punished for proper goal setting behavior. Suppose that a manager sets a goal of decreasing
turnover next year. If turnover is decreased even by a fraction , the manager can claim success and
perhaps be rewarded for the accomplishment. In contrast a manger who attempts to decrease the
turnover by 5% but actually achieves a decrease of only 4% may receive a smaller reward because of
his or her failure to reach the established goal.

DYNAMIC AND COMPLEX ENVIRONMENT:

Rapid change, technological innovation and intense competition can all increase the difficulty of an
organization ‘s accurately assessing future opportunities and threats . For example when an
electronics firm like IBM develops a long range plan . It tries to take in to account how much
technological innovation is likely to occur during that interval. But forecasting such events is
extremely difficult. During the early boom years of personal computers data was primarily stored in
floppy disks . Because these disks had a limited storage capacity, hard disks were developed. Whereas
a typical floppy disk holds hundreds of pages of information hard disk can store thousands of pages.
Today computers increasingly store more information on optical disks that hold millions of pages. The
managers attempting to set goals and plan in this rapidly changing environment face a formidable task.

RELUCTANCE TO ESTABLISH GOALS:

The reason for this reluctance may be the lack of confidence or fear of failure. If a manager sets a goal
that is specific concise time related then whether he or she attains it is obvious . Managers who
consciously or unconsciously try to avoid this degree of accountability are likely to hinder the
organization’s planning efforts. Pfizer ran into problems since its managers did not set goals for
research and development. Consequently the organization fell further and further behind because
managers had no way of knowing how effective their R&D efforts actually were.

RESISTANCE TO CHANGE :

Another barrier to goal setting and planning is resistance to change. Avon products all most drove itself
in to bankruptcy several years ago because it insisted on continuing a policy of large dividend
payments to stockholders When profits started to fall , managers resisted cutting the dividends and
started borrowing to pay them. The company’s debt grew from$3 million to $1.1 milion in eight
years. Eventulally managers were forced to confront the problem and cut dividends.

COGNITIVE AND PERSONAL BIASES :

 Selective search for evidence – We tend to be willing to gather facts that support certain
conclusions but disregard other facts that support different conclusions.
 Premature termination of search for evidence – We tend to accept the first alternative that
looks like it might work.
 Inertia – Unwillingness to change thought patterns that we have used in the past in the face of
new circumstances.
 Selective perception – We actively screen-out information that we do not think is important.
 Wishful thinking or optimism bias – We tend to want to see things in a positive light and this can
distort our perception and thinking.
 Choice-supportive bias occurs when we distort our memories of chosen and rejected options to
make the chosen options seem more attractive.
  Recency – We tend to place more attention on more recent information and either ignore or
forget more distant information. The opposite effect in the first set of data or other information
is termed Primacy effect
 Repetition bias – A willingness to believe what we have been told most often and by the
greatest number of different sources.
 Anchoring and adjustment – Decisions are unduly influenced by initial information that shapes
our view of subsequent information.
 Source credibility bias – We reject something if we have a bias against the person, organization,
or group to which the person belongs: We are inclined to accept a statement by someone we
like.
 Tunnel vision occurs when people have mental blinders, such as individual biases, that restrict
the search for an adequate solution to a relatively narrow range of alternatives.

DIFFERENCES IN THINKING AND DECISION MAKING PROCESSES

When faced with a complex negotiation task, most Westerners divide the large task up into a series of
smaller tasks Issues such as prices, delivery, warranty, and service contracts may be settled one issue at
a time, with the final agreement being the sum of the sequence of smaller agreements. In Asia,
however, a different approach is more often taken wherein all the issues are discussed at once, in no
apparent order, and concessions are made on all issues at the end of the discussion. The Western
sequential approach and the Eastern holistic approach do not mix well. That is, American managers
often report great difficulties in measuring progress in negotiations, particularly in Asian countries. After
all, in America, you are half done when half the issues are settled. But in China, Japan, or Korea nothing
seems to get settled. Then, surprise, you are done. To Americans, a business negotiation is a problem-
solving activity, the best deal for both parties being the solution. To a Japanese businessperson, on the
other hand, a business negotiation is a time to develop a business relationship with the goal of long-
term mutual benefit.

SEARCH FOR THE BEST :

Major barriers in decision making nowadays are fear and anxiety at getting it wrong. We have this idea
that there is one best solution and that anything else is second-rate. This notion sometimes leads to an
excessive gathering of information to the point where sometimes the decision never actually gets made.
One way around this is to make effective decisions as opposed to perfect ones. As General George S.
Patton said, 'A good plan, violently executed now, is better than a perfect plan next week'.

FEAR OF FAILURE :

The desire to avoid negative consequences and unpleasant aspects. This may lead to indecision, or
simply the choosing of a safe option to avoid controversy. This can be especially tricky because often
times there are unexpected consequences to any decision. The reason things are unexpected is that
they are unexpected! Life happens and the world is chaotic. A useful skill is to be able to use whatever
occurs so that one still gets to achieve his/her outcome.
LACK OF CREATIVITY :

Creativity is the ability to generate ideas that are both innovative and functional. It is especially
important in making non routine decisions. Unfortunately, creativity rarely receives adequate attention
within organizations. The first reason for this neglect is that organizational policies and procedures are
usually designed to promote order, consistency, and uniformity, thereby limiting creativity. Second,
managerial work is fast paced and action oriented whereas creativity requires time for preparation,
incubation, inspiration. Finally most people do not understand creativity and therefore overlook rather
than advocate or reinforce it.

IMPLICIT FAVOURITES :

Many people select a favorite alternative early in the decision-making processes but continue to
evaluate additional solutions. Subsequent alternatives are therefore distorted perceptually, evaluated
using decision criteria that emphasize the superiority of the preferred solution. Consider a person who is
told to choose a site for a new plant. He quickly decides that it should be close to a place where he
always wanted to live. He may unconsciously take steps to insure this city is a prominent alternative and
be biased in his choice

BOUNDED RATIONALITY:

This theory points out that decision makers must cope with inadequate information about the nature of
the problem and its possible solutions, a lack of time or money to compile more complete information,
an inability to remember large amounts of information and the limits of their own intelligence .
Satisficing is in which the managers accept the first satisfactory decision they uncover.

PREVIOUS COMMITMENTS :

People who feel personally responsible for a previously selected bad decision often tend to commit
additional resources to that alternative. The most significant implication is that the escalating
commitment to a particular decision makes it increasingly difficult to objectively evaluate other
alternatives and to change the already initiate course of action.

EMOTIONAL ASPECT :

Our natural identity is a lens that narrows our field of perception and distorts, at least in part, the
information that comes in. There is both an emotional and an intellectual component to this. Example :

John and Judi have been peers as well as competitors for years, and are both in the running for the
position of Senior Vice President of their division. Judi ends up winning the position and John now
reports into her. John is a critical player, important to the success of the division. Believing that he
should have gotten the position, John continually finds fault with Judi’s leadership, disagreeing with her
point of view. His view of the issues being discussed is colored by his disappointment that he did not win
the position, and by his belief that he could be doing a better job. This is an emotional barrier, affecting
John’s ability to engage in an objective dialogue with Judi. But he is unaware of this; he believes that his
perspective is “objective.” His lack of self-awareness affects the division’s ability to get to brutal reality
quickly and thus has a negative impact on performance.

OVERCOMING THE BARRIERS TO DECISION MAKING:

1. Understanding the purposes of goal setting and planning.

2. Consistency , revision and updating
3. Effective reward system
4. Proper communication
5. Developing authentic leadership style

UNDERSTANDING THE PURPOSE OF PLANNING AND GOAL SETTING:

One of the best ways to facilitate goal setting and planning processes is to recognize their basic
purposes. Managers should also recognize that there are limits to effectiveness of setting goals and
making plans. Planning is not a panacea that will solve an organization’s all problems nor it is an
ironclad set of procedures to be followed at any cost. And effective goals and planning do not
necessarily ensure success; adjustments and exceptions are to be expected as time passes.

CONSISTENCY REVISION AND UPDATING:

Goals should be consistent both horizontally and vertically. Horizontal consistency ,means that goals
should be consistent across the organization from one department to next. Vertical consistency means
that goals should be consistent up and down the organization – strategic, tactical and operational
goals must agree with one another. Because goals setting and planning are dynamic processes, they
must be revised and updated regularly. Many organizations are seeing the need to revise and update
on an increasingly frequent basis.

EFFECTIVE REWARD SYSTEM :

In general, people should be rewarded both for establishing effective goals and plans and successfully
achieving them. Because failure sometimes results from the factors outside the manger’s control,
however people should always be assured that failure to reach a goal will not necessarily bring
punitive consequences.

COMMUNICATION AND PARTICIPATION:

Although goals and plans may be initiated at high levels in the organization they must also be
communicated to others in the organization. Everyone involved in the planning process should know
what the overriding organizational strategy is, what the various functional strategies are and how
they are to be integrated and coordinated . People responsible for achieving goals and implementing
plans must have a voice in developing them from the outset.
DEVELOPING AUTHENTIC LEADERSHIP :

This is a far more complex process than most leaders realize. Only those who have a stable and
authentic sense of self, who know their blind spots, fears, and shortcomings, can view the unfolding of
the world around them with equanimity and objectivity, and thus enable themselves to see the
opportunities – and challenges – that arise. Without this self knowledge, and even if their business
strategies and initiatives are right, leaders will be ineffective because their organizations will execute
sub-optimally

AUTHENTIC LEADERS DEMONSTRATE FOLLOWING QUALITIES:

 The absence of defensiveness and arrogance.

 The presence of humility

 The presence of accurate empathy

 The presence of social values

 Appropriate transparency

 The presence of emotional courage

 A tolerance for ambiguity