Sunk cost bias has been blamed for everything from disastrous military campaigns to over-budget public works and is widely acknowledged as a serious obstacle to effective decision-making. Defined as the “tendency to continue an endeavour once an investment in money, effort or time has been made”, it leads people to “throw good money after bad” […]
Subject: Decision Making
Decision-Making With Emotional Intelligence
Emotional intelligence — the awareness and understanding of emotions — has a variety of workplace applications and benefits. Leaders who perceive and relate to the emotions of those they direct are going to be seen as more caring and understanding leaders. Leaders who can better manage their own emotions will also develop more positive relationships […]
When Allowing Decision Latitude Can Backfire
Most leaders now recognize (at least theoretically if not always in practice) the ineffectiveness of the old school top-down, command-and-control leadership style. The knowledge worker of the information age is not going to be satisfied with simply obeying orders from above. The best managers avoid micromanaging their employees, giving them instead the freedom to make […]
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Social Influences on Decision-Making: Neuroscience Insights
In making decisions, people are susceptible to the influence of those in their ‘in-group’, who commonly include others of the same age, sex, ethnicity or religion, as well as friends, family members, colleagues and classmates. This is a long-observed and commonly acknowledged phenomenon, often explained in terms of evolutionary biology. (By conforming to the common […]
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Conducting Better Meetings – Can Data Help?
What can statistics and data-based analyses reveal to us about meetings that are effective (leading to consensus and decision-making) and efficient (goals achieved in optimal time)? Because the science of meetings is still in its early stages, the raw data for study is still being accumulated. However, two researchers from MIT’s Sloan School of Management, […]
Motivation by Last Place Aversion
Professors Ilyana Kuziemko of Columbia Business School and Ryan Buell and Michael Norton of Harvard Business School, working with doctoral candidate Taly Reich of the Stanford Graduate School of Business, collaborated on a series of experiments to explore how far people would go to avoid being in last place. One experiment was designed to measure […]
Narcissistic CEOs – A Signature for Poor Performance
Recently, faculty from Kenan-Flagler Business School and Robert H. Smith School of Business looked at the relationship between egotistic (or narcissistic) CEOs and firm performance by measuring ego by the size of signatures on yearly SEC filings. They looked at about 400 CEO signatures from the annual SEC filings from companies in the S&P 500, […]
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Better and Fairer Management Control Systems
One way that organizations ensure that they accomplish certain objectives is through management control systems. These systems reward and promote employees according to certain criteria, in order to achieve goal congruence. According to the authors, very little research into the design of control systems that lead to goal congruence takes into account the role that […]
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Avoiding Flawed Decisions: A Finance Manager’s Role
Rational and objective thinking is not the only influence on the decision-making process. Recognising this, the authors set out to research why good leaders often make flawed decisions, at times dragging their organizations down. According to them, finance managers play an important role, being “savvier” at managing rational thinking and the inevitable personal biases of […]
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Avoiding Bad Decisions: ‘Red Flags’ and Reflection
Decision-making is at the heart of all leadership. Sometimes leaders make good decisions, but sometimes they make less good decisions. The authors set out to understand why bad decisions are made, and what causes them. They propose that in certain situations, the brain processes that normally get us to good decisions, lead us instead to […]
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