Dysfunctional Decision Making
Decisions made in the interests of local managers that are not in the interests of the organization.
Dysfunctional decision making refers to the decision-making process that is flawed due to various factors such as biases, lack of information, groupthink, external pressures and emotional factors. When decision-makers are influenced by these factors, their judgement and reasoning become impaired which contribute to poor decision-making outcomes. The consequences of dysfunctional decision making can be significant, ranging from low employee morale and decreased productivity to lost opportunities and financial distress.
Here are some of the factors that contribute to dysfunctional decision making:
1. Biases: Cognitive biases such as confirmation bias, overconfidence bias, and anchoring bias can influence decision-makers to make irrational decisions.
2. Lack of information: Partial or inaccurate information can limit the ability of decision-makers to make informed decisions.
3. Groupthink: The phenomenon where decision makers tend to conform to group norms and opinions rather than actively seek new opinions or solutions.
4. Emotional factors: Fear, stress, and pressure can negatively impact the decision-making process and lead to impulsive or reckless decisions.
To avoid dysfunctional decision making, decision-makers must consider the following:
1. Gather accurate and comprehensive data: Decision-makers must gather as much accurate information relevant to the situation to make informed decisions.
2. Seek diverse opinions: Decision-makers should identify different perspectives to avoid groupthink and biases.
3. Use a structured decision-making process: Having a process in place can help ensure all the key factors are considered during decision-making
4. Dissect the situation: Decision makers should assess the situational factors that can influence decision-making and analyze the potential impact of their decision.
In conclusion, dysfunctional decision-making can have negative consequences for organizations and individuals. Decision-makers must be aware of the factors that can impair their judgement and take proactive measures to minimize the effects of these factors during the decision-making process.
More Answers:
Understanding the Major Lines in Financial Statements: A Guide to Analyzing Company PerformanceMastering the Concept of Estimated Useful Life: A Comprehensive Guide for Accounting, Finance, and Business Valuation
Understanding Residual Value: Importance and Calculation for Effective Asset Management