Why Do We Make Bad Decisions?
In the workplace, not a day goes by that you don’t have to make a decision, or more likely several. How many of them subsequently proved to be bad decisions?
If a decision achieved the desired outcome, it was an effective decision. Therefore, let’s define a "bad decision” as one which led to an undesirable outcome.
So, why do people make bad decisions? There are many possible reasons, actually, such as lacking sufficient alternatives to choose from, not considering all the alternatives, a lack of time or information, hazy objectives, not being methodical in making the decision, a lack of familiarity with evaluation techniques, and uncritical acceptance of needs and feelings.
Sometimes, poor decision making stems from the way information is framed. For example, it’s been found that people are more likely to undergo an operation with a reported 80 percent success rate than one with a reported 20 percent risk of death, even though these numbers represent the same level of risk.
If it’s any consolation, the ability to make sound decisions isn’t something we’re born with. And studies suggest that smart people don’t automatically make good decisions, which means it’s a skill we need to develop.
Among several steps recommended by Mike Myatt in a Forbes article on minimizing the chances of making a bad decision are the following:
- Perform a situation analysis. Consider, for example, what is motivating the need for a decision, who will be affected by it, what data is available to support it, and what would happen is no decision is made.
- Subject the decision to scrutiny. Ask yourself how you’d feel if your decision came to the attention of your family, your employees, your shareholders, or the public.
- Conduct a cost/benefit analysis. What happens if costs exceed projections or benefits fall short?
- Have a back-up plan. In Myatt’s view, no “Plan B” equals a flawed plan.
Obviously, questions such as these are overkill if the decision concerns where to go for lunch. But for the major decisions that affect your professional or personal life, they seem worth considering.
What would you add to this list from your own experience? Share your comments below.