Although many determinants are involved in business decision-making, a significant number of strong scholarly arguments confirm the idea that the main underlying aspects in this regard are motivation of the leaders and their cognitive biases (Monahan, 2000). This essay speaks about the key underlying causes of cognitive biases and poor motivation of company leaders, and speaks about potential solutions in this regard.
Cognitive bias is a systemic deviation from rational judgment, i.e. a popular cause, which compels people to think and adopt decisions in an illogical way. At the same time, the practice revealed that in some cases cognitive biases are positive for the organization. For example, many people are cognitively reluctant to take decisions, when insufficient data is available. Although in some cases cautiousness may be negative, because the economic environments are becoming increasingly dynamic, in financial decision-making it more an advantage than a deficiency. Thus, by analyzing specifics of different types of cognitive biases and applying such biases for specific business needs of a company, overall operational efficiency of a firm may be increased (Beshear & Gino, 2015).
The second important aspect of decision-making is motivation of the managers (Beshear & Gini, 2015). Any act of decision-making is connecting with assuming responsibility for the results of such decision. Therefore, the company human resources managers should be constantly developing different financial and non-financial motivational strategies. Individual approach to each employee is the key factor in this regard, especially in the cases, when senior managers are analyzed (Bazerman, 2002). Because their performance in decision-making is of particular importance for company, human resources managers should be inventive in creating favorable employment conditions for such managers. The role of research in analyzing the key determinants of the business leaders’ motivation is highly important in this context, and, therefore, human resources managers of the organization should be especially scrupulous in developing corresponding policies (Plous, 1993)
References
Bazerman, M. (2002). Judgment in managerial decision-making. New York: Wiley.
Beshear, J. & Gino, F. (2015). Leaders as decision architects. Harvard Business Review, 51-62
Monahan, G. (2000). Management decision making: spreadsheet modeling, analysis, and application. Cambridge, UK New York: Cambridge University Press.
Plous, S. (1993). The psychology of judgment and decision-making. Philadelphia: Temple University Press.
