Decision making based on emotions or personal motivation undermines the quality and fairness of the decisions as well as the ethical standing of a business organization. Managers need to be able to separate their emotions from their logic when making decisions. This helps prevent bias as well as enabling them to make decisions that are in their organizations best interest and not their own.
Take for instance a bank manager who denies an eligible client a loan because he’s annoyed. This is an example of a decision made based on emotion. Here the bank manager allows his anger to cloud his judgment and therefore ends up making a decision that is unfair to the bank’s client.
When making judgment on decisions, a manger can base the decision making process on easily available events in his mind. Since these events are usually frequent, this type of judgment is mostly accurate but there are other factors that relate to this therefore making this heuristic unreliable. (Bazerman and Moore, 2009)
Another way of making judgment involves comparing likely outcomes with those of their stereotypes of parallel events. This heuristic often results in poor judgment. (Bazerman and Moore, 2009)
Decisions based on emotions often end up producing poor outcomes for all the parties involved. The emotions don’t always have to be negative ones. Overconfidence for example, can cloud the manager’s judgment. It can prevent him from considering all factors influencing the decision at hand. This therefore results poor decision making.
Overconfidence is the reason most successful professional make small mistakes that end up having far greater repercussions than they imagined.
References:
Bazerman, M. H. & Moore, D.A. (2009). Judgment in Managerial Decision Making (7th ed.). Hoboken NJ: John Wiley and Sons, Inc.
Russo, J. E. & Schoemaker, P, J. (1992). Managing Overconfidence. Sloan Management Review: Winter.
