What are the hidden traps in decision-making?

Five Hidden Traps That Can Affect Decision Making Sticking with the status quo and the fear of upsetting the balance. People inherently fear change. ... Anchoring and relying on first impressions. ... Refusing to leave your echo chamber. ... Not framing the question properly. ... Being held hostage to the past.

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Being a strategic leader isn't easy. Every day you are faced with multiple decisions, knowing that a single mistake can damage both your company's fortunes and your own. These choices can also have a serious impact on team morale, with studies showing that poor managerial decision making is the number one reason for employees handing in their notice. Meanwhile, scientific research has revealed several psychological traps hardwired into our brains can affect the decisions we make. So, let's look at these pitfalls and how you can avoid them. 1. Sticking with the status quo and the fear of upsetting the balance People inherently fear change. Either consciously or subconsciously, we don't want to upset a perceived balance in business or life. So, we are more inclined to make decisions that maintain the status quo. This stems from our self-preservation instinct. We share a natural aversion when it comes to taking actions for which we may be held to account. Yet allowing yourself to fall into this trap can have far worse repercussions for the wider business, because you will end up avoiding the sometimes difficult adjustments needed for your company to grow (or even survive). How you can avoid this trap: Maintaining the status quo could be the correct course of action, but you can't let fear dictate your choices. Strive to explore and compare alternative approaches to make sure your choice is the right one. Always analyze the options on offer with a view to their business value in the future, not just in the present. Turn the decision on its head: would you choose your current approach if it wasn't already the status quo? Break down the decision into how well it meets your goals and targets, and how the options on offer align with your business strategy.

2. Anchoring and relying on first impressions

This trap is the tendency to rely too heavily on the first piece of information we receive when trying to make a decision. For example, when negotiating a deal, we are inclined to allow the first offer that is put on the table to set the limits of our subsequent decision-making. This means we are more likely to make counter-offers that don't stray too far from this initial figure. This cognitive bias is known as anchoring. It can lead us to ignore specific business contexts (rapidly changing market, economic pressures, etc.) in favour of limited information "anchors'. This means that our decisions are not taking advantage of all the data available and are less likely to be successful. How you can avoid this trap: First impressions matter but set aside that initial piece of information for the moment and seek other approaches and perspectives. Recognize that you need to create a more rounded context and you will be able to build a clearer picture of what is needed. Quite simply, the more information you have to work with, the better your decision will be. Author Lars Kirchhoff has suggested that a good way to debias anchoring is by instantly setting multiple anchors when faced with this trap, to confuse the brain and snap out of the hardwired thinking. For example, you could try mentally throwing out a range of arbitrary figures when the aforementioned offer is placed on the table. When looking to others (consultants or colleagues) for advice, be careful not to offer up too many of your own thoughts on the subject, so that you avoid providing unintended anchors for them.

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3. Refusing to leave your echo chamber

If you've been paying attention to world affairs, you might have already seen how this trap works. It's especially prevalent on social media, where it's easy to find and connect with people who share your views, likes and dislikes. Great for socializing but incredibly dangerous for business. Operating from the safety of a bubble –or echo chamber– means you will only see and hear your own reflected biases and preconceptions, "confirming' what you already thought. It will also make it far easier for you to dismiss conflicting evidence, despite any validity it might have. The best decisions are made based on rational and objective examination of all available evidence. How you can avoid this trap: Studies have shown that those with a better balance and diversity of ideas in their network could benefit from up to 30% higher ROI. So, be a social explorer, connecting with new people and ideas to expose yourself to a wide range of thinking. Get in the habit of willfully seeing the opposing view when it comes to decisions. Is there evidence that supports making a different choice? Can you identify an approach you've dismissed for reasons of instinct rather than merit? Have you considered all the available evidence or only that which you've received from within your business bubble? Ask for advice from people you trust to be objective and honest, not someone who you know is likely to support your point of view. Hiring smart people who don't necessarily agree with your world-view can work wonders for breaking down that echo chamber.

4. Not framing the question properly

When faced with a problem, you will often have a range of solutions to choose from and it's up to you to pick the best one. But did you know that the nature of the question – and the way it is asked – is just as crucial to making a good decision? As an example, psychological research has shown that people are risk averse when facing a dilemma that talks about "potential gains', but more inclined to take a risk to "avoid losses'. So bear in mind that how you frame your question or problem can affect your instinctive decision making and act as a barrier to making the correct choice. How you can avoid this trap: Take some time before making the decision to ask yourself the question, or try posing the problem in several different ways. For example, is the glass half full or half empty? Reframing it might bring to light some areas of subconscious bias that could affect your choices and help you bring more balance to your decision making. Always consider and challenge the framing imposed by others to make sure their presentation of the question or problem isn't going to sway you into making the wrong choice.

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5. Being held hostage to the past

Once you've made a bad decision, it can be embarrassing to cut your losses and run. It might be the right thing to do, but it's difficult to hold up your hands and admit you made a mistake (especially if there are serious penalties). Consequently, people often avoid this approach and double down on their past decision instead. When this happens, they end up being held hostage to previous poor choices, which reduces the chances of any future decisions being good ones. How you can avoid this trap: Take advantage of advice from people unconnected with the past decision, as they will be able to offer objective feedback and help you understand when it's time to move on. Similarly, it doesn't hurt to delegate responsibility to a party who isn't held hostage to a past decision. In their Harvard Business Review article "The Hidden Traps in Decision Making', the authors talk about this "sunk cost' trap and present the example of bankers who gave loans to companies who got into financial difficulty. They found that that the same bankers who originated the loan were more likely to continue throwing money at the problem than somebody new who could be more objective. And be aware of your employees falling into this same trap and encourage them to own up to their mistakes. Make sure that the penalties for admitting mistakes are not so severe that you're actually encouraging people to double down on their past poor decisions.

Learn to recognize these traps and you will improve your decision making

The psychology behind making decisions is fascinating and well worth further exploration, especially for those whose companies rely on them to make the best choices possible. Admittedly, you won't make the right decision every time, but by acknowledging the traps you will give yourself the best chance possible.

Related: Why Data Analytics Can Help Drive Sales For Your Business

entrepreneur.com - Five Hidden Traps That Can Affect Decision Making - Entrepreneur

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