Common biases can often lead to poor judgement in making decisions. There are three types of decisions – strategic, operational, and administrative. There are several factors that influence decision making that may include biases, prejudices, and stereotypes. These influences can affect the outcome which may cause a company to lose a business deal. The most common biases include overconfidence, anchoring, confirmation, hindsight, self-serving, and in-group bias (Editorial Board, 2015). If self-awareness about these common biases are not attained, this could lead to adverse outcomes. A leader may overlook data, overestimate their ability to complete a task, overlook an opportunity, or cost their organization time, money, and resources in trying to resolve their error in making poor judgement calls.
Common biases, bounded awareness, emotions, and motivation affection the decision-making process because they can throw off the balance between short-term and long-term business outcomes. There is often a balance between the short-term and long-term decisions. Short-term decision usually deals with operational activities which may lead to immediate, concrete, or predictive decisions. Long-term decisions affect the visionary mission and often dictate the direction of the organization. Organizations that lose that balance are at risk at losing their competitive edge in their competing industry. Using bounded awareness, you must take into considerations what information is known, what information is relevant, and whether to ignore the information that the organization is not using (Editorial Board, 2015). It is important to consider all these factors and to not ignore what may seem unnecessary and carefully analyze how the information will impact the outcome for the business.
When making a decision and considering ethical factors, there is a code of conduct. Making sound business decisions relies on the morality of doing the right thing. It is important to be respectful of the business standards at which we conduct business. Being professional, and having ethical awareness is important for day-to-day business. Being unprofessional may not fall under unethical standards, however it may appear negative to other business associates. Being ethical means treating a decision with fairness, being truthful, and living up to the standards that are set within the organization and ensuring that the decision being made is beneficial.
Although ethical standards vary from nation to nation, I believe ethical standards in multi-national corporations should be adjusted for the diverse cultures the organization works within by communicating how decisions are made and what each organization expects from the outcome and collaborating and coming to consensus that benefits both sides and brings fairness.