The Impact of Biases on Managerial Decision Making: An In-Depth Essay

This essay provides a comprehensive analysis of biases in managerial decision-making within a business context. It begins by defining bias and emphasizing its detrimental effects on the workplace, including demotivation and unfair treatment. The essay then identifies and explores three primary types of biases: biases based on religion, race, sex, caste, creed, political views, or social standing; favoritism; and biases against types or categories of work. The discussion is interwoven with the role of overconfidence in decision-making. The essay delves into the concept of heuristics, specifically the availability, representativeness, and anchoring heuristics, and their influence on biased decision-making. The essay examines how these heuristics can lead to unfair or inaccurate decisions, particularly in scenarios such as recruitment and selection processes. The essay concludes by emphasizing the importance of avoiding such biases to foster a fair and productive organizational environment.

Running head: MANAGERIAL DECISION MAKING
Managerial Decision Making
Name of the Student
Name of the University
Author Note

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The word bias is used to indicate preference for or prejudice towards a particular group in
favor of other groups in a given scenario. Bias is something that ought to be strictly avoided in a
business environment given the fact that this leads to some groups of people in a business set up
quite poorly while other groups tend to get the upper hand (Abatecola, 2018). A biased work
environment can end up de-motivating an employee and inducing him to leave the organization
to go and join a place where he is likely to be treated with a greater degree of fairness
(Cristofaro, 2017). This assignment engages in a detailed analysis of the type of biases that can
find manifestation in a work environment. It discusses specifically, three types of bias that can
surface in the workplace, and intersperses the discussion with mention about the role of over-
confidence in decision making. The essay concludes with a number of recommendations as to
how such biases can be avoided.
When discussing the matter of bias in the workplace, it is first important to understand
the types of bias that can emerge in a workplace environment. To begin with, people can be
biased against each other on grounds of religion, race, sex, caste, creed and political views or
even social standing for that matter (Akkermans, H., & van Oorschot, K. E., 2016). Favoritism
can also play a role in generating biased decisions on the part of the management or leadership of
a particular organization. Biases can, not just be developed against individuals and groups but
also against the types or categories of work that are performed by employees in an organization
leading some projects to be rejected and other projects to be passed by the organizational
leadership (Jalai et al., 2019). Bias can be a learned bias, and it can also be something that is
acquired by an individual over time. All in all, developing bias is not good for an organizational
setup as it is something that can keep a business organization from moving in the forward
direction. The concept of bias is something that can be best understood when discussing three

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possible business scenarios that are affected by the same, more of which is discussed in the
section below (Costa et al., 2017).
Overconfidence in managerial decision making is a significant problem and it is caused
because of three main factors namely, the overestimation of a problem, over-precision and
generalizability among other things (Luan et al., 2019). The person who engages in
overconfident decision making is an individual who more often than not fails to take into
consideration the needs and the opinions of other people. At times a biased individual is also
capable of being approached in the way by which he or she approaches a business matter or
situation especially from the perspective of leadership (Weber, 2018). The following section will
discuss three important heuristics that are connected to biased decision making in a managerial
setup and the way by which these heuristics find manifestation, the dynamics that are assumed
by the heuristics etc.
The term heuristic refers to a mental process or a strategy that is followed by a human
being or even an animal for that matter, in order to form a judgment or to make a decision. The
three types of heuristics that are seen to have an impact on bias and decision making in a
managerial setup are the heuristic of availability, the heuristic of representativeness as well as the
heuristic of adjustment and anchoring (McManus, 2018). All the three heuristics tend to come
into play when deciding what to do or not to do to ensure the growth and development of an
organization, and bias is something that is influenced in a workplace by these forms of heuristics
as well (Belle et al., 2018). A managerial decision can turn out to be biased if it is taken based on
the information that is available at hand instead of waiting for full facts and information on the
situation to be provided. In this situation, the manager who ends up taking a biased decision is
more often than not, not at fault as business decisions often have to be taken in a limited span of

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time, and in most cases managerial cannot wait for the full facts on a given situation to be
provided to them before they can take a decision on a particular matter (Hermalin, 2018). They
have to judge a given business situation and immediately take a decision based on the facts that
are made available to them, and in this sense the decision that they take ends up being of a biased
nature (Foley & Williamson, 2019).
Representativeness can also lead to bias in the decision making process. This is what
happens when a manager assumes two situations or things to be more closely related to each
other than what they actually are. This type of bias in the decision making process is something
that can find manifestation when the recruitment and selection of candidates takes place. Prior to
engaging in the recruitment and selection of candidates into a business organization, managers
often take the decision not to recruit people who come across as over-confident in their behavior
or who have a bossy attitude. In the course of an interview, they may come across confident
candidates who are proud of their achievements and who like to talk about their
accomplishments quite glowingly. In this event the managers may misunderstand the confident
candidates to be bossy and overconfident and may refrain from selecting them to work at the
organization. This form of representational bias can prove to be quite dangerous for an
organization and is something that needs to be avoided. Representational bias in the managerial
decision making process can also be detected if the management decides that it is going to avoid
recruiting Muslim candidates or candidates who follow Islam as a religion. In the process of
doing so, they can end up rejecting people from more than one ethnic background, such as Jews
or Zoroastrian people who have names that are similar to the Muslim or the Islamic names (Sajid
& Li, 2019).

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The final form of heuristic that is seen to play a role in bias in the managerial decision
making process is the anchoring heuristic. Much like availability, this is also a heuristic that
entails managers or leaders to rely a bit too much on a specific piece of information in order to
arrive at a particular decision on something. In such situations, the managers tend to anchor on
one specific piece of information only when taking a decision on a subject, and in the bargain the
decision that they make or take tends up to be strongly biased or influenced, and in certain
situations, not very fair. In a case of discrimination at the workplace, it can be that an employee
of the organization is subjected to racist behavior on the part of a supervisor, and the supervisor
who is a tenured and long term employee of the organization has an upper hand. When the
management is approached to arrive at a solution on the particular case and to investigate what
kind of discrimination has taken place, it is possible that the manager relies solely on what is said
to him about the situation by the supervisor, instead of taking into account what the victim has to
say or what other witnesses in the given situation may have to say. In such a situation the
manager may be biased towards the supervisor given the fact that this is a person who has been
working at the organization for a long time, and can choose to rely on the words or the
information that is provided by the supervisor, anchoring on this piece of information and taking
what may be construed as an unfair decision on the subject matter. Anchoring is one of the worst
possible instances of bias that can arise at the workplace. Like availability, this is a heuristic that
leads a manager to take a biased or unfair decision simply because there is too little that is take
into consideration for the purpose of making a fair decision. Biased decision making is definitely
facilitated or brought into play when the heuristic of anchoring is deployed for managerial
decision making (Sajid & Li, 2019).

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None of the heuristics that have been outlined and discussed above are worth supporting.
All of them are indicative of the fact that managers can take biased decisions in the process of
running a business organization. Anchoring in particular is quite a problem and more often than
not it can lead to some really terrible decisions being taken against workers or employees of the
organization. In such instances the manager or the leader decides to consider very little when
taking a decision and the position of the employee who is awaiting a fair decision turns out to be
quite precarious.
Thus, biased decision making in an organizational set up can definitely occur by putting
to use the three heuristics that have been mentioned above. Bias is never justified in
organizational decision making, given that it can greatly hamper the progress and development
of the business organization.

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