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Running head: LEADERSHIP DECISION MAKING

Leadership Decision Making

Aashish Sthapit

BUS 345 Decision Making

April 26, 2020

Professor Rapadas

Westcliff University
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Abstract

This paper continues the content of the previous report and starts with a brief summary of the

concepts covered in the earlier CLA. Furthermore, it contains a descriptive plan to help the

financial department from being clouded by biases while making a certain financial or

investment decision. It also explains processes and strategies which can be employed to assist

employee make rational decisions during negotiations. Also, it contains a descriptive plan about

improving the overall decision making of the organization through various approaches also

ensuring an ethical practice decision-making practice.

Keywords: decision making, bias, leadership, ethics, negotiations.

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Leadership Decision Making

In the earlier CLA report, it has been decided to improve the quality of product and

service being offered by the company. The company will invest heavily in its R&D and market

research department to understand the needs and preferences of the customers and modify

products and services to meet the needs and preferences. After understanding the customer

behavior, the acquired information has been decided to improve the marketing communication

strategies to attract new customers and retain existing customers. The management team has also

used to implement a reward basis strategy to uplift the motivation level of the employees. This

strategy has been adopted to increase the organizational productivity and dedication level of the

employees as well. The earlier CLA also covered strategies to train employees to improve the

decision making of individual employees.

Improving Financial Decision-Making

The finance department of any organization are actually the back-bone of the company.

They are responsible of making investment and other financial related decisions. Employees in

the finance department might be a victim of various biases affecting their decisions. Biases while

making financial or investment related decision might affect the financial performance of the

firm which will have a long-term effect on the company. Some of the common biases affecting

financial decisions are:

a) Endowment Bias: This bias occurs when an individual will prioritize a pre-owned

investment. It is a human nature to dislike losses, and we over-value possessions which

are special to us[ CITATION Zha05 \l 1033 ]. For instance, if an opportunity to sell a

particular asset arrives, and the financial manager might be reluctant to sell the asset

because it had been fruitful in the past years. This is how the endowment bias occurs. To
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help financial manager make rational decisions, financial officers must evaluate the real

financial evaluation rather than valuing the emotional attachment with the decision or

asset in this case.

b) Anchoring Bias: The anchoring bias occurs when investment decision is heavily relied

by studying the historical data while making investment decisions[ CITATION Rob07 \l

1033 ]. This might create an attachment and anchor an employee to make the wrong

decision. To avoid this bias, I would instruct all the employees to carry out an extensive

research and run through their decision with superiors before making the final decision.

c) Overconfidence: Overconfidence happens all the time in our lives. When we are very

much familiar with a certain financial or investment decision, we tend to make the

decision without having a second thought. To avoid this from happening, the officers will

once again must be instructed to conduct proper research.

Negotiation Decision Making

Negotiation is an important part in any business, and if negotiation fails; a company

might face some consequences. Negotiation might take place to resolve conflict, persuade a

prospect, or mitigate threats for the company[ CITATION Ros91 \l 1033 ]. The nature of our

thinking and brain processes are likely affect our system thinking which might result in causing

errors. The common biases that occur during most of the negotiations have been briefly

discussed below:

a) False Conflict Bias: When two parties are involved in a negotiation scenario, both the

parties may develop certain pre-assumption about each other which usually lead toward a

lose-lose situation. The best outcome of any negotiation is to create a win-win situation.
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Without the existence of any relevant conflict between the negotiating parties, they might

assume a presence of conflict. This usually results in both the parties settling the least

preferred outcomes.

b) Overconfidence: Not only financial decisions, but overconfidence also ruins the

decision-making process during negotiations. When one party assumes that they

righteous or experienced beyond what is true, they seem to fail during negotiations.

When an employee is over-confident, he/she might not come prepared for the negotiation

which will affect his/her decision making skills [ CITATION Fox00 \l 1033 ]. On the

contrary, over-confidence can be also used to rule out other parties and convert the

negotiation into a grand success.

c) Framing Bias: Framing bias is mostly observed during internal negotiations[ CITATION

Ode09 \l 1033 ]. If employees get into dispute, the management might conduct a

negotiation to resolve such conflicts. However, when one party tries to frame or blame

the other involved party; it usually leads in dull outcomes which is not a fruitful practice

at all. This will create barriers within the organization affecting the overall organizational

performance.

Improving Employee Decision-Making

The following section contains strategies to be employed by the company to ensure that

every employees are able to make rational decision and feel empowered:

a) Workshops and Seminars: As a CEO, I will plan concurrent decision making

workshops and seminars to increase the efficiency of employee decision-making . Firstly,

I would conduct a two-day long seminar where I will invite experts to educate the
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employees about decision making, cognitive biases, and measures to avoid such biases.

After the employees get theoretical knowledge through these seminar sessions, I would

conduct work-shop which will include role-playing sessions. Various possible scenarios

will be created involving financial and negotiation decision making to evaluate decision-

making process of each employees. This will help the management understand the

lacking part, and provide essential suggestions to help improve employee’s decision-

making skills. Doing so will also help boost the confidence of employees during real

negotiation situations.

b) Performance Measurement: The performance of employees involved in decision-

making level will be evaluated with the help of the HR department. The officers working

at finance department will be evaluated on their rate of success while making any

financial or investment decisions.[ CITATION Dum91 \l 1033 ] Similarly, employees

involved in negotiation processes will also be evaluated in terms of achieving success

through the negotiation they are involved in. After the evaluation is completed, the high-

performers will be recognized and rewarded to increase their motivation level. Similarly,

it will help evaluate those employees who fall short while making decisions, and

concentrated counselling can be provided to such employees. In the case of employees

make the worst out of their decision, they can be warned or demoted. This will encourage

every employees to consider thoughtfully before making a decision.

Ethical Decision-Making
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Ethics play a great role during decision-making for any organization. If the decision taken

by an individual employee is unethical, it will affect the reputation of the whole

organization[ CITATION Moo12 \l 1033 ]. Since, employees are the ambassadors of the

organization, the CEO must be ensured that his employees make proper ethical consideration

while making decision.

Each and every employee must consider the possible consequences of their decisions

before taking them. The decisions they make must not serve their personal purpose, but rather

serve the best interest of all the involved stakeholders of the company. For instance, when a

company hires an IT specialist, his work must be used for strengthening the company’s fire-wall

rather than hacking the financial information of its competitors. Consequently, I will establish an

ethical guidelines fit for the company which will input the thoughts of every employees. After

establishing a proper ethical guidelines with the help of each and every employee, employees

will become more likely to follow these guidelines, reducing the chances of unethical decision

making and practices.

Conclusion

Hence, leaders are faced with very important tasks, and they need to live up to the

expectations of many others in an organization. The leader must be an active listener with

efficient critical thinking skills. As a result, every decision a leader takes in an organization has a

tremendous effect on the whole organization. After being promoted as the CEO of the

organization, the workforce will be working under my supervision which makes the decision

making more crucial than ever.

ALA (T) – Topic Video Review

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The given video talks about Corporate Social Responsibility (CSR) which is a common

organizational practice which aims to fulfill societal goals rather than specific business

objectives[ CITATION Jon80 \l 1033 ]. CSR comes in various form, it might be done through

philanthropy, voluntary activities, or any other ethically-oriented activities. Over the years,

organizations have been adopting various CSR strategies to promote its public goodwill, and

appeal customers to like their brand. While this being true, other companies are pursuing CSR

activities in order to strictly contribute towards social welfare.

Ethical decision-making is an important part of any CSR campaign. When a leader in an

organization maintains an ethical leadership style, the employees are likely to commit towards

any cause initiated by the company. Otherwise, the campaigns would become a big failure. Also,

companies must consider both short-term and long-term implications of their CSR activities. A

paper producing company wouldn’t gain much by afforestation related activities to replace the

damage done, but would be more relevant by supporting educational causes by providing

scholarships.
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References

Dumond, E. J. (1991). Performance measurement and decision making in a purchasing

environment. International Journal of Purchasing and Materials Managemen, 27(2), 21-

31.

Fox, C. R., & Levav, J. (2000). Familiarity bias and belief reversal in relative likelihood

judgment. Organizational Behavior and Human Decision Processes, 82(2), 268-292.

Jones, T. M. (1980). Corporate social responsibility revisited, redefined. California management

review, 22(3), 59-67.

Moore, C., Detert, J. R., Klebe Treviño, L., Baker, V. L., & Mayer, D. M. (2012). Why

employees do bad things: Moral disengagement and unethical organizational behavior.

Personnel Psychology, 65(1), 1-48.

Odell, J. S. (2009). Breaking deadlocks in international institutional negotiations: The WTO,

Seattle, and Doha. International Studies Quarterly, 53(2), 273-299.

Roberts, C., & Henneberry, K. (2007). Exploring office investment decision‐making in different

European contexts. Journal of Property Investment & Finance, 3(1), 22-29.

Ross, L., & Stillinger, C. (1991). Barriers to conflict resolution. Negotiation journal, 7(4), 389-

404.

Zhang, Y., & Fishbach, A. (2005). The role of anticipated emotions in the endowment effect.

Journal of Consumer Psychology, 15(4), 316-324.