Effects of Social Influence, Persuasion, and Risk Taking

Social Influence In business most decision that guide the performance of an organization are made by a group of employees that use decision making techniques to develop strategi c decisions that benefit the organization. In some cases, those decision makers are influenced by protocols, persuasion, and the effects of social norms to make decisions that result in negative outcomes that can cripple the organization. T he following scenario demonstrates how social influences can effect decision mak ing negatively. Trouble in the Workplace On a hot July day Phillip, an equipment operator working at a government facilit y, arrived at work. Phillip had been off work for three days, reportedly due to illness. Brad, Phillips boss, assigned him to a lower position, in an effort to maintain the continuity of the work force. Phillip was upset, feeling that he wa s being punished for missing three days of work and confronted his boss about be ing assigned a lower position assignment for the day. After listening to Phillip his boss reassigned him to a billet, commiserate to his grade. The employee tha t was working in that billet was of lower grade and was appreciative of the oppo rtunity to work in a higher position. As the day progressed, the Phillip and Bar t began to have problems working together. The lower grade employee, Bart felt t hat Phillip was punishing him for stepping up and working in his absence. Philli p felt that Bart was upset because he was back and Bart had to move back to his previous position. Both men began to argue loudly, drawing the attention of othe r employees throughout the facility. When Brad showed up to defuse the situation several employees approached him and stated that they heard Phillip make a deat h threat to Bart. The supervisor separated the two employees and began his infor mal investigation into the incident. After receiving several statements from oth er employees, the supervisor discovered Phillip had possibly threatened to kill Bart and had thrown his hard hat at Bart during the argument. The supervisor qui ckly informed the facility director who directed both employees to go home until farther notice; they were placed on administrative leave pending a formal inves tigation. The director solicited advise from his supervisors, of the six, three thought that a deeper analysis of the possible causes were needed, and two thoug ht that the death threat was so egregious that termination was the only course o f action. In their discussion of how to handle Bart four supervisors believed th at Bart was the victim and Phillip the aggressor, while two believed the opposit e. Based on the input from the supervisors the director made the final decision by himself. Bart was called back to work a week later and given a seven-day susp ension. For his actions during the incident, Phillip was terminated, pending a f ormal review of the case by the Resident lawyer of the facility. The facility manager called all of his supervisors in to discuss the situation a nd possible courses of action. Each supervisor recommended differing methods for handling the situation. The six managers decided to reduce Bart s suspension to thr ee day, and four supervisors wanted to continue the termination of Phillip. Whil e the attorneys were processing the termination, Phillip remained on administrat ive leave receiving full pay and benefits. Six months later the government s attorne ys recommended that Phillip be offer another opportunity to work, because if Phi llip fought the termination there was a strong chance that the government would

lose the case. Eventually Phillip returned to work without being suspended or te rminated and Bart served his three-day suspension and returned to work. The above scenario demonstrates how social effects can lead to decision that are counterproductive and divisive. Challenges to Sound Decision Making Being in a position of authority is challenging to ethical and sound decision ma king. Leaders sometimes focus on what is good for the organization or the corpor ate culture rather than what is an ethically sound decision. According to Nonaka & Takeuchi (2011), experiential knowledge gives a leader the best tools for dec ision-making. Knowledge gained through experience has been important to good lea ders knowing how to handle decision-making situations. Biases and Risk Decisions that involve risk should be evaluated differently. According to Schrif t, Netzer, & Kivetz (2011) in decision involving risk, such as large purchases, unskilled decision makers mitigate the risk by attempting to simplify the proble m of denigrating the alternatives. As in the scenario, when the director was fac ed with the decision of what to do about the issues he decided to mitigate the r isk to the staff by terminating the employee. Whether his decision was based on the input of his supervisors or his biases, his decision was not well developed. Maule & Hodgkinson, 2003), evaluated the perspectives of behavioral decision ma king, as seen in the scenario, and concluded that human judgment and decision ma king is clouded by errors and biases. Furthermore, their study shows that decisi on makers the use of heuristics, simple modes of reasoning, have the ability to flaw the perceptions of the decision maker to a point where judgment is based on their interpretation of the decision opportunity. Mistakes of Leadership In the scenario, the management team made several decisions based on bias, risk, and heuristics that resulted in an unfair labor practice. The leadership should have been allowed to explore the root causes of the situation. As with any prob lem, before a decision matrix can be created decisions team should develop oppor tunities and alternatives to help in interpretation of the situation. Though the management team discussed the situation, the ultimate decision was the Director s and his decision did not reflect the opinion of the team. The organizational p rotocol at the time was to send employees involved in physical confrontations ho me for the day. This is a situation where protocol influenced the decision proce ss, had the employees remained and were interviewed by their supervisors, inform ation pertinent to the scenario would have surfaced. Phillips parents were killed three days earlier in a car crash and he was making funeral arrangements without the knowledge of his fellow employees. The leaders hip of both employees failed to properly evaluating the situation prior to devel oping a decision. Three areas should be defined prior to developing a decision i n uncertain situations, what are the alternatives the outcome of the decisions ( how will they effect the employees and the organization?), and the benefit that accompanies each decision, (Evans, 2010). Social effect Miscues In addition to not fully evaluating the situation before forming a decision the management team fail victim to the heuristics of the social culture of today s socie ty. When the director requested input from his supervisors, two supervisors and the director felt that a death threat was something that must be taken seriously because of the current social climate of employees returning to work and killin g fellow employees. This form of flawed risk analysis, according to Evans et Al, risk analysis examines the impact of uncertainty, at no time did the management team attempt to examine the risk associated with terminating an employee based on threats that were not verified as true, (2010). Persuasion It can be assumed that persuasion did not influence the directors decision. That assumption would be false, the director had obvious biases towards supervisors he had known the longest. His decision were backed and supported blindly be thos e supervisors that had worked for him the longest. This form of bias serves to a lienate the junior supervisor and create an environment where true team develope

d decisions cannot be made. In conclusion, the scenario discussed was an actual case, two years after the c ase the two employees sued the government for unfair labor practices and won. Ba rt was awarded the monetary damages because he was the only employee that was re primanded. Manager and management team must understand the decision-making tools do not only apply to mathematical analysis of decision situation but behavioral decision also.

Reference Evans, J. (2010) Statistics, Data Analysis, and Decision Modeling, Prentice Hall Maule, A., & Hodgkinson, G. P. (2003). Re-appraising Managers' Perceptual Errors : A Behavioural Decision-Making Perspective. British Journal of Management, 14(1 ), 33-37. doi:10.1111/1467-8551.1401007 Nonaka, I., & Takeuchi, H. (2011). The Wise Leader. Harvard Business Review, 89( 5), 58-67. Schrift, R., Netzer, O., & Kivetz, R. (2011). Complicating Choice. Journal of Ma rketing Research (JMR), 48(2), 308-326. doi:10.1509/jmkr.48.2.308