Managerial Judgement: When Good Managers Make Bad Decisions

Abstract: Title: Managerial Judgment: When Good Managers Make Bad Decisions Author: Vincent B. Mashinji Supervisor: Anders Hiderstierna Department: School of Management, Blekinge Institute of Technology Course: Master Thesis in the Business Administration, 15 credit (ECTS) Background and Problem Discussion: “To err is human” once we realize that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes. Involving employees in organizational decision making has been advocated as one of the strategies to minimize cognitive errors in managerial decision making. But, can one leave/change job because the managers has made bad decisions? There must be no shared heuristic among managers and subordinates. Purpose: The purpose of this thesis is to determine factors, which contribute to realization of managerial cognitive errors during decision making among top level managers and operational staffs working with International Organizations in Tanzania. Method: Research methodology based on quantitative data collection and analysis approach, which considered the gathering of information using a self administered structured questionnaire. Data validation and analysis was done using SPSS 10.0 version. Theory: The theory considered various methods of decision making styles; it also looked at the concepts of heuristics emphasizing the three types: representativeness, availability and adjustment from anchor. Analysis: The analysis was mainly modeled around three major issues: demographic variations of study participants, decision making styles and heuristics variability among managers and their subordinates. The analysis basically focused on variables in relation to job positions. Conclusion: We conclude that for one to be considered for top level management position in an international organizations working in Tanzania; need be an adult over 30yrs of age with good work experience and a university graduate. Managers must be ready to decide, consult individual or delegate decision making. Therefore the preferred decision making styles between managers and subordinates include consult group and facilitate. We also conclude that the observed differences in heuristics are a source of observed multiple distrust and conflicts between the two groups. Managers and subordinates have shared approach to risky decision. Both managers and subordinates seek and averse risky decision equally. Even well informed laypeople have difficulties judging risks accurately and it is tempting to conclude that the subordinates should be removed from organizational risky-assessment and decision making processes. We also conclude that participants were risk averse with positive frame and risk seeking with negative frame.