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Lecture 11

Decision

Making and

Ethics

Dr. Bahareh Assadi

Decision Making

• (^) Decision making is a part of our daily lives, from simple choices to complex ones.
• (^) It involves gathering information, considering emotions, and managing biases.
• (^) Critical thinking, patience and practice can improve decision making.
• It involves trade-offs, risk assessment, and can have long-term consequences.

Did you Know Emotions Beat Logic?

• Emotions always beat logic
• Research has continually found that we use our emotions more than logic to make decisions.
• (^) The neuroscientist Antonio Damasio studied people who had brain damage in areas that deal with emotions and found that although the subjects could talk through the pro and cons of a decision they could not decide on a decision.
• (^) When helping people make decisions don’t get them to just think about the facts but get them to think about how they will feel when they make a particular decision and whether that emotion is stopping them making the best decision.

More is not always better!

• (^) If you want to make decision easier don’t give people too many options. Sheena Lyenger a professor at Columbia Business School examined what stopped people making decisions.
• (^) She put two displays in a shop that either had 24 different types of jam or 6 types of jams. The results showed that while people stopped more at the 24 jam display than at the 6 jam display, there were 6 times as many people who bought jam from the 6 jam display.
• To make decisions easier for people the quicker you can reduce their decision to 1 or 3 choices the easier they will find it to make a decision.
• (^) Selecting a movie from Netflix!

Decision Making in the Afternoon is Hard

• We all suffer from a phenomenon call decision fatigue. In other words the more tired you get the less likely you are to make good or difficult decisions.
• A 2011 study at Ben-Gurion University found that parole boards granted parole to about 70% of cases heard in the morning, but less than 10% of cases heard in the afternoon. This pattern held true regardless of the prisoners’ ethnic backgrounds, crimes, or initial sentences. As they got tired the board found it more difficult to consider every aspect of the cases and defaulted to the safe option.
• (^) The takeaway is if you or your team have a difficult decision to make consider it in the morning when people are at their freshest. - (^) Sleep on it!

• (^) In early 2017, Bev Beaton noticed a

new $29.95 charge on her TD Bank

statement.

• (^) When she called for an explanation,

she was told that she was in a new

account that required her to keep a

minimum monthly balance of $5000 in

the account.

• Beaton immediately disputed this

change, saying she had not made a

request to change her account type.

The bank employee she was speaking

to told her, “You must have.”

• The sales targets put the employees in an

ethical bind.

• (^) As one teller noted, “It’s a choice between

keeping my job and feeding my family... or

doing what’s right for the customer.” Another

teller, Dalisha Dyal, who worked at a

Vancouver TD for four years, quit because of

the pressure. “I was made to feel as if I was

committing a huge wrong for looking out for

the best interests of my customer over the

interests of the bank,” she said.

• It can be difficult to make a rational decision if

someone is pressuring you to make a

different decision.

• (^) One TD teller on sick leave noted that her manager stood behind her three times a day to oversee her work. - (^) “They just really stress you out and say, ‘You’re not doing good. I need you to do double the amount you’ve been doing.’ I couldn’t sleep. I’d be thinking... ‘What can I do tomorrow to try and get sales?’”
• (^) Another teller reported to CBC that she was put on a Performance Improvement Plan because she was falling below the sales targets. The plan involved coaching, and could result in discipline if her sales didn’t increase. - (^) The pressure was so great that “I have invested clients’ savings into funds which were not suitable, because of the SR [sales revenue] pressure,” she said. “That’s very difficult to admit. I didn’t do this lightly.”

• TD’s management, in response to the CBC report on the bank’s aggressive sales goals, said that all employees are expected to follow the company’s code of ethics.
• (^) TD spokesperson Daria Hill stated that every employee must “act ethically and... not allow a focus on business results to come before our focus on customers.”
• (^) Employees report that this makes it difficult to meet sales targets.
• (^) “I’ve increased people’s lines of credit by a couple thousand dollars, just to get SR [sales revenue] points,” said a former teller from a Windsor, Ontario TD branch. Doing this violated the Federal Bank Act.

Question

Do you have a criteria/process that you use to make important decisions? Do you take shortcuts with your decision making when you don’t have time? What do you rely on? How did you make the decision to study at SFU? What factors played a role in your decision making? Was a quick decision or a difficult one?

First, the decision maker must define the problem. If you calculate your monthly expenses and find you are spending $50 more than your monthly earnings, you have defined a problem. Many poor decisions can be traced to the decision maker overlooking a problem or defining the wrong problem. The decision maker then needs to identify the criteria that are relevant to making the decision. This step brings the decision maker’s interests, values, and similar personal preferences into the process, because not all individuals will consider the same factors relevant for any particular decision.

• (^) Because the criteria identified are rarely all equal in importance, the third step requires the decision maker to allocate weights to the criteria.
• (^) The fourth step requires the decision maker to develop alternatives that could succeed in resolving the problem.
• (^) The decision maker then critically evaluates the alternatives, using the previously established criteria and weights.
• Finally, the decision maker selects the best alternative by evaluating each alternative against the weighted criteria and selecting the alternative with the highest total score.

• (^) The rational decision-making model assumes that the decision maker has complete information, is able to identify all the relevant options in an unbiased manner, and chooses the option with the highest utility.
• (^) Most decisions don’t follow the rational model; people are usually content to find an acceptable or reasonable solution to a problem rather than an optimal one.