Mastering Management Roles and Decision-Making Biases

Management Roles and Functions

Interpersonal Roles

These roles are related to the formal authority and position of a manager within the company.

• Figurehead: A visible head who is required to perform routine duties of a legal or social nature.
• Leader: Responsible for the motivation, direction, and training of employees.
• Liaison: Responsible for linking the company with its external environment.

Informational Roles

These roles relate to the handling and processing of information.

• Monitor: Responsible for seeking and receiving information to develop a full understanding of the company and its environment; this role involves identifying opportunities and threats.
• Disseminator: Communicates decisions and information to other members of the organization.
• Spokesperson: Represents the department to third parties, transmitting information to the outside unit.

Decisional Roles

These roles are related to the organizational decision-making process.

• Entrepreneur: Initiates and oversees new projects, taking advantage of the opportunities and threats faced by the organization.
• Disturbance Handler: Acts as a problem solver to return operations to normal.
• Resource Allocator: Responsible for distributing company resources among various activities to help achieve objectives.
• Negotiator: Responsible for representing the company in its environment to obtain business benefits.

Common Cognitive Errors in Decision Making

Prior Hypothesis Bias

This occurs when a decision-maker holds a preconceived idea or believes they understand the relationship between two variables based on experience or intuition. They may ignore evidence that contradicts this relationship or specifically seek evidence to prove its existence.

Representativeness Bias

This occurs when results, events, or situations are generalized from very small, insignificant samples or even a single case. For example, thinking that five years of prosperity will always be followed by five years of crisis is not always accurate.

Illusion of Control

This occurs when an individual overestimates their ability to direct and control situations. An excess of confidence can prevent a person from accurately perceiving risk and uncertainty.

Escalation of Commitment

This occurs when a person continues to invest in a project despite receiving information that it is a failure, illegal, immoral, or unprofitable. This is often due to the perceived liability or commitment already acquired to make the project succeed.