RUNNING HEAD: HARVARD DECISION MAKING Harvard Business Review on Decision Making A Term Report Presented to the Emergency Management Faculty California State University, Long Beach In Partial Fulfillment of the Requirements for the Course FCS 597, Analytical Techniques for Decision Support and Innovation By The-Khai Luu August 21, 2010 HARVARD DECISION MAKING 2 Harvard Business Review on Decision Making Task1. Even Swaps A decision to be made in my personal life is selecting a new vehicle to replace my 1999 Ford Explorer that has 185,000 miles as my primary work commute vehicle. I want a car that is safe, can be driven for at least ten years, and a cost of ownership at or under $450 a month because I am on a fixed budget. I have four alternates to evaluate: Volkswagen‟s Jetta TDI Sedan, Honda Civic LX, Volkswagen‟s Jetta Sedan, and Honda Insight (Hybrid). Below are Consequences Tables for the four vehicle alternatives along columns and objectives listed along the rows. Standard Objectives 2010 VW 2010 Honda 2010 VW 2011 Honda Jetta Civic LX Jetta Insight TDI Cost $24,680 $18,256 $19,457 $24,500 Engine 2.0L 1.8L 2.5L 1.3L Horsepower 140 140 170 98 Fuel Type Diesel Gasoline Gasoline Gasoline Emission OBD-II ULEV-2 PZEV AT-PZEV MPG 30/41 25/36 23/30 40/43 Financing 1.9%; 5Yrs 0.9% for 5 0% for 5 Yrs 0.9% for 5 Yrs Yrs Warranty 3 Yr Limited 3 Yr Limited 3 Yr Limited 3 Yr Limited 3 Yr Maint 3 Yr Maint Leg Room (F/R) 41/36 42/35 41/36 42/33.5 Rebates $650 Fed No Cost of Owning $5178 + $3735 + $3891 + $5013 +$1017 P/Year (Payment + $1319 + $0 = $1439 +$200 $1668 = + $200 = $6230 Gas + Maint) $6497 = $5374 $5559 HARVARD DECISION MAKING 3 Ranking Table Objectives 2010 VW 2010 Honda 2010 VW Jetta 2011 Honda Jetta TDI Civic LX ) Insight Cost 3 1 2 3 Engine 2 3 1 4 Horsepower 2 2 1 3 Fuel Type 2 1 1 1 Emission 2 4 3 1 MPG 2 3 4 1 Financing 3 2 1 2 Warranty 1 2 1 2 Leg Room A A A A Rebates $650 - - - Federal Cost of Owning D B A C P/Year (Payment + Gas + Maint) The first step would be to remove the even swaps (see Round 1). The fields shaded in gray have numerical values equal to each other and less than the leading Alternative and are removed as an even swap. Next, the values that had the lowest numerical value for each objective shaded in purple are removed. If there were enough fields that had gray and purple shaded areas, the objective would be removed from further evaluation. (ex. Leg Room). The cost of owning a VW Jetta TDI and Honda Insight Alternatives exceed the monthly maximum of $450 a month and is eliminated as an Alternative. I would cross out duplicate objectives like Cost, Financing, Warranty, and Engine; with the removal of the VW Jetta TDI and Honda Insight the following objectives would not apply and would also be removed (see Round 2). HARVARD DECISION MAKING 4 Round 1 – Even Swaps Objectives 2010 2010 2010 VW 2011 VW Honda Jetta Honda Jetta Civic Insight TDI LX Cost $24,680 $18,256 $19,457 $24,500 Engine 2 3 1 4 Horsepower 2 2 1 3 Fuel Type Diesel Gas Gas Gas Emission 2 4 3 1 MPG 34 29 25 41 Financing 3 0.9% 0% for 5 2 for 5 Yrs Yrs Warranty 1 2 1 2 Leg Room A A A A Rebates $650 Federal Cost of $6497 $5374 $5559 $6230 Owning YR YR YR YR $541 $447 $463 Mo $519 Mo Mo Mo Round 2 – Even Swaps Objectives 2010 2010 VW Honda Jetta Civic LX (Sedan) (Sedan) Cost $18,256 $19,457 Engine 1.8L 2.5L Horsepower 140 170 Fuel Type Gas Gas Emission 1 2 MPG 29 25 Financing 2 1 Warranty 2 1 Leg Room A A Rebates Cost of $5374 YR $5559 YR Owning $447 Mo $463 Mo HARVARD DECISION MAKING 5 For the final analysis I could make a decision using the Even Swaps or I could evaluate the value of the objectives using Benjamin Franklin‟s Moral or Prudent Algebra (Hammond, Keeney, Raiffa, 2001, p. 42-43). Prudent Algebra is devised as a list of “Pros” and “Cons;” Franklin suggested that he could spend several days weighing the argument for or against a decision but I will take only a few minutes to do my prudent algebra. Round 3 – Even Swaps Objectives 2010 Honda 2010 VW Civic LX Jetta Sedan (Sedan) Horsepower 140  170  MPG 29 25 Cost of $5374 YR $5559 YR Owning [$38.39] [$32.70] Round 3 – Prudent Algebra Honda Civic VW Jetta Pros Cons Pros Cons 16% better MPG Stronger engine Subcompact Compact No maint plan 3 yr Maint plan Good finance Better finance Better resale value Good reseale value $200 less per year $200 more per year HARVARD DECISION MAKING 6 For Round 3 – Even Swaps, of the two Alternatives, the only real variable is horsepower and subsequent cost of that feature. Evaluating per yearly cost of each Alternative‟s horsepower, I found that the Honda Civic costs $38.39 and the VW Jetta Sedan costs $32.70. Using the even swaps method, I would choose the Jetta Sedan because all things being equal and acceptable (cost of ownership, high miles per gallon, emission ratings, and leg room) for about $200 more you get a car that has 21% more horsepower, no cost maintenance for 3 years and better financing options than the Civic. Using Prudent Algebra, the results are inconclusive and I do not know if I could make a better guess than using even swaps method. Prudent Algebra might require me to add additional fields that the even swaps method did not consider as an objective such as resale value and independent ratings like Consumer Reports. Task 2. The Effective Decision The Classification. The first sequential step is for the effective decision maker to classify the problem (Drucker, 2001, p. 3); there are four classifications, identifying and applying the right one depends on determining if the symptom is of a fundamental disorder or a stray event. The personal decision at hand is which new car to buy. Deciding on which car to buy is symptomatic of the first classification – a truly generic event like an inventory decision for a business. The Definition. The second sequential step is ensuring that the definition is complete and is not missing components or objectives (Ibid, p.7). For the personal decision of buying a new car, I would define the ideal car as possessing the following objectives low cost of ownership, safety, efficiency, reliability, and style. To ensure that HARVARD DECISION MAKING 7 this definition is complete I would (a) check the definition against all observable facts, (b) test for signs that definition explains my personal need for a new car, and (c) be prepared to revise the definition after an influencing event occurs like having a need for more room with the addition of another family member. The Specifications. The third sequential step is defining clear specifications as to what the decision has to accomplish (Ibid, p.9). Personally, the need for a new car is to replace my 1999 Ford Explorer as the primary commuter vehicle and I would use the objectives from Task 1 and specify for each objective the boundaries needed to be met to select a new car. I have a laundry list of objectives from Task 1 but I am most concerned about the following objectives: (a) cost of ownership, which needs to be at or below $450 per month due to my fixed budget; (b) safety, engineered and tested to be safe for head on collision and side impacts; (c) efficiency; 25 to 35 miles per gallon capability with a strong engine; (d) reliability, designed well and core components last ten to fifteen years; (e) style, the car needs to look good and have functional and practical interior accessories. The Decision. The fourth sequential step is to make a decision based off of what is right versus what is acceptable (Ibid, p. 11). For my personal decision to purchase a new car, if I took the “right” approach in regards to the standards specified for each objective then my standards are not diminished despite the fact that I might compromise on a lower standard for a specific objective like gas mileage. I might compromise on lower mileage efficiency if the cost of ownership decreased 15% to 20%. However, if I began with what is “acceptable” approach in regards to the standards specified for each objective then I run the risk of giving up important objectives that would not be identified as part of the solution and not make the best decision overall. Lastly, the decision HARVARD DECISION MAKING 8 requires input from my wife, while I might be able to gather the facts up to this point, making a decision either the right decision or compromise thereafter, my decision would be conditioned on her approval and blessing. If I did not involve my wife in the decision making process I might have to sleep on the couch. The Action. The fifth sequential step is to convert the decision into action (Ibid, p. 9). The first sub-step would be to address the question, “who has to know of this decision?” Notice would have to be given to my immediate family, my CPA, auto- insurance representative, the car dealer, California DMV, and my co-workers. After the right persons and entities are notified, the next sub-step would be to ensure that the right person or persons have to carry it out; the right person would be me and anyone else that is legally required to sign the contract for purchase (after concluding that the right model with packages, etc. has been agreed to at the car dealership). The Feedback. The sixth and final sequential step is feedback (Ibid, p. 9). My decision to purchase the new car would be monitored by using quantitative and qualitative data sources. My family and I would be the first judge of the value of and worth of the new car and I would get qualitative data such as “I love the car, good choice” or “I hate the car, it‟s a wreck.” I would also periodically check with Consumer Reports, Kelly Blue Book, and other auto rating agencies to see if there were any red flags discovered or warnings about the vehicle purchased. I might go so far as consult with my auto insurance agent and query the safety record of other drivers that purchased the same vehicle and model on any problems with the vehicle. If enough negative qualitative and quantitative feedback is received concerning the purchase of my new car, I might take action to return the vehicle under California‟s lemon laws, work out a deal HARVARD DECISION MAKING 9 with the dealer to trade the car in for another model, consider joining a class action suit against the dealership or car maker, and or learn to live with it. Task 3. Humble Decision Making I own an eleven-year old Ford Explorer, SUV, with about 185,000 miles that runs well that I use mostly as a work commuter vehicle, and as a work truck with the option of transporting maintenance items for home improvement. My objectives for a new car are low cost of ownership, standard safety features, motor engine efficiency, reliability, and style. I have four alternate automobiles to evaluate; at this time my favorite is the VW Jetta Sedan. I would likely make this purchase sometime next year after paying off on personal credit card debt and saving up on emergency funds. I would most likely keep the Ford Explorer as a limited use vehicle for its utility and not trade it in for the purchase of the new car. Focused trial and error (Etzioni, 2001, p. 54) could help me select automobile objectives (auto safety, engine efficiency, low cost of ownership, etc.); I may not know where to start off hand so I might devise an outline for research and reference Consumer Reports, Internet search engines, ask family members on their opinions and so on. I might give myself a few weeks to get a strong list of objectives and periodically review progress every three days. With a strong list of objectives in hand, I might devise that the next course of action would be to specify boundaries for each of the objectives (good to excellent rating for crash tests, $450 or less per month on car payments, etc.). As applied, this strategy does not have a specific roadmap to follow and is dependent on feeling my way through the data and turning that information into actionable intelligence. HARVARD DECISION MAKING 10 Tentativeness is a strategy that I would use on a limited basis because it conditions the decision maker to make a decision but have options to revise the course of action and use another course of action in the event that the first decision failed or had limited success (Ibid). The closest analogy for this strategy is like test driving a vehicle, if objectives being equal for the selected automobiles, if I got a good vibe or liked the handling of the vehicle I would be prepared to commit to that vehicle choice or if I hated the vehicle I could easily rule out that auto alternative and choose another auto alternative to test drive until my opinion was favorable. Procrastination (Ibid, p. 55) as a strategy could be used in several ways when it comes to shopping for a new car. Having narrowed the list of viable auto alternatives, I could take a few days or weeks off on making a decision to re-evaluate my position. If I had already gone to the dealership, seen the automobile that I wanted, had the test drive, sat down with the sales representative, and started the negotiation – as a tactic I could step back and tell the sales rep that I wanted to think about it further. By doing so, I could be giving myself time to reflect on the legal terms discussed and evaluate if this was a good buy or a bad buy. I could also be using this tactic to get the sales rep to lower the cost of the auto knowing that the sale rep wanted to make a deal and time was my leverage. Decision staggering (Ibid) would be used in my decision making process. One of my conditions to buying a new car is that it would be sometime next year after I have paid off my personal credit card debt and built up sufficient emergency savings funds. This situation is dependent on my aggressive ability to pay down on credit card debt, limit impulse spending, and abiding to a budge t for the next twelve to fourteen months. HARVARD DECISION MAKING 11 If for some unforeseen situation like a need to take a vacation eight months from now, the cost of that spending might additionally delay the date to make the automobile purchase. Lastly, after meeting these two conditions in the near future, I could rationalize that it makes more sense to continue using my present automobile for another year and delaying the purchase until the following year. Fractionalizing (Ibid) could be used as a condition to purchasing the new car at a later date. I want a new car but I am not in a financial position to commit to the financed monthly payments until I pay off a reasonable amount of my personal credit cards, set aside three to six months worth of salary in the catastrophic event that either I or my wife loses their job, and so on. So pay off personal debt would be the first condition. The second condition could be securing favorable financing. The third condition could be a requirement to sell my present vehicle or trade the vehicle in for additional funds support. Hedging bets (Ibid, p. 56) could be used as a strategy for ensuring the best deal for a new car. Say for example I have decided on a VW Jetta Sedan, to use this strategy I could visit four car dealerships in the Los Angeles area and low ball each dealership with what I am willing to buy the automobile for and ask the sales rep to call me back if the terms are acceptable. I might not get a call back from any of the four dealerships or I might get two call backs and with counter-offers get a price I am satisfied with from one of the two VW dealerships. Maintaining strategic reserves (Ibid) would be used as a condition for purchasing a new car. As before mentioned, I would need to set aside three to six months worth of a salaries for an emergency fund before I would be comfortable to buy a new car. However, upon further evaluation maybe three to six months worth of salaries are not HARVARD DECISION MAKING 12 enough. Perhaps I need six months to nine months worth of reserves; in today‟s depressed economy many persons that lost jobs are still looking for work up to a year after being rifted or let go. Aside from emergency funds, maybe I am concerned about getting into an accident and losing wages so I might consider buying short term disability insurance to off-set lost wages. The reversible decisions (Ibid) strategy is not something that I would naturally consider; however, as applied it would allow me to purchase the new car acknowledging that I would take the appropriate measures in the event that the cost of ownership skyrockets. I am on a fixed budget and I along with the majority of Americans would find it difficult if the cost of gasoline cost more than $4.00 per gallon due to a myriad of natural, man-made, and technological hazards that hurt domestic or international oil production. The appropriate measures that I would use as a countermeasure for the increased cost of fuel would be to consider carpooling with co-workers and either use less gas per week sharing the driving duties with another co-worker and working on a 9/80 schedule and getting one day off, every other week, and thus spend a day off of the highway. Task 4. Interpersonal Barriers to Decision Making Restricted commitment (Argyris, 2001). My supervisor attends a monthly internal committee called the Central Safety Committee, attendees are our Agency‟s senior management, and at these meetings they discuss general safety topics, training results, and schedule specialized assessments to be performed by our Environmental Health and Safety (EH & S) Section. Restricted commitment is present in our Agency and as HARVARD DECISION MAKING 13 evidenced by monthly Central Safety Committee notes, lip service is paid as the norm towards general hazard avoidance and actionable decisions occur only after employees lose a finger or get killed. I cannot speak much about other sections, but for anything related to EH & S, restricted commitment is standard operating procedure, occurring somewhere between 75% of time. Often times the reason for restricted commitment is due to conflicting departmental objectives, diminished budgets, and procrastination and delay strategies, acceptable versus what are right attitudes, denial, and ignorance. My supervisor acknowledges that this local government is slow to change and requires firm but advocate style pressure. To minimize restricted commitment occurrence, we are limited by what management allows us to do. As a section we could win them over with proposals and reports on benefits of hazard mitigation; try a grassroots approach and get buy in from employee Union and professional committees; lastly we could work on winning over key Department Head managers that could be our advocates. Subordinate gamesmanship (Ibid, p. 70). After reading this case study, I can see how subordinate gamesmanship could be a barrier to decision making. No organizational leader wants to sit through a long meeting let alone a meeting that could be much shorter than it needs to be. Presenters, in any organization, cautiously learn to be tactful when presenting negative information and positive information too, sugar coating the data, and providing lip service as opposed to getting to the point. Personally, I have not observed that in the local government that I work for; however, I have seen it used at the Los Angeles County Operational Area, specifically during post exercise evaluations. For the local government that I work for most meetings follow the prescribed one or two hour format, they do get to the point, spend less time sugar coating the facts, and give the HARVARD DECISION MAKING 14 attendees the data (good, bad, or indifferent) and present a summary or recommended course of action to follow. As far as documenting subordinate gamesmanship at my local government I would say that it‟s on the low end between 25% of the time; for the Los Angeles County Operational Area I would say that because they represent 78 cities, special districts, and other jurisdictions the message is always carefully crafted, the meetings are longer than they should be, its‟ occurrence at the high end between 75% and 100% of the time. This barrier can be mitigated by having formal or informal rules known by all that subordinate gamesmanship should be minimized and that the Boss prefers the raw facts and recommended courses of action and if he/she has a question, be prepared to answer or provide further explanation. Less is more. Lack of awareness (Ibid, p. 72). I believe our local government might have similar results as indicated in the case study regarding executive behavioral characteristics. However, most of the employees have worked with each other for fifteen to twenty years and have taken the time to know each other professionally and personally. Turn-over is low because our local government has a good pension program that vests after five years of full time employment, the pay is moderately progressive, and the work rarely goes beyond eight hours a day. If I had to guess I would say lack of awareness is a problem that affects 20% to 33% of our supervisors and managers in their ability to communicate with each other and or understand each other. I would concede that employee awareness could be better than it is now and that could be achieved through professional development training and modifying annual professional and supervisory training to integrate self-evaluation instruments like the Thomas-Kilman Conflict Mode Instrument or the Leadership Effectiveness & Adaptability Description (LEAD) Self / Other HARVARD DECISION MAKING 15 Instrument. It would be a tough sell but Management could be sold on the idea of conducting three hundred and sixty degree employee performance review as opposed to the standard annual performance review between the employee and the immediate supervisor. Blind spots (Ibid, p. 76). Working for this local government it‟s quite transparent how subordinates feel about their supervisors. The world belongs to engineers; as a special districts specializing in wastewater and solid waste functions, the highest paid salaries go to engineers and up until about two years ago this local government predominantly promoted based off seniority versus competency and ability. Anyone that is not an engineer has limited job growth opportunities and usually hit their pay ceiling after 8 years of employment. As for the previous barrier, about 20% of management have blind spots and are unaware of how their subordinates feel about them. A majority of management knows that their subordinates do not have favorable opinions of them and of the organization. This organization can minimize the blind spots by speaking to employees rather than at them; by creating a shared vision where employees take ownership in their respective stations, foster employees to take initiative and find their own solutions, by management taking effort to mentor and help each person find their potential in the organization. Distrust and antagonism (Ibid, p. 78). At our local government we have a board of directors that represent 78 cities from Los Angeles County, they do not intervene in how the special districts operate, as was indicated by the case study; however, distrust and antagonism is present between blue collar, white collar, professionals, engineers, and management. I would rate the occurrence as being slightly higher than the before HARVARD DECISION MAKING 16 mentioned barriers, resting around 33%. In response to the downward trend in the economy, our local government‟s budget has decreased, and I believe the State swooped in and borrowed about fifty million from our reserves, and so for the he past three years, management has instituted challenges for departments to trim costs and reduce spending. Indirectly this program has uncovered employee abuses and several high-ranking employees have been terminated and others sought early retirement. Management could improve upon distrust and antagonism by giving employees incentives, rewards, and recognition for reducing costs or coming up with a solution to work smarter. Management takes a lot of employees for granted when they should acknowledge that the employees‟ success translates into the organization‟s success, and that a happy employee is more productive rather than an unhappy employee that is not motivated to do more than is required of him or her. Management could reverse the downward trend by taking the time to see the organization from the employees‟ perspective. Task 5. The Hidden Traps in Decision Making Anchoring trap (Hammond, Keeney, and Raiffa, 2001, p. 146). I believe anchoring affects about 25% of our local government. Some anchoring is very necessary – we use past performance as an indicator of trends and for predictive analysis for hazard avoidance. Management wants to know if enough money is adequately spent on various environment health and safety programs that mitigate the rate of accidents, injuries, or deaths. Our collective success or failure is measured by past performance. However, reliance on anchored data can have its negative consequences too; for risk avoidance and hazard mitigation the message has to be uniform regardless of the data improvements and HARVARD DECISION MAKING 17 the training has to be inclusive and regular to avoid complacent behavior. Anchoring affects mindset to the point that there‟s strong resistance to change. On a personal level, I would acknowledge what anchoring is, observe the workplace and identify how anchoring is applied and document it. Then I would present it to my supervisor and with buy-in develop a course of action to address the trap either on a limited basis, or section by section as a trial and error to evaluate if it can be applied department by department. Status-quo trap (Ibid, p. 149). The status quo trap affects about 75% of our local government. Our department managers and chief engineer are defined by status quo. But I do not fault them too much because often in our line of business the status quo is a better standard than what is in practice in the general public. Take the industry design specifications for thickness of cement walls for example, three to six inches is the standard whereas the status quo for our facilities is fifteen to thirty inches. Unofficially our standard is to build five times the accepted industry standard for most specifications to ensure the structure is strong and will not likely ever fall apart short of a 9.0 magnitude earthquake. Aside from building specifications, the status quo trap, was integrated into all policies and procedures, annual engineer promotion boards, employee benefits, cost of living adjustments, and selection of management. However, management has taken steps to change how we operate, in response to the depressed economy. To continue moving in management‟s direction, I would take effort to not emphasize status quo but rather list it as one of several factors, or one of several courses of action, or one of several costs, and so on. To avoid the status quo trap a probable mindset is to take on the persona of impartiality, indifferent to how things are done by standard operating procedure and offering unbiased solutions for any question or concern. HARVARD DECISION MAKING 18 Sunk-cost trap (Ibid, p. 152). For my local government there are several examples of sunk-cost projects. A decade ago our local government had about one billion dollars in reserves; then about five years ago coming to the realization that our primary landfill (the world‟s largest active landfill) was set to close in 2009-2010 prompted management to buy a landfill in Imperial County for about two hundred million dollars. Then the economy took a nose dive and debris tonnage to regional landfills decreased 25% to 50%. In response, our local government demoted 25% to 50% of landfill staff. In addition the technical solution to transport trash from our recycling centers in Los Angeles County to Imperial County by railway cars is spiraling out of control and past project deadline by one year. Our management is throwing money at the problem but cannot walk away from this two hundred million dollar investment. It‟s hard to gauge what percentage sunk-costs affect our local government; however, I can estimate that the dollar figure in expenses for these monumental projects cost about 400 to 600 million dollars. How can our local government avoid this kind of trap in the future? Cost sharing. There are many examples of other monumental projects that our local government has partnered up with to manage and or provide funds to develop. I don‟t have a solution for this sunk-cost project but I propose that in the future, project engineers set aside space in proposals to discuss and analyze worst case scenarios that could damage, delay, and threaten the project and offer up viable solutions to counter those hazards. Confirming-evidence trap (Ibid, p. 155). I cannot confirm, I would love to field test this, but I would estimate that my local government is prone to this trap about 50% of the time. As a feedback mechanism for any decision, seeking out and confirming corroborating evidence is part of the National Incident Management System (NIMS) HARVARD DECISION MAKING 19 Operational Planning P cycle that I teach for professionals and supervisors. Feedback is best obtained first hand but and through operational planning briefs; however, I had not put much thought on sampling and seeking out counter-opinion evidence that gives a real picture rather than the simple, uncorroborated data evidenced by the confirming-evidence trap. It‟s worth integrating into my instruction how this trap could give Incident Commanders misleading information and advise against seeking out the easy answer but rather sample from a diverse pool of sources. Framing trap (Ibid, p. 157). The framing trap manifests itself in our local government through state and federal government programs such as OSHA; I would estimate that we are susceptible to the framing trap about 25% of the time. Often times the law or regulation is vague, without clear guidance on how the employer is suppose to mitigate against hazards. Earlier this month I was faced with a framing trap situation: when to use locks versus tags regarding the Lock-out, Tag-out, and Block-out Safety Program. The answer is that it depends on the OSHA enforcement officer and your interpretation of the regulation as addressed to your specific piece of equipment and the hazard you‟re attempting to mitigate. The framing trap as applied to local governments‟ safety programs can be very costly and have wide disparities because the interpretation varies along with enforcement‟s understanding of the specific situation. To minimize the framing trap as applied to our safety programs, it‟s a good idea to meet with and know the local OSHA enforcement officer, coordinate a complimentary evaluation of your safety programs, and when in doubt consult with your legal advisor on the interpretation of the said regulation. By default, OSHA takes the conservative approach towards safety HARVARD DECISION MAKING 20 when in reality given the particular vulnerability assessment the correct application could be considerably less strict and cheaper for the local government. Overconfidence trap (Ibid, p. 162). I envision the overconfidence trap affecting our local government personnel during emergency situations, excluding routine business operations. In this emergency situation I believe the overconfidence trap affects emergency personnel about 25% of the time. The possible scenarios for this trap are underestimating the quantity of untreated sewer system overflow. The Incident Commander is encouraged to downplay the problem and quote a smaller spill size to avoid enforcement fines and penalties. Another possible scenario where the trap is present is the overconfidence of Incident Commander‟s in their ability to solve these kinds of problems and reluctance to ask for help. For our local government, mitigating the overconfidence trap is an ongoing task. My approach over the past four years is comprehensive emergency management training consisting of NIMS courses, internal / external exercises and workshops with all first responders, and special emphasis on supervisors and managers developing emergency incident action plans for the initial response and for the first operating period. Prudence trap (Ibid, p. 163). Normally I do not find fault with the prudence trap. I would say that our local government is affected by prudence trap 100% of them time. To error on the side of safety, we build a lot of tolerance and resistance into our buildings, that often exceed the safety precautions by five or six times industry standard. We do so knowing that it will cost more but we reassure management and the public that acts of Gods are the only instances where there will be a failure at our facilities. The poisonous gases will be contained and at most injure personnel in the immediate vicinity. However, HARVARD DECISION MAKING 21 the prudence trap could impact us in a negative way, such as spending too much on high end countermeasures to contain the hazards. Personally, I would say that we take a middle ground approach and do not have that problem. I have conducted comprehensive vulnerability assessments on our facilities, on an annual basis, identified facilities‟ vulnerabilities, and worked with the managers to reduce vulnerabilities. I know which hazards pose a higher degree of harm to our system. My facility threat assessments and vulnerability assessments are reviewed by local government department managers, local law enforcement, and Department of Homeland Security. Any additional things I might do to decrease the likelihood of this trap would be to provide awareness training for professionals and supervisors on an annual basis Recallability trap (Ibid, 164). I do not see this trap affecting our engineers whom are in the rear with the gear, but the recallability trap could affect our first line supervisors, whom are trained to be Incident Commanders for their area of responsibility. Most of them apply the recognition-primed decision making, allowing them to quickly size up the situation and develop an action plan for response. It‟s in this five minute window where the recallability trap could affect 20% of our Incident Commanders. I have personally trained all of our first line Incident Commanders, their immediate supervisors, and department managers on ICS 100, 200, 300, 400, 700, and 800. I have reviewed their facility standard operating procedures, and revised their department operation plans, and evaluated them in tabletop and functional exercises over the past three years. I have also coordinated after action reports and written after action reports on their real world incidents, so I have a good idea how they operate in the field. In my opinion our personnel are well trained and competent. Most of these incidents are HARVARD DECISION MAKING 22 resolved in less than four hours and the response cost is minimal. I am not concerned about mitigating against this pitfall. What I plan to do for this pitfall and all the other ones, is to review which ones are likely to degrade incident response and write an annex addressing how to mitigate against them. Task 6. When to Trust Your Gut Intuitive/gut instincts are a person‟s primordial or basic level reaction to stimuli. The source of the stimuli can range walking along a path and being confronted by a rattlesnake in the grass or safely reviewing a business proposal at your desk. As attributed to the evolution of the human brain adding parts from jellyfish, rats, monkey, etc and through our human senses (sight, hearing, touch, smell, taste, pain, balance, joint motion and acceleration, sense of time, temperature differences, and magnetic direction) our nervous system transforms that data into electrical impulses that our brain interprets, and as a result our brain sends signals to other parts of our body in reaction to the stimuli for a fight or flight reaction. We may experience a physical reaction and or our perception of the stimuli gives us the ability to make a decision – run away from the snake or pick up a rock and kill the snake, like the proposal or run away from the proposal. The intuitive/gut instinct may be correct, wrong, or a combination of the two. With a million experiences to reference over a lifetime or very little experiences because you‟re an infant, we can react differently to the stimuli, we can ignore the stimuli, and we can learn to apply other decision tools to arrive at another conclusion or to confirm our intuitive/gut instincts. The gambler‟s syndrome means taking “unnecessary risks to recover a loss” (Hayashi, 2001, p. 183). In my opinion, the gambler‟s syndrome is similar to men‟s risk HARVARD DECISION MAKING 23 adverse behavior but different in that as a syndrome, there is an aspect of operating with blinders on, ignoring other senses that are telling one to go into flight mode and stop endangering themselves further. Occupationally, I would say that our local government employees are more likely to experience gambler‟s syndrome and that number is 50%. Proportionally, there are more men that work here than do women, there are lots of occupational hazards onsite (industrial, hazmat, biological, chemical, electrical, etc), and the accident rates that we track often suggest the leading factor causing the accident is attributed to independent employee action. As an organization, the first step is to recognize the problem and then determine if remedial training can rectify the problem. Absent of training the best course of action is to counsel the employee and ultimately remove the employee from employment. Over-fitting the data “is our tendency to see patterns where none exist” (Ibid). Over-fitting the data can be a pitfall for the majority translating into employee lost time and decreased efficiency, and I believe this affects about 75% of our local government employees. Personally, I am well trained in analyzing data, conducting pattern analysis, and creating link diagrams; I got this training in the US Army as a military police officer and a military intelligence officer and yet my wife tends to see the patterns better than I do (attributed to her MBA from Pepperdine no doubt). Over-fitting the data, seeing patterns where none exist, is a similar reaction expressed by the Worried-Well – whom flood the hospitals worried about their contagion to H1N1 or salmonella after coming in contact with someone on the street that coughed. Through formal education and effective guidance from management, our local government might limit this pitfall; however, In my opinion it‟s to be expected that people will fall prey to this pitfall and the best thing HARVARD DECISION MAKING 24 we can do is to acknowledge the pitfall and remind employees to „stay on track‟ and not get lost spending time on undocumented problems or patterns. Revisionism occurs when “we frequently remember when we didn‟t trust our gut and should have, while conveniently forgetting when we were fortunate to have ignored our instincts” (Ibid, p. 184). This pitfall is not something employees talk about so I do not see examples of this in our office; however, if I polled a hundred employees I bet 50% of them will say that revisionism has affected them in the past year and 25% of them will say that it happens to them more frequently. Is this a pitfall to avoid or is it how our minds work to reassert that “you were right along” and with hindsight you‟ll trust your instincts the next time. I do remember the times that I ignored my instinct to do something, and that something was often done in reaction to strong feelings or emotions in the workplace like refraining from sending a co-worker a nasty email or replying to your boss when you‟re angry. Self-fulfilling prophecy occurs ”when we hire or promote someone, for instance, we consciously or subconsciously make extra efforts to ensure that person‟s success, in the end justifying our original decision but obscuring whether our choice was actually a good one” (Ibid). This pitfall affects about 50% of our employees; 50% of them are purposefully manipulated through our mentoring program and 50% of them experience this pitfall on their own. In my line of work emergency response training for public works employees, my supervisor encourages self-fulfilling prophecies or as he calls it “setting people up for success.” Each year I draft an exercise plan and in support of that plan I coordinate monthly or quarterly training, then I provide one-on-one meetings with key employees that might play a lead role as either Incident Commander or Command Staff. I HARVARD DECISION MAKING 25 will explain to them the tasks, conditions, and standards for their job in the exercise. A year later we have the exercise and department heads marvel at how wonderful the exercise was and how much the staff learned and so on. Perhaps its pitfall or it‟s our way of making the best outcome possible. How well do they do, having us coddle and hold their hands? They do pretty well in the field and I get to do the process over again each year for another batch of professionals and supervisors. Overconfidence occurs when “we overestimate our ability in just about everything– driving, being able to tell which jokes are funny, distinguishing between European and U.S. handwriting, and so on” (Ibid). I think that overconfidence affects about 75% of our employees, the other 25% know their limits and realize that their jokes are not that funny. Overconfidence in the work place can get employees injured and killed. Sometimes I insert this statistic into training sessions to get employees attention, I‟ll say: “according to the Bureau of Labor Statistics, in the state of California, in 2008 there were 465 occupational fatalities, 91% of the fatalities were men and versus 9% for women; as applied to men and women the leading cause of occupational fatalities was attributed to 36% transportation incidents, 20% assaults and violent acts, 15% contact with objects and equipment, 15% falls, 10% exposure to harmful substances or environments, so pay attention this training might save your life” (Unites States Department of Labor, 2010). Depending on the facilities statistics for the past few years I might also tell them that statistically their facility has less number of accidents per year; however, the types of accidents are consistent with leading causes of occupational fatalities. We mitigate against employee overconfidence, as it might make them more accident prone, with hundreds of different environmental, health, and safety training HARVARD DECISION MAKING 26 courses. We balance a fine line between supporting the employees and protecting the interests of management and the local government. Hayashi (2001) imparts some final observations on how to tap into one‟s intuitions: (1) Self-check (Ibid, p. 186). It can be helpful for decision makers to reflect on their actions and reflect on what went right, what went wrong, what‟s an alternate solution, etc. and perhaps the answer or decision is worked out. (2) Feedback (Ibid). Before a decision is made or after a decision is made, decision makers can benefit from having another qualified decision maker review the plan or situation and evaluate from their perspective; with more information or data on the course of action a decision or plan can be modified, tweaked, or left alone. (3) Quick decision making (Ibid). For the decision maker that acknowledges that half of their decisions are wrong, the task is to quickly acknowledge the decision as wrong, do not make the same mistake again, and over time have more right decisions than wrong ones. (4) Don‟t fall in love with your decisions / everything‟s fluid (Ibid). Leaders make decisions, ideally these decisions are the right ones to make but if they are not, the decision maker needs to let go of the first decision and apply an alternative until the right action is achieved. HARVARD DECISION MAKING 27 References Drucker, F., Hammond, J., Keeney, R., Raiffa, H., Etzioni, A., Argyis, C., Stryker, P., Hayashi, A. (2001). Harvard Business Review on Decision Making. Boston, MA: Harvard Business School Publishing Corporation. Unites States Department of Labor. (2010). Fatal Occupational Injuries in California. Retrieved from http://www.bls.gov/iif/oshwc/cfoi/tgs/2008/iiffi06.htm on August 20, 2010.
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