Carter’s Decision-Making Process

There are multiple weaknesses in Carter’s decision-making process. When we have look at the Financial data, the company was recovering by October 1975, he could have requested to adjust from anchoring bias of 15% downsizing and could have focused on the idea of sustained growth.

We group considered downsizing based on lack of future growth in component people and seniority. Steven gives a suggestion to measure employee’s potential and seniority which leads to anchoring bias. Further he considers that senior employees might go early retirement showing representative bias which is not fair.

The group is totally ignorant of the firm’s paternalistic culture, Carter ignored the risk of employee’s feeling loss of morale. He also did not include Brown in the group even though he had maximum experience with the company. He could have played the role of devil’s advocate and helped the group take a better decision. They could have included Jack in the group to avoid overconfidence bias as he was the person who knew about the audit process in detail, he could have played the role of Paul from carter racing case where as Steven plays the role of Tom here.

Steven came up with a good idea to hire more capable people from another sister department. But instead of focusing on finding capable people and then downsizing he went into anchoring bias that to hire capable people they can downsize 48 instead of 43 now.

The PAS system was not structured to rank employees, as we see Attachment 1 and 2, it only identifies core competencies and areas of development. It is not helpful to find out the low performance employees. It is also very risky to sample on a dependent variable, it might be possible that Only Good and well performing employees submit the results to PAS whereas poor performing employees never submit anything on PAS. Using results of PAS system leads to confirmation bias. It is like Tom from Carter racing providing no correlation between temperature and gasket failure. The audit process also creates a Illusion of transparency bias as things are not clear between subordinates perceptions of performance and managers evaluation.

Carter is a victim of availability bias due to his experience of firing employees, he gives too much control to Steven. Just because Steven was performing better on other task Carter fell into anchoring bias and did not consult his direct subordinate Brown. He kept Brown after demoting is also like giving more importance to loyalty than his long-time decision which is actually following escalation of commitment.