I am currently taking a business management class to help enhance my soft skills to prepare for opening my engineering firm in the near future. One of the assignments involved writing a short essay about decision-making. The following blog post is an adapted version of that essay where I share my thoughts about decision-making at civil engineering firms.
Decision-making is a major aspect of being a manager or business owner. However, managers tend to have a limited amount of time to spend on making decisions. To use their time more efficiently, many managers make routine decisions based on what has worked well in the past. This type of decision-making is called programmed decision-making. In contrast to programmed decision-making, nonprogrammed decisions are those that require more thought and information. The decision-making process for both programmed and nonprogrammed decisions can be compromised by poor managerial performance (Bright et al., 2019). This is because managerial decision-making can be affected by overconfidence, the lack of information required to make a sound decision, and the “appealing to tradition” logical fallacy (Bright et al., 2019). The following essay will discuss how each of these decision-making pitfalls can affect a manager’s ability to create value within an organization, particularly civil engineering firms.
Research has shown that people who have a fixed mindset, which means that they believe intelligence is unchangeable, are more likely to be overconfident in their decision-making. Overconfidence can hurt programmed and nonprogrammed decision-making. According to Johnson and Fowler (2011), overconfidence can lead to faulty assessments, unrealistic expectations, and hazardous decisions. This is because people, including managers, who have a fixed mindset believe that they must prove their competence to others. This overconfidence can cause such managers to perform poorly because they may not seek out the information or expertise required to make the best decision for their team. One way this manifests itself in civil engineering firms is during the proposal/budget development phase of a project. A project manager may be overconfident in their understanding of the time it will take to complete a project and make budget decisions without consulting their team. In reality, they may not understand the resources and time it will take to complete tasks they are not engaged in regularly. For example, a project manager may grossly underestimate the amount of time it takes to perform the geospatial analysis required for a project in their proposal to the client. Failure to involve the geographic information systems (GIS) team in the proposal process could cause the firm to go over budget on the project and reduce its profit.
Another reason for poor managerial performance in the decision-making process is a lack of information. Almost every decision is based on information. In the case of nonprogrammed decisions, that information may be comprised of experience. Managers might also need to make more impactful decisions based on outside information or others’ input. Trusting the wrong information can lead to making a poor decision. Similarly, putting too much weight on the first piece of information received can lead to poor decision-making (anchoring bias). Finally, an overabundance of information can lead to poor decision-making because too much information can make it easy for a manager to lose sight of the big picture. One way to avoid making poor decisions due to a lack of information is to generate alternatives and discuss the potential consequences of each alternative with others. It is often easier to obtain feedback on concrete ideas.
Finally, appealing to tradition by default can result in poor decision-making that can affect a manager’s performance. When a manager makes a certain decision because “we have always done it that way,” they are not considering current market conditions, new regulations, or new information that may reveal a particular viewpoint. This is probably the most common decision-making pitfall in the civil engineering industry. Civil engineering firms are often resistant to change even when it comes to pricing structure. This is particularly true of mature firms. As a result, many civil engineering firms are facing a labor shortage because they cannot pay competitive wages (Reid, 2023). Continuing to learn and adopting a growth mindset can help managers minimize the chance of making a poor decision based on the “appeal to tradition” logical fallacy. A growth mindset refers to the belief that one’s abilities and intelligence can be developed and improved through effort, learning, and perseverance (Johnson and Fowler, 2011). A growth mindset can improve decision-making because managers with a growth mindset tend to see challenges as opportunities for growth rather than as threats. In addition, managers with a growth mindset will embrace feedback and are more likely to persist in the face of setbacks or failures.
How we can make better decisions as civil engineers
Holistic decision-making can significantly enhance managerial performance by providing managers with a more comprehensive and nuanced understanding of the factors influencing their decisions. This approach involves collaborating with others, generating creative solutions, and considering multiple alternatives when making a decision (Bright et al., 2019). Holistic decision-making involves considering various factors, including potential risks, trade-offs, and unintended consequences. By considering these factors, managers can make more informed choices for their teams. Holistic decision-making also helps in developing a long-term perspective because managers are encouraged to consider the potential future impact of a decision. By considering the long-term consequences of decisions, managers can avoid short-term fixes or temporary gains that may undermine the company’s ability to compete in the future. This forward-thinking approach contributes to the organization’s resilience, adaptability, and long-term success. In addition, holistic decision-making integrates ethical considerations into the decision-making process. In this way, managers can make decisions that go beyond immediate financial or operational considerations to evaluate the moral, social, and environmental implications of decisions. Finally, holistic decision-making encourages innovation and creativity. By exploring various perspectives, alternative solutions, and unconventional approaches, managers can uncover new insights, opportunities, and breakthrough ideas. In this way, holistic decision-making fosters a culture of curiosity, open-mindedness, and continuous improvement.
Sources:
Bright, D. S., Cortes, A. H., & Hartmann, E. (2019). Principles of Management. 12th Media Services, 2019.
Johnson, D., Fowler, J. The evolution of overconfidence. Nature 477, 317–320 (2011). https://doi.org/10.1038/nature10384
Reid, R. L. (2023, May 1). Why US civil engineering firms face a labor shortage. American Society of Civil Engineers (ASCE). Retrieved June 23, 2023, from https://www.asce.org/publications-and-news/civil-engineering-source/civil-engineering-magazine/issues/magazine-issue/article/2023/05/why-us-civil-engineering-firms-face-a-labor-shortage