Assumptions in Management Decisions

Managers often make decisions based on assumptions (Lange, 2009). They derive these assumptions from traditions, experience, success stories, superstitions, and testimonies. However, sometimes they come to the mind of the decision maker directly. In this case, assumptions seem true and relevant to the situation even when they are untrue.

1) War is an example of a situation in which leadership assumptions to make a decision (Lange, 2009). Wars start mainly through information based on assumptions. In the past, people supported a mission for war without the knowledge of the underlying truth as to the political agenda responsible for the conflict.

An example is the America-Iraq war, in which political leadership put people into action for hidden reasons. The assumption for the war was the presence of nuclear weapons in Iraq. The decision was not right because the mission wasted resources and did not achieve anything.

2) In human resources, many managers use poor, unquestionable assumptions and data to make decisions. Human resources use assumptions in determining the connection between job satisfaction and productivity. Human resources managers make decisions based on the assumption of Returns on Investment to show that human capital adds value to the organization’s bottom line.

In addition, human resource managers use the assumption of shareholder value to show that they are creating value to the organization. Calculation of the returns on investment is a straightforward tool to use. However, despite its role in measuring the benefits of management programs such as programs for leadership development, it is essential to take care in determining the correct returns on investment figures.

Reference

Lange, B. (2009). “Decisions Made on Assumptions”. Retrieved from http://badeish.blogspot.com/2009/11/decisions-made-on-assumptions.html

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