Behavior

When companies make irrational decisions.

Back in 1985, when the Montana power company made irrational decisions for a major rate hike in utilities, they had to appeal to the district court to have it requested upon the public. The five directors were reelected for three-year terms amidst of criticism from audience members who felt the directors were out of touch with reality.

A keynote speaker said the company was a victim of irrational policies and regulatory theories that were tolerated in better economic times which was at the time intolerable due to the poor economy and also having customers pay for new buildings that were not needed at the time for the power company.?

Half of the residents were at least over 65 years of age and on a fixed income of some sort. The protestors were there to pinpoint that the raise was only to benefit the new director's salaries and not by having new buildings for the company.

In psychology, the term ” irrational behavior is decided because the company is not listening to reasoning, logic or common sense. The company is demanding a need to be taken care of at the time of the irrational behavior. The Montana power company was going with the board’s emotions (of what they thought was right for them at that time) and not thinking things through which leads to irrational behavior.

The above scenario was easily resolved by not having a rate increase put upon the residents until there was a better economy and the directors did not get raises until they had served three more years on their new contract.

Recently, there were drag queens dressed in nun attire that was part of a group of LBGTQ who call themselves Sisters of Perpetual Indulgence who were supposed to be honored and receive an award at Dodger Stadium in Los Angeles because of gay pride month. This group began in 1979 in San Francisco by three gay men who call themselves the leading order of queer and transgender nuns.

Many protesters (around 2600) at the park spoke about how sad they were, the Dodgers made the decision to have the drag queens show up at the stadium when it is a family landmark. Former Los Angeles Sheriff, Alex Villanueva said he stood with others in principle and said he did not want to participate in the event even though he is a major fan of the Dodgers and has season tickets.

The decision was made months ago to have the Sisters of Perpetual Indulgence attend the Dodger game and have an award given to them during pride month but when fans started complaining that they would not be attending the game because of this group and many media outlets including religious organizations told people to boycott the stadium, the Dodger’s did not realize they had open up a can of controversy.

The Dodgers tried to get out of their contract with this group but it was signed months before. As one psychologist said, Dodger’s marketing group made a groundless decision (based on the trend at the time) that would affect fans' attitudes and started a backlash. The decision was made because the marketing team felt that since it is pride month everything was all right in celebrating this event. The psychologist said this decision was solely based on a fad at the time. Companies that bend to trends/fads usually don’t last long, mostly it is based on irrational thoughts.

As one protestor stated, why do we as a society have to celebrate people’s sexuality? Sexuality is your own business, just like your political and religious beliefs. You don’t see a heterosexual month, do you?

The companies that make illogical decisions usually do not listen to analysis. They will not listen to cogent explanations, or they want to fulfill a need right away, so they behave irrationally until the need is met.

The conclusion came out recently that the Dodgers were paid up to a couple of million dollars to have the sisters of Perpetual Indulgence at their stadium even though the Dodgers lost many season ticket holders because of this stunt.

A similar situation has unfolded with the company Abercrombie and Fitch, the sports apparel company. Abercrombie and Fitch has a video where two gay men are dancing and kissing each other also bearded women featured in their company advertising. The company has posters advertised in their window display at various locations including malls. Since this has drawn major criticism from families who shop at family-friendly malls and parents are demanding the posters be taken down.

“Two men kissing each other on a poster does not resonate with me,” said one parent. Another parent said they felt the poster should not be viewable within a mall atmosphere but it might be all right to see if the poster was in the store only with shoppers of the brand.

Abercrombie and Fitch have always pushed the line of homoerotic metaphors in their advertising since 2012. Abercrombie and Fitch newest marketing is on the male body whether it is heterosexual or homosexual. Years ago it was on the average white male with a muscular body, tan face, blond hair, and blue eyes.?

Abercrombie and Fitch now are mostly related to the gay male or lesbian female since their brand is aimed at that particularly group thus turning off other young buyers who use to frequent their stores. This is a perfect example of the far-reaching consequence that the store is alienating a majority of young people in favor of a minority group based solely on their sexuality.

The Dodgers and Abercrombie and Fitch situations are called over-heading behavior. The companies are bending to follow a fad/trend or current moment and they are hoping to cash out big time on the money returns. Psychologists say following the trend usually leads to disaster because it is, as it states, only a trend. And when the fad/trend wears off then people will remember what the company did and stay away from buying their products.

A great example is the Budweiser campaign with the actor dressed in female attire talking about Budweiser beer. The company has lost revenue in the billions because beer drinkers are choosing to satisfy their quench with another beer instead.

Over Optimism is another term psychologists use for irrational behavior and a great example is the advertisements to buy gold currently since the prices are good. Several companies were persuading their employees to invest in gold instead of the stock market since there have been predictions of recession and more job losses.

One psychologist said people lose their heads when faced with an uncertain future and go with an instinct instead of what is rational. The best advice is to sit down and look at your situation and see if investing in gold is the right choice for you at the moment.

The reason why many temping companies fold is because of multitasking. Psychologists say making too many decisions at one time without clearly thinking through your choices spells disaster. Many temp companies have closed their doors because they took on too many clients at one time and did not have the temporary workers to fill the jobs. The temp companies were hoping that their past temporary workers would fill the positions but found out most past temporary employees have found full-time employment somewhere else.

The company Radio Shack had made bad decisions by trying to keep buying electronic devices that were stuck in a particular time frame instead of investing in newer technology that the public was seeking. As an employee of Radio Shack said, “Radio Shack did not want to grow up and face what the public was buying.” He stated that his store was still buying old hand held games that for a while had customers but when the game broke or needed parts, none of the games could be repaired. So the customers had to thrown away the games, a lost investment for the customer. Radio Shack was accepting hand held games that were broken in exchange for a store gift card but soon the company was throwing away merchandise and had to discontinue the program.

Psychologists call this behavior by Radio Shack being attached to previous bad decisions and still making bad decisions based on past performance. Psychologists said Radio Shack made bad decisions in the past but should have realized that the public is changing and they should have stayed ahead of the curve and started looking at what the public was pursuing in order to keep their business alive. But bad decision after bad decision made them a poor company.

Cognitive Bias can lead to irrational behavior. Dan Teal had a substandard experience at an airline and told company executives not to fly on this commercial airline. Many of his colleagues felt the same way and soon word passed from this company to another company and so on. The word-of-mouth spread so quickly that everyone was talking how badly this airline had treated passengers, staff, and crewmembers, everything from racism, sexism, age discrimination, violence to passengers, etc. The reputation of the airline was so bad that the airline cease to exist.

Teal’s cognitive bias was because of bad experiences on the airline and this carried over into his thoughts about the airline and so did his colleagues. Psychologists warn, don’t let poor experiences control your behavior. And try not to be judgmental when it comes to experiences you cannot control. For instance, the flight path could be full of storms and the plane was not on target as it should have been. The airline stewardess could be a new hire this was her first flight and they are still learning the ropes of the job.

Instructors usually get decision fatigue and can make irrational decisions because they are staying up late to grade essays/tests or research papers. Some professors are working two to three jobs at one time to earn a living and by doing this, they are not fully awake when they are trying to teach a course or instruct a group of students on a project.

Psychologists say you cannot make good decisions when you are fatigued. The best advice is when tasks require thought then it is advised to schedule them at a time you are at your best energy level. Whether that could be either in the morning, afternoon, or night. Make sure you are fully alert when you have to make decisions. Also psychologists warn you not to medicate yourself meaning use drugs or alcohol to stay awake longer than you need to for a meeting or course. You cannot make rational decisions medicated and later on may regret the decision you made.

Another piece of advice, don’t ever be emotional when you are engaging in decision-making. Tim Myers was so enraged at his boss he sent him an angry email telling him what he thought of him one day while working. Lydia Williams stood up at a microphone at a big box store and told everyone what she thought of her coworkers instead of performing a karaoke number for karaoke night at the store.

These decisions lead to consequences of being fired or having regrets later if or when the employee might have to go back to their old company.

Michael Ramirez put off making a company decision because it might affect the long-term company goals. The decision cost him a prime spot in real estate that was being negotiated for expanding the company’s fortune. Psychologists warn that procrastinating too long has lingering consequences in the end. Set deadlines on what needs to be addressed. If you are having moments of hesitation then ask colleagues for help in deciding what would be best for the company.?

It is gloomy to admit but a Harvard study done in 2006 proved that men make the most irrational decisions over women. The study was done with economic students who provided a saliva test after playing a gambit. The men who had more testosterone decided to receive less money in the game instead of receiving nothing at all.?The end results were that men place a higher priority on how other men view them than women. The men would accept less than see a rival get ahead. Testosterone is linked to social dominance that economists said causes men to make irrational decisions.?

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