The Role of Managerial Heuristics in Organizational Decision-Making and Beyond

Managers making decisions in organizations commonly face the challenge of finding satisficing solutions to complex managerial problems. Managerial heuristics are simple, adaptive rules that managers use to make such decisions in organizations, but current literature on heuristics has predominantly stayed at the individual level of analysis. This paper reviews 70 recent studies on the role of managerial heuristics in organizational decision-making to describe the general role of heuristics in organizations. We contribute by bringing previously disconnected studies together and showing that managerial heuristics make organizational decision-making more efficient through three mechanisms: 1) filter heuristics narrow down the set of potential solutions during the alternative-generation phase of decision-making, 2) pinpoint heuristics make the evaluation and selection phase more efficient by guiding decision makers to find one satisficing solution to the problem at hand, and 3) heuristics, in general, reduce effort required to establish decisions, mainly by considering a single criterion. We also contribute by focusing attention to how managerial heuristics that are shared at the organizational level are related to a wide spectrum of managerial tasks beyond decision-making, ranging from communication, coordination, and monitoring to strategy and process design.