How can organizations effectively manage both risk taking and escalation of commitment in the decision-making behavior of employees?

Risk taking is when a person is willing to accept greater potential for loss, also that person tolerates greater uncertainty and are more likely to take risky decisions. Escalation of commitment is when a person tends to commit resources to a failing course of action.

In order to effectively manage risk taking, organizations should teach their employees properly how to act under pressure, and when it is good to take a risk and when it is simply reckless. Organizations can also reduce or eliminate punishments for making mistakes, because with the punishment the employees are always scare and always play safe.

In order to manage escalation of commitment, organizations should teach their employees, when is a good time to keep trying and when it is right to stop committing to the same action because better results are not possible, they should also split responsibilities for decisions so a single person won’t be capture under the temptation of full commitment. 

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