Escalation of Commitment

“Imagine you are a Consultant to an Organisation. Write a Report to the Chief Executive outlining the dangers of Escalation of Commitment and how these dangers may be avoided”

Contents:

1. Executive Summary

2. Introduction

3. Stages of Escalation of Commitment

4. Causes of Escalation of Commitment

4.1 Psychological

4.2 Social

4.3 Economic

4.4 Organisational

5. Dangers of Escalation

5.1 Entrapment and Economic

5.2 Social

5.3 Economic

5.4 Organisational

6. Measures to Deal With Escalation of Commitment

6.1 Better Planning

6.2 Alternative Options

6.3 Share Responsibility

7. Conclusion

8. References

1. Executive Summary:

Escalation of commitment is an extremely relevant issue to any organisation which follows a certain project or course of action. Escalation of commitment is defined as “persisting with a course of action beyond an economically defensible point” (H. Drummond, 1996, pg 1,) when the decision to continue with a project should “be based solely on future returns of the additional expenditures” (S. Fox, A.Bizman & O. Huberman, 2009, pg1). Before an escalation of commitment situation arises, there are normally three preceding features: a significant amount of resources are invested, there is negative feedback and the decision maker has the option to continue with the project or escape (Ming-Hong Tsai and Maia J Young, 2010, pg 1).

There are four main causes of escalation of commitment: psychological, social, economic and organisational. Each of these causes varies, focusing either on the individual decision maker or the organisation as a whole, with each of these causes offering various dangers. One of the key dangers of escalation of commitment is that ultimately, the organisation will waste money on a project that is going to fail, when they could have escaped from it early on and saved money. Another danger of escalation of commitment is that of entrapment, where the organisation gets so caught up...