Each of us has a schema, a collection of ideas, experiences, and associations that we bring to a situation, and we have a tendency to open ourselves far more readily to input that fits in easily with what is already there. This means that information-gathering, an important part of the decision-making process, can be skewed in ways that harm the process. At the most primitive level, when I own a red car, I see red cars everywhere, causing me to believe that there are now more red cars on the road. That is not going to affect very much, so it's not a problem. However, if I am a manager, and I have recently read an article on wastefulness in the production process, if I need to cut costs somewhere, that is likely to be my focus, possibly causing me to miss some more important aspect of cost-cutting. So, selective perception can harm the decision-making process, cutting us off from observing viable alternatives.
I should say, on the other hand, that selective perception serves us well in many ways, since it helps prevent us from being "flooded" with too many perceptions at the same time. We cannot possibly take in everything in the world around us, so selective perception does act as a handy filter.
A good manager will have some awareness of the phenomenon, surround him or herself with those who can act as a corrective on the skewing of input, avoiding the harm in surrounding oneself with "yes men."