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September 16th, 2016

Biases and Their Effect on Business

 

Biases are everywhere. Even when we know they exist and that everyone falls victim to them, they are a force that can’t be stopped.

They effect the decisions we make on a daily basis both in and out of the workplace. Because of this it is important to at least know they are there. The next step is to understand them and know what to look for so you are able to recognize them in your colleagues and tackle them as a team.

 

Bias Basics

To be a little more specific, biases are the unconscious tendencies that we seemingly all experience that influence the way we think, act, and view the world around us, as well as the people in it.

In day-to-day vernacular, bias carries a negative connotation. However, they do have their place and can be quite helpful because they enable you to make quick judgements and decisions with minimal cognitive effort. In situations where there may not be an abundance of evidence, this intuition comes in handy. They also function as a form of mental protection for you and those associated with you. But, as we will get into, that negative connotation is a concern to be taken seriously, as they can blind a person to alternate ways of knowing, perpetuate prejudice, or restrict consideration of certain options when making important decisions. 

The image below outlines the 10 biases that are most commonly found in the workplace, and the effect that they have on a company. 

 

 

Biases and Business

The more I learn about bias, and even though I understand that they are universal and a product of our unconscious, I also feel so sure that they do not affect me... even though I know they do! This is of course the insidious nature of bias and what makes them all the more difficult to mitigate.

Expanding on examples from the above graphic; consciously at an individual level, and explicitly through companywide practices, racism – which is an example of an out-group bias – is definitely not acceptable. However a Harvard Business Review article outlines how biases of this nature can show up in subtle ways and can have a devastating impact on those who are on the receiving end.

Consequences of subtle implicit biases are also difficult to get right because the perpetrator is typically unaware that they are causing an issue. On top of that, there is often a vehement belief that they would never act in whatever "ist" manner is being experienced.

In-group/out-group biases affect every level of a business that involves people. Everything from decisions on which clients your company works with, to hiring and promoting, to every day interactions in meetings and at the coffee machine. Malcom Gladwell also talks about this in his book Blink. His website has an excerpt that talks about appearance – in particular men’s height – and the unconscious associations – read bias – we attach to it.

This is unfortunate, because just like the evidence points to the existence of universal biases, there is also evidence that teams of people with varying backgrounds and perspectives often make better decisions and are able to execute them more effectively. 

On top of making snap judgements about those who fall into both your in and out-groups, biases are also particularly good at breeding misunderstanding and confusion among people who work together, even if they are in your in-group. This is caused by the overestimation of the extent that others think or view reality as you do, and holding a strong conviction that the way you see reality is the way it should be seen, which leads to assumptions being made that anyone who sees things differently must be wrong. In a setting such as the workplace, this assumption can lead to unnecessary conflicts. This is especially true if a leader makes an assumption that their team or employees are in agreement with their views and make decisions accordingly.

 

Banishing biases for good?

Nope. Sorry, but it can’t be done. Because biases are an unconscious phenomenon, even if we know everything there is to know about them, and are aware that we have them ourselves, a “lack of insight into [our] own cognitive processes makes it difficult for people to purge biasing influences from their judgements even when they desire to do so.” (Moore et al. 2010)

This doesn’t mean that we should stop bias awareness programs, or give up and let them roam free. Implementing practices such as structured interviews and diversity policies do help to mitigate the negative impact that biases can have.

Knowing that individual awareness alone is insufficient, efforts are aided by making it a team effort. Because it is so much easier to see bias in others, groups can help identify biases as they emerge. Creating a culture that encourages employees at all levels to remind each other that we are hardwired to be egocentric and prefer our in-groups, to hopefully nip them in the bud.

Because of its prevalence in the workplace, I focused a lot on the in-group/out-group biases in the previous section. Continuing this trend here, Heidi Grant Halvorson and David Rock note in their book, Beyond Bias: Neuroscience Research Shows How New Organizational Practices Can Shift Ingrained Thinking, that while you can’t change your innate preferences for who belongs to your in-group, you can consciously try to find commonalities between yourself and those you would have traditionally classified as belonging to your out-group. This then expands the group rather than changes it.

 

If you don’t see bias in yourself, that in itself is a bias. Everyone has them and there is no escaping them. Learning about them and working together as a team to spot them in each other are the only ways to help limit their effect on us and the way we act. While they may aid us in snap decisions, sometimes these quick judgements are wrong, or worse, end up hurting the people around us, or the company we work for.

 

 

 

 

 

Sources used for this post:

Baker, K. and Ricciardi, V. (2014). How Biases Affect Investor Behaviour. [online] Europeanfinancialreview.com. Available at: http://www.europeanfinancialreview.com/?p=512 [Accessed 21 Apr. 2016].

Buchanan, J. (2015). Think Different? Real Diversity Means Getting Past Group Think. [online] The Conference Board Review. Available at: http://agilityexecutivesearch.com/articles/Think%20Different_.pdf [Accessed 26 Apr. 2016].

Credit Suisse, (2016). Behavioral Finance: The Psychology of Investing. Finance White Paper. [online] Credit Suisse Securities (USA) LLC. Available at: https://www.credit-suisse.com/media/pb/docs/us/privatebanking/services/cs_wp_behavioralfinance_final.pdf [Accessed 19 Apr. 2016].Ibid.

Grant Halvorson, H. & Rock, D. (2015). Beyond Bias: Neuroscience research shows how new organizational practices can shift ingrained thinking. PricewaterhouseCoopers.

Kahneman, D., Rosenfield, A., Gandhi, L., & Blaser, T. (2016). Noise: How to overcome the high, hidden cost of inconsistent decision making. Harvard Business Review. Retrieved 10 September 2016, from https://hbr.org/2016/10/noise?referral=00205&cm_mmc=email-_-newsletter-_-bestofissue-_-bestofissue_date&utm_source=newsletter_bestofissue&utm_medium=email&utm_campaign=bestofissue_date

King, E. & Jones, K. (2016). Why Subtle Bias Is So Often Worse than Blatant Discrimination. Harvard Business Review. Retrieved 10 September 2016, from https://hbr.org/2016/07/why-subtle-bias-is-so-often-worse-than-blatant-discrimination?referral=00202&cm_mmc=email-_-newsletter-_-weekly_hotlist-_-hotlist_date&utm_source=newsletter_weekly_hotlist&utm_medium=email&utm_campaign=hotlist_date

Mindtools.com. (2016). Avoiding Psychological Bias in Decision Making: How to Make Objective Decisions. [online] Available at: https://www.mindtools.com/pages/article/avoiding-psychological-bias.htm [Accessed 25 Apr. 2016].

Moore, D. A., Tanlu, L., & Bazerman, M. H. (2010). Conflict of interest and the intrusion of bias. Judgment and Decision Making5(1), 37.

Stafford, T. (2016). How curiosity can protect the mind from bias. bbc.com. Retrieved 13 September 2016, from http://www.bbc.com/future/story/20160907-how-curiosity-can-protect-the-mind-from-bias?ocid=ww.social.link.twitter