Cognitive Biases and You

As a leader you have to demonstrate and deliver strong decision-making capabilities that are impartial for a lot of obvious viability reasons.  Mostly to meet organisational strategic objectives and to ensure that your organisation has a solid long-term future.  Which obviously you, the reader, make unbiased decisions, don’t you?  No, you do not.  Shout at me telling me that you are different if you want to, throw this book on the floor in disgust at such an accusation if you want to, declare that I have absolutely no idea what I am on about if you want to or sit there all smug knowing that you are perfect and fair and transparent etc.  The truth is that we all carry so many biases, some we recognise and excuse ourselves for having in that comforting and possibly jokey way. 

Here we will explore some biases when making leadership decisions.  There are not any specific biases that impact our decision making that are the most common or some that are the most destructive.  All can lead to potentially destructive situations with the level of harm dependent on a number of environmental factors that are too complex to explain here.  You will recognize some of these traits in your own behaviour.  That does not make you a bad leader or a bad person.  If you are new to a leadership role your biases are not directly related to having little experience in leadership either.  The longer someone has had a successful career is more likely to lead to justifying biases when the organization is thriving and growing.  That is when bad habits take root.  There are so many successful leaders who fall into the trap of cognitive bias, that is the technical term for it.   To not admit, to even yourself, that you have any cognitive biases is quite frankly arrogant.

Cognitive biases are attributed to human psychological condition.  Cognitive bias comes in many forms.  There are too many cognitive biases to mention here.  Most of us operate with at least 6 cognitive types of biases that impact us every time we made decisions about people and situations whether those be for personal or professional reasons. 

Cognitive biases operate in 6 categories and made up on varying permutations of the following: 

  • Memory
  • Social
  • Learning
  • Belief
  • Money
  • Politics

Each one of us base our decisions on these categories our experiences and influences.  All of those experiences and influences impact our decision making subconsciously until such point that we become analytical about our behaviour and opinions. 

It is extremely difficult and requires discipline to recognize how cognitive biases influence your own decision making in the workplace.  There is the danger of over-compensating for biases which is just as unproductive and stifle effective business decision making.

This is not meant to be a lesson in social psychology and merely an aid providing tactics to leaders to support decisions made are the best for your business and your future career.  It is important to recognise that there are social psychological influences in our decision making. 

Leaders have responsibilities that lie in shaping and delivering strategic objectives.  Often there is no upper layer, e.g. manager or committee, to scrutinise decisions made.  In cases where there is scrutiny or a higher level of management to your role do you really want to be exposed as a weak decision maker?  Such a judgement could have serious consequences to your future career progression and / or, potentially, remaining in your current role.  

Some decisions you make, or have the authority to make, may seemingly be obvious but beware of subconscious influences.  Even as ultimate leader of your organization or if the business is solely owned by you, how you think about people, practices and how you respond to situations based on your opinions could have a negative impact on your business.  Apologies for the apparent drifting away from the topic but it is only to provide some context why cognitive bias is important to recognise.

Too much time is spent, in the workplace, correcting poor decisions.   Even worse, time is wasted making more poor decisions to justify the first poor decision.  Most are made based on cognitive biases, that some may prefer to call instinct.  The greater the responsibility of the leader the greater the risk that cognitive bias has to the business because there is greater strategic influence. 

Keeping employees happy at your organisation is what we all like to believe that, as leaders and fair human beings, we do and must do.  Sometimes we can get too focussed on keeping people happy by bending too much.  However, leaders are in positions of power and influence.  Making poor or wrong decisions can have serious impact on the organization financially and reputationally.

Here are 10 cognitive biases that can substantially have a negative impact on performance and businesses.  This list is not exhaustive but contains the most prevalent cognitive biases in the behaviour or all individuals and you will recognise some of these traits in your decision making.

Fundamental Attribution Error

One of the most common biases we have is observe actions and match the action to a personality trait.  There are so many examples and a common one is that people who turn up late to meetings are disorganised, irresponsible, not committed to the business and stupid.  However, individually, we will excuse our own lateness to meetings by telling others, or ourselves, it is because we are busy, important, stopped on the way to a meeting by a Director, manager, customer etc.

It could be that people who are habitually late have too much work to do, are bullied in the workplace, you have not given them enough information to complete tasks / projects, they are terrified about not meeting their targets and expecting to be humiliated … possibly by you.

In-Group Favourtism

This is a classic that we are all guilty of.  Often it is direct association to hierarchy within the organisation.  Beware, because it does work the opposite way too. 

There are other factors that form an in-group favoritism such as age groups, gender, ethnicity, hobbies and sports interests.  Be honest with yourself and analyse your in-group.  Try to put a label on your in-group.  Put it in a box and start to question your choices.  It is highly probable, as a leader, that your in-group is based on hierarchy and pecking order within the organisation.  You might have another in-group, not necessarily as influential as the first, depending on the size of your company and will be based on age groups, gender and ethnicity. 

Beware of groups within your organisation based on ethnicity.  You have a serious problem if that is going on in your organisation and you need to fix that quickly.  Often these are visible during lunchtimes.  There is a group is feels disenfranchised within your company or your other employees have made it difficult for members of in-groups based on ethnicity to feel welcome.

I recognise that the above paragraph might be unpalatable to some readers.  Use your eyes.  It is not just happening in your company it happens in most companies including some organisations. 

Curse of Knowledge

This is where we assume that everyone knows what we know regarding a subject, business practice, jargon.  Obviously there are those in the workplace that deliberately thrown in the latest jargon to enhance their own sense of self-importance.  We all know those characters.  Please do not go down the route.  Everyone will notice and that will affect the perception that people have of you and will more than likely make you the subject of office / work mockery when you are out of ear shot.

If you are guilty of assuming that everyone knows what you know you are in danger of expressing surprise in a condescending manner which will cause offence.  Relationships within the workplace are more fragile that you might hope.  This is because we are brought together and have to maintain that bond, whereas the irritating friend and some family members can be walked away from.

The fragility of work bonds can be manifested by people reducing their levels of commitments to collaboration, reduced interest in your priorities, reduced effort in problem solving. 

The biggest failure of assumed knowledge is that work is not carried out as you expected.  Money, time and other resources will have been wasted because you assumed that work would be carried out to a standard or ethos and project / work review uncovers errors of judgement.  Who is to blame?  In extreme examples, assumption of knowledge could lead to reputational damage to the business.  Obviously, those extremes would be where projects / works were not adequately managed and / or risk assessed.  All of which are risks to achieving targets and strategic objectives.

Spotlight Effect

Oh dear, how can we explain the vain cognitive bias or the inferiority complex?  This can work both ways.  My apologies for the harsh comparisons.  The Spotlight Effect is where you think that people are paying more attention to your behaviour and appearance which may cause you to behave abnormally because you make decisions based on being observed much more that is reality.  It is not always about you.  This bias can also result in being over cautious about making decisions for fear of being scrutinised whereas others do not recognise the need to scrutinise as much.

The COVID-19 health pandemic that started at the end of 2019 changed the way most organisations conduct their business.  A significant proportion of workers moved to working from home with plans put in place for millions of office workers, managers and directors to continue to work from home as an ongoing business practice.  Businesses and workers have benefited from reducing expenditure and increased family time.  The disadvantage has been that the use of digital platforms to conduct meetings such as Zoom, Microsoft Teams etc have resulted in people concerned about their conduct in meetings.  Whilst there have been benefits of meetings becoming more focussed because only one person can speak at any one time, hence avoiding break away discussions that can easily happen in meetings held in one room, there is a greater likelihood of the Spotlight Effect. 

Have you been conscious about how to position your camera, thought about changing your background, changed the arrangement on your bookshelf to create a perception of your persona?  If you are that person looking at backgrounds during online meetings, then you really should revisit your priorities.  You are at a meeting for work purposes and to get your focus back to business matters.

How you appear online or at physical meetings is irrelevant.  Slick presentations and detailed reports are great however, showcasing needs to be backed with results.  What you are judged on are your successes, how well you meet your targets and whether or not you did what you said you would and did it professionally. 

False Consensus

This takes place where we believe that people agree with us more than reality.  This often occurs during meetings.  Leaders / chairs of meetings often misinterpret silence to discussions as indications of agreement. 

False consensus takes place in businesses regularly.  To ensure that you are bringing people along with you create an environment where people feel comfortable about sharing concerns and expressing disagreement. 

Leaders often wrongly interpret disagreement as dissent.  Good leaders succeed by having people around them who have the courage to disagree and can endorse their views with alternatives and coherent explanations of risks to the business. 

Those within the team stating that they feel that something is wrong and cannot explain why should be encouraged to give it some thought and come back with a thoughtful response.  That is on the assumption that there is time to cater for that thought process.

Halo Effect

This is the opposite to Fundamental Attribution Error.  The Halo Effect is where you see a significant positive trait in someone and make the assumption that the same level of skills and expertise crosses other disciplines of a person’s character and / or work capabilities. 

Leaders can make decisions and plans that build in the expertise of an employee or department to work on projects / tasks that are outside of their expertise and / or may not have the resources to deliver targets and objectives. 

Leading teams and businesses puts you in the privileged position of people wanting to please you.  That can result in over promising by individuals and teams enthusiastic and motivated to make you happy.  People and teams are often too willing to meet goals and worry about the details at a later date.  Some individuals and teams are willing to collaborate to please you and may not always be best placed to achieve your targets.  If that team and individual have your personal approval you may conclude that they can achieve what has been agreed / promised.  Set in place framework that scrutinise checks to ensure that

Dunning Kruger Effect

The Dunning Kruger Effect is where people over-estimate their capabilities which can lead to over promising on outputs, outcomes and targets.  This bias also manifests itself where individuals underestimate what they can do and achieve.  This over and underestimation of self-capabilities does not lead to a person deliberately misleading in the workplace.  Individual’s opinions of themselves are genuine beliefs that are not always expressed but retained within an individual’s thought processes and how the manage their workloads.

An individual is not informed enough to fully judge their ability that is for others to assess.  The Dunning Kruger Effect can be triggered through attending training to improve skills.  For example, attending a time management course may make an individual think that their individual skills set has increased because they now know tactics and started to put these into place.  However, that improvement might not been sustained over a longer period of time. 

What we know and how we implement our knowledge can be different and poles apart. 

Confirmation Bias

Statisticians are often blamed for providing information that supports their message, as do companies promoting their products through advertising campaigns. 

Individually we retain information that supports our beliefs and can effortlessly quote that to justify actions, plans, strategies and tactics.  We may also search for data and other evidence to support our opinions enhancing personal confirmation bias further.

A brave leader will objectively consider evidence that contradicts their own professional opinions.  Provided contradicting information is logically assessed and the original professional opinion is retained then pursuing with the original opinion is logical.  Being honest with yourself is of paramount importance about your motivations and influences to make decisions.

Sunken Cost Fallacy aka Escalation of Commitment

How often have you started on a specific project or plan, invested time and money, met a challenge and then had to gather the team together to problem solve?  Too many times to mention is probably an easy guess.

Decisions relating to problem solving or following a plan are often based on the level of investment that has been made to date in terms of money, time and level of profile within the organisation, especially if a higher management structure has shown an interest in the work. 

Accountants and economists apply the principle of Cost Benefit Analysis to decision making which considers alternatives, including working on another way or not doing project.  It is worth factoring into decision making to abandon a project that has hit problems.  That is not to suggest to always abandon projects that hit problems.  What I am suggesting that a clear assessment is made about how much effort will be required to fix a problem.

How often has the owner or director of an organisation got involved in a problem that costs so little to resolve but requires that level of input.

Naive Realism

In a position of power and influence it is less likely that someone will point out if you are guilty of believing that you are making objective assessments and that anyone who disagrees with you is uninformed, irrational, biased or a combination of these.

Create time or a decision making structure or matrix that helps to ensure that you really are being objective and not guilty of this bias. 

The Way Forward

The higher you are within the hierarchy of your organisation the more likely any cognitive biases are going to continue unless you identify these flaws and make the change.  It is very difficult for employees to challenge senior managers and directors about their cognitive biases.  Some managers have open sessions where people can be honest which rarely see results because employees will stay silent about the real issues for fear of consequences.  There is a quote that an old boss used to say when someone expressed an opinion which was “[name of person] just made a career shortening statement”.

Employees are fearful about their future regardless of what measures you might put in place for honesty, sharing ideas and encouraging suggestions for change.  How many suggestion box changes have ever been implemented other than minor changes that are often related to food and drink e.g. change the brand of coffee in the workplace kitchen.

The reduction in your cognitive biases is your responsibility and yours alone.  You have to continually check that you are not going back to your old ways.  You might be tempted to justify your biases when certain results or problems occur.  By doing that is only fooling yourself and not bringing about objective thinking and making the best business decisions you can make. 

Depending on the impact of decision making to strategic objectives will determine what measures you take.  A diary is not sufficient.  Some leaders will put in place frameworks for decision making e.g. Business Framework that checks decisions made on submitting bids and proposals for contracts, authorisation processes etc.  Whilst this seems onerous it will save time in the long run.  Leaders of small organisations might have their own personal tick box created in a table of spreadsheet before making decision. 

Sometimes all you will need to do is to not make snap and instinctive decision making. 

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