How would you rate the quality of your decision-making? In one study of senior executives, three out of five of them believed that their bad decisions were as common as their good ones – a startling admission considering the seniority of the participants.
We make these bad decisions for a number of reasons, not least because of our ingrained biases. By being aware of our biases, we can limit them, and in doing so we tilt the odds in our favour so that our good decisions will be more common than our bad decisions. Here are 4 of the most common biases that get in the way of sound decision-making:
1. Self-Serving Bias
If you find yourself thinking ‘in silos’, not considering others or even ‘the bigger picture’ you may be displaying what psychologists refer to as the ‘self-serving’ bias. You will be motivated to win a favourable outcome for yourself or your team at the expense of the company as a whole.
The self-serving bias is very common in organisations, for example when a supervisor turns a blind eye and a deaf ear to the misdemeanour of the employee he plays golf with. Or when different people within the company are in deep conflict over the right course of action to pursue, despite everyone having the same overall goal.
To limit the effect of this bias, consider assembling a decision-making team comprised of individuals from a diverse group to avoid any one group’s opinion dominating proceedings. Another solution is to define clear criteria for decision making and ensure that everyone sticks to it. It’s also important to have clear personal rules that you will not over-step. For example, if you are a manager, a personal rule could be that everyone will be treated the same, regardless of your feelings about them.
2. Confirmation Bias
Confirmation bias is our tendency to look for information that supports our preconceptions. Thus, we pay more attention to anything that supports our view and dismiss anything that contradicts it. It is often displayed in political debates when political leaders invoke case studies, data and ‘real stories’ to ‘confirm’ that what they are saying is true.
To minimise the effect of this bias, consider looking at the available evidence from different perspectives. Another tip is to ‘be your own devil’s advocate’: find reasons why your perspective is wrong. Both these activities will broaden your thinking, leading to better decision making.
3. Action-Oriented Bias
With this bias, we feel a compelling need to take action: we are ‘oriented’ towards action, and we reward action over inaction. Problems occur, however, when little regard is paid to the risks or the business environment. Action-oriented bias is usually at play when an employee speaks with supreme confidence about the need to take action and is rewarded for his stand, despite there being scant consideration of the risks and uncertainties.
To limit the effect of action-oriented bias, devote time to analysing the risks and uncertainties involved in a particular decision. It is also a good idea to identify milestones and success metrics - these will serve as a guide for the process to be taken and enable you to change tactics/strategy if things aren’t going to plan.
4. Status-quo bias
Status –quo bias reflects our tendency to want things to stay the same, as such it is at odds with risk- taking and innovation. A ‘business-as-usual’ attitude regardless of the turbulent times a company is going through is usually an indicator of status quo bias. A failure to make important changes on important considerations such as strategy and budgets is also a common sign of status quo bias.
Reduce this bias by gathering all the data that points to the need to shift from the status quo. Another effective solution is to obtain feedback from an external agency on the changes that need to be implemented.
If you are a leader with significant decision-making responsibilities, you will make better decisions by challenging your ingrained biases. Confronting them will make it easier for you to minimise their impact.
Have you seen any of these biases at work? Add your comments to the box below.