Each day you face many business decisions … some small and insignificant … others bigger with more moving parts and more financial consequences. If you’re a manager or heading up a project, it’s easy to get swept along with a decision that your team has fallen in love with.
Maintaining objectivity is key. It’s your challenge to remain unbiased and objective … so you make a good decision.
The types of bias that can affect decision making are mushrooming. Here are just a few (primarily from Wikipedia) to get you started thinking about how difficult staying objective can actually be.
- Status quo bias: The tendency to like things to stay relatively the same
- Time-saving bias: Underestimating of the time that could be saved (or lost) when increasing (or decreasing) from a relatively low speed and overestimations of the time that could be saved (or lost) when increasing (or decreasing) from a relatively high speed
- Social comparison bias: The tendency, when making hiring decisions, to favor potential candidates who don’t compete with one’s own particular strengths
- Pro-innovation bias: The tendency to make risk-averse choices if the expected outcome is positive, but make risk-seeking choices to avoid negative outcomes
- Present bias: Paying attention to what is happening now, without concern for the future
- Omission bias: The tendency to judge harmful actions as worse, or less moral, than equally harmful omissions (inactions)
- Normalcy bias: The refusal to plan for, or react to, a disaster that has never happened before
- Distinction bias: The tendency to view two options as more dissimilar when evaluating them simultaneously than when evaluating them separately
- Confirmation bias: The tendency to search for, interpret, focus on and remember information in a way that confirms one’s preconceptions
- Blind spot bias: Recognizing biases in judgment of others, while failing to see the impact of biases on one’s own judgment
And if you think being bright gives you an edge … think again. It’s not genius that makes for good decision making. It’s disciplined, logical processes. In fact, according to Daniel Kahneman, Nobel Prize- winning economist and author, intelligence does not reduce our susceptibility to bias — in fact, over-confidence can actually increase bias.
Further complicating our need to keep bias out of our decision making is our difficulty in judging our own biases (the blind spot bias noted above).
Two Thinking Systems
In addition to all these biases, Kahneman and his late colleague Amos Tversky “realized that we actually have two systems of thinking. There’s the deliberate, logical part of your mind that is capable of analyzing a problem and coming up with a rational answer,” reports a bbc.com article. This type of thinking is slow and deliberate.
But most of the time we’re actually using our faster, more intuitive system of thinking. It’s this fast, instinctive mind that is in control — handling everything from switching lanes while we’re driving to work, to making a choice on ice cream flavors for our double-dip cone at Baskin-Robbins.
Complex, multifaceted, long-ranging decisions should be passed over to our slower, more logical, deliberate self. Taking the time for this thought process is necessary for good decision making. If you need a review of the decision-making process itself, check out this quick step-by-step article from University of Massachusetts.
In addition to taking time for this thought process, an article by Steven Ringel, TheConsultantLounge.com, identifies two ways to help make better business decisions.
- Use groups or teams. Many decisions need to be made quickly and don’t allow time to assemble a group. But, when possible, a group will be able to come up with more possible alternatives and provide pertinent facts and expertise. These groups need to be diverse. Consider including someone who’s been in a similar situation or people with niche knowledge to increase accuracy. Also, team members need to know how they will be involved in the decision — who will ultimately decide.
- Rely on data. How can this be done effectively? Consider the factors that are involved in your decision. Assign relative importance to each item. Reliance on the numbers can keep you focused on the facts and help you stick to the pros and cons.
Everyone has biases, and being aware of them doesn’t change them. When it comes to decision making, it’s important to acknowledge the role they play, to include multiple perspectives and look to the data for direction. Whether you’re choosing a new hire or charting a new course, approach decisions as objectively as possible.