What leadership is to an organization, decision making is to leadership. However, in reality, some of the most impactful decisions, on departmental, organizational and Governmental levels, made by very intelligent people, with great intentions, end with catastrophes. 

So why do capable leaders make flawed decisions? One of the biggest influencers of bad decisions is cognitive biases that clouds our reality and results in poor decision making. 

How did we develop biases?

Our brains engage in daily judgment-making processes to ensure our safety and comprehend the world around us. Through the utilization of our senses, the brain actively seeks information that can assist us in real-life situations. This process of information processing occurs rapidly, significantly contributing to our overall understanding of the world which in turn allows us to promptly interact with our environments. By interpreting the information our brain receives, we form judgments about various aspects of the world around us, including people, objects, or situations, which subsequently influence our behaviors, such as how to escape from potential hazards. The down-side of it is, this cognitive process can also lead to unwarranted biases, causing us to treat certain individuals more favorably or unfairly. This is primarily because our brain employs a subjective perspective when forming opinions about particular individuals or things. Consequently, when an opinion is formed subjectively, it becomes biased.

Renowned psychologist, Daniel Kahneman dedicated a significant portion of his work to studying human judgment and decision-making processes, specifically delving into the mechanics behind the formation of biased thoughts. 

He identified two distinct systems in our brain:

  • System One: accounts for approximately 98% of our overall thinking and operates on a rapid, unconscious, and automated basis, often outside our conscious awareness in our day-to-day lives.

  • System Two: makes up the remaining 2% of our thinking and serves as a slower thought processor, primarily engaged when we consciously and deliberately contemplate matters.

Kahneman discovered that our system two thinking is influenced by our system one thinking. Consequently, our conscious thoughts and beliefs are influenced by biases stemming from our unconscious thought processes governed by system one.

This implies that despite our belief in carefully considering our thought processes and considering ourselves fair thinkers, we can all be susceptible to unconscious bias. Therefore this can highly influence our perceptions and feelings about our surroundings, others and ourselves. This implies that as a leader, your unconscious biases can affect your decision making and therefore: the working environment making it unfair or psychologically unsafe, productivity, employee diversity and retention. 

Most common biases that can affect decision-making in leadership:

Gender bias:  Unconscious and reflexive mental connections formed as a result of cultural norms, traditions, values, or personal experiences. A recent report by UNDP in June 2023 uncovered that 9 out of 10 individuals, regardless of gender, harbor ingrained biases against women. This pervasive bias has profound implications, exemplified by the enduring gender pay gap. Despite numerous initiatives aimed at rectifying this issue, women still earn an average of 17% less than men in 2022, as reported by Forbes.

Racism: The tendency to have preconceived notions, prejudices, or discriminatory attitudes against certain people based on their race or ethnicity. It entails making judgments, generalizations, or treating someone differently just because of their race, without taking into account their unique traits, skills, or virtues. In fact, a study conducted in the United States by the National Bureau of Economic Research unveiled that job applicants with names that were perceived as African-American received 50% fewer callbacks than applicants with names that were perceived as white, even when their resumes had identical qualifications.

Ageism: Ageism refers to prejudiced and discriminatory behavior specifically targeted at older workers. This bias manifests in the expectation for older employees to step down, making way for younger talent, based on the unfounded notion that performance diminishes and capabilities decline with age. Age bias is pervasive across the entire job life cycle, fueled by a diverse and multigenerational workforce. Conversely, ageism directed at younger adults is termed “youngism,” rooted in the misguided belief that competence necessitates experience and the erroneous conflation of age with maturity.

Mona Mourshed, the global CEO of Generation, stated in a McKinsey podcast episode that a significant portion of individuals aged 45 and above are being systematically excluded from opportunities because they do not align with certain predefined profiles or the algorithms used in the selection process.

Confirmation bias: Confirmation bias can make it difficult for leaders to evaluate multiple points of view objectively because it causes them to actively seek information that confirms their prior assumptions or judgments. This inclination can stifle creativity and make problem-solving more difficult. Individuals that exhibit confirmation bias discount or disregard evidence that contradicts their previous opinions while actively pursuing materials that support their convictions. As a result, their judgements become prejudiced because they fail to explore alternate points of view. This bias can have serious consequences for businesses, reducing their ability to make educated decisions and hinder progress.

Affinity bias: People often gravitate towards individuals who share similarities with them, as it provides a sense of comfort and familiarity. This inclination, known as affinity bias, can manifest in leadership settings, where preference is given to individuals who have similar backgrounds, experiences, values, or traits. Consequently, unconscious favoritism and unfair opportunities may arise as a result of this bias.

A study by McKinsey & Company revealed that companies in the top quartile for ethnic and cultural diversity on their executive teams were 36% more likely to have above-average profitability.

Recency bias: Tendency of leaders to focus more on recent events or experiences rather than considering the entire performance period. This bias can become particularly prevalent in the workplace when leaders are overseeing large teams and facing heavy workloads. In such circumstances, leaders may rely heavily on their most recent interactions with employees to evaluate their performance. For instance, when a typically poor performer unexpectedly excels in a task, their previous underperformance may be overlooked or forgotten due to the recency bias. Conversely, if an otherwise excellent performer makes a single mistake, that error might disproportionately impact their overall review, overshadowing their consistent high-quality performance.

How do you stop yourself from making biased decisions?

The path to making unbiased decisions begins with self-awareness and the recognition that, as humans, we are predisposed to biases. Recognizing this fact is an important first step for leaders seeking fair and objective decision-making.

Once leaders recognize the presence of biases, the next critical step is to have a better understanding of how these biases appear and impact their ideas and perceptions. Biases differ greatly from person to person because they are molded by individual experiences, cultural backgrounds, and beliefs. This identification enables leaders to acquire insight into their own distinct biases and the influence they may have on decision-making.

Following the awareness and understanding of biases, leaders can employ different strategies to minimize their impact on decision making. One effective approach can be borrowing the STOP skill from Dialectic Behavior Therapy (DBT) and applying it in their decision-making process.

Stop: This phase assists in establishing a mental break and disrupting the natural response that biases might elicit.

Take a step back: In this step, leaders could take a step back from the decision-making to gather perspective. This entails separating themselves from personal prejudices and contemplating various points of view. 

Observe: This is where leaders can start asking themselves questions such as: What assumptions am I making? Do any prior notions play a role in my choice? 

Proceed mindfully: Leaders can move on with a more focused and deliberate approach to decision-making after pausing, getting perspective, and analyzing biases. Being fully present in the moment and making an intentional decision to take an impartial and objective course of action are both aspects of mindfulness.

With automation and AI becoming the new norm, decision making by leaders is more sensitive than ever. This is why understanding how biases can be a strong variable in the decision-making process is crucial. Biases are inherent in human nature and can impact different areas from choosing the team members to making alliances. One way of trying to mitigate their effect is being aware of them, how they manifest in our personal thoughts and behaviors and using different frameworks such as the STOP skill to control them.

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