Are Your Business Decisions Biased?

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Sure, you pride yourself on being fair-minded in all your business dealings. But bias has a way of creeping into decision-making. Here’s how it happens and what you can do to minimize it.

As a business leader, you evaluate organizations, people, products and services on a regular basis. But how confident are you that you’re fair and unbiased in your judgments? After all, building a successful business depends on accurate assessment of employees, vendors, opportunities and a host of other factors. The problem when it comes to judging behavior, it turns out, is that most of us skip right to the issue of competence and fail to factor context into the equation.

According to Francesca Gino, an associate professor of business administration at Harvard Business School, humans tend toward what psychologists call “correspondence bias.” That is, we link someone’s behavior with their overall character and competence without thinking about what, if any, outside forces could be at play.

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The example she uses is one where your co-worker is late to a meeting, and you view that behavior as inconsiderate without thinking that outside forces, such as traffic, might be a factor. However, if you’re the one running late, you’re not likely to interpret your own behavior as rude or undependable.

Further, Gino says that correspondence bias goes beyond affecting how we interpret other peoples’ behavior; it also affects how we evaluate their performance. In her research, Gino found that when conducting personnel evaluations, managers and executives don’t account for the level of difficulty in achieving high performance.  This often results in promoting someone who performed well in a less-challenging arena over someone whose performance in a more difficult arena was merely good.

The trick to overcoming these pervasive biases is to regularly use a principle Gino calls “consider the source.” Before rushing to judgment take the following points under advisement.

  • Carefully consider the information you take into your decision-making process, and understand that it may affect the way you evaluate others
  • Before trusting your “gut instinct” about someone’s competence, ask yourself whether there may be situational factors or other mitigating circumstances behind someone’s behavior or performance
  • Remember that correspondence bias goes both ways: mind your own behavior and avoid situations that might cause people to misinterpret your competence. And if you’re ever late to a meeting, take the time to explain yourself.

Lauren Simonds is the managing editor of  Small Business Computing.

Adapted from How to Ensure Your Business Judgments Are Fair by Francesca Gino at Baseline MagazineFollow Baseline Magazine on Twitter.