1 3 Bias In Business Bias affects human life every day. Bias

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Bias In Business

Bias affects human life every day. Bias refers to the practice of harboring prejudice against someone or something due to the inability to complete information. Often, the phenomenon leads to negative impacts that result in the construction of a stereotype frame. While business requires confidence to succeed, overconfidence bias influences some people, especially senior officials, to believe that they are better than others failing in the business.

Reasons for Overconfidence Bias

Overconfidence bias makes individuals or groups of individuals disregard crucial information leading to a poor decision. Overconfidence cascades from individuals to groups because they bring overconfident people together (Big Think, 2014). The issues affect vital stakeholders such as experts because they rarely recognize the occurrence of any uncertainty. Again, experts do not envision a situation whereby they will go wrong. Thus, organizations should institute critical measures to address bias and deal with the challenge of decision failure.

Statement 1: “That’s the way we’ve always done it”

The statement implies that the person suffers from survivorship bias. The organization relies on norms and routines (Practical Psychology, 2016). In reality, organizations bring together distinctive individuals. This diversity influence people to make a decision differently. The belief that an organization has a particular way of making decisions blocks creativity. Therefore, the statement makes it difficult for actors to embrace new information to inform decision-making.

Statement 2: “The CEO needs to validate it first”

The statement underpins the centrality of authority bias. This bias implies that individuals often prefer opinions from authority figures in an organization (Campbell et al., 2011). The ideas or opinions that come from senior individuals such as CEO trump over others without considering their validity. Therefore, the decision-maker remains powerless due to overdependence on the CEO to validate documents and ideas.

Statement 3: “Trust me, I know this won’t work”

The statement illustrates tolerance bias. The person advancing this argument fears failing again because, the last time, they pursued a similar idea and failed (Campbell et al., 2011). Such an individual possess fear that inhibits them from taking the risk. The statement becomes biased because; the person willing to take a move may have information that the fearful person does not have. Thus, this statement leads to poor decision-making because it instills fear.

Statement 4: “If it’s not broken, why fix it?”

This statement reveals a preference in retaining the status quo and do not tolerate any disruption. Comfort zone bias ensues, influencing a person to ignore challenging situations (Chira et al., 2011). A person with this bias often ignores things and remains unperturbed by the undesirable situation. Therefore, the bias discourages improvement of the present situation.

Statement 5: “There’s no budget for this risky stuff”

The person propagating these words often has anchoring bias. A cognitive bias makes an individual rely solely on the initial information (Practical Psychology, 2016). Any other information that emerges later does not augur well with them. As a result, they trash the information, and committing money to it amounts to wastage. The person further manipulates others to believe that existing information is more beneficial than a new one. Therefore, an organization led by a person with this bias does not take risks.

Statement 6: “Let me check with the team and see what they think”

This statement demonstrates that the person has confirmation bias. They resort to consulting and determine whether the information aligns with their preexisting position (Big Think, 2014). The consultation diminishes chances of challenging new information and instead devises a solution that conforms to existing preconceptions. Again, group consultation promotes consensus in a situation that does not take cognizance of critical thinking. Therefore, some members with contrary opinions resort to bandwagon instead of sharing divergent views.

References

Big Think. (2014). Cognitive Biases 101, with Peter Baumann | Big Think [Video].

Campbell A., Finkelstein S., & Whitehead J. (2011, December 12). How emotional tagging can push leaders to make bad decisions. Ivey Business Journal. https://iveybusinessjournal.com/publication/how-emotional-tagging-can-push-leaders-to-make-bad-decisions/

Chira, I., Adams, M., & Thornton, B. (2011). Behavioral bias within the decision making process. Journal of Business & Economics Research (JBER), 6(8). https://doi.org/10.19030/jber.v6i8.2456

Practical Psychology. (2016). 12 Cognitive Biases Explained – How to Think Better and More Logically Removing Bias [Video].