An unbiased decision a day, keeps the losses away!


#1

Decision making is a crucial part of every organization. Working on being fair throughout the process and reducing the existing biases helps overcome inefficiency, non-productivity and prevent loop holes. Every organization should know how to tackle, reduce and counteract a bias affecting an important decision.

What if you’ve been making the wrong decisions all this while? Did you know an unbiased and effective decision making process is crucial for growth?

Why unbiased decision making?

Decision making involves a group of people collectively deciding and discussing something important in the management which either makes a huge difference and balances out the issue that has been put forward by the company or a brand.

Decision making is an integral part of the management as it involves both managerial and organizational activities.

It plays an important role for the following reasons:

  • Helping with achieving the planned goals.
  • Realizing the balance between sorting out issues and improving the standards of a company.
  • Realizing the importance of labor satisfaction and their well-being.

This process also enhances the overall working of an organization and involves intellectual people taking part in the same. Hence, it requires extremely skilled people with great scientific knowledge and needs to be balanced by having mentally mature and understanding people who take care of the psychological part of a decision.

There are certain steps to be followed during a decision-making process:

  • Find out what exactly the issue or the problem is and try to define it for everyone to understand. Define the problem which would set a standard.
  • After you know what the issue is, try to gather information, statistics, and data related to it.
  • Compare and analyze your information and see which section of it requires more attention and effort in order to rectify it. In this way, you can prioritize smaller issues and solve the large one as a whole.
  • Adopt the best option that’s available in order to rectify the issue.
  • Plan how the process is going to be worked upon and execute on the same.
  • After the process has been executed, it requires continuous following up and sessions regarding the same.

Even if the whole process is cumbersome and time-consuming, it’s very efficient in professional organizations and administrative problems, giving really good results.

How important is decision making?

Employees satisfaction and motivation:

A person strives hard to get what he/she wants. This happens only when there is an incentive or reward behind the work. Similarly, decision making provides a proper framework for the organization and benefit on time. Hence, employees are motivated enough to work hard and get recognized in the organization.

Achievement of goals and increasing the standards:

Decision making helps achieve goals by improving the processes, adopted the best method for the process, recruiting the best employees and with excellent monitoring and following up. It also increases standards and expectation level of an organization when they display good results.

Evaluation of the organization’s performance and results:

Decision making helps compare results, analyze the improvements and helps enhance the level of expectation. This, in turn, ensures that the organization keeps growing, achieves its goals and moves forward!

What happens when decision making is affected?

Decision making affects the whole organization as such. It affects everyone right from the leader to a normal employee in the organization.

The whole system gets disorganized, ineffective and confused. The organization might be a loss.

What are the Seven biases that affect decision making?

1. Progress Bias:

When a person tends to give more importance to good and helpful actions, even if the negatives outweigh them.

A straightforward example would suffice to explain this point very clearly. To simply put it, have you ever been so proud of yourself for eating at home every day and treated yourself with an expensive weekend meal outside? We always tend to make wrong decisions by ruling out the negatives in our lives which is outnumbered by the positives. Hence, we often think that we are in a good position to make decisions, but we honestly aren’t.

In managerial terms, rewarding good employees, appreciating successful ideas from them and giving them space to assume that it is okay to slack off is progress bias.

How to counteract it?

In basic terms, following feedback loops (a review template to monitor a person’s behavior) and concentrating on negatives as well could help control this bias.

In managerial terms, appreciating and encouraging all the employees equally would be very helpful. Equality and unity among the employees are fundamental.

2. Confirmation Bias:

This often happens when opinions are considered. It’s a normal humane thing to get influenced by people and their opinions.

Let’s say, an engineer receives a text from his boss saying that he needs to talk to him immediately. A normal human brain tends to overthink this sentence and imagine a whole new story of probably getting fired or getting busted. At that moment, everyone tends to lean towards the facts that are normally believed and generalized.

How to counteract it?

When a person tends to decide something based on opinions, generalized facts and gets influenced, he/she rules out the other possible factors that might be the reason otherwise. Before making any decision, it’s wise enough to think if all the other reasons were justified and ruled out of the picture. Thinking and deciding would be the best possible solution to this.

Digital feedback system can help you sort out this bias. This collects feedback from your employees using automated survey and takes appropriate steps to solve issues. There are features like metrics and anonymous feedback submissions for survey questions which will make the feedback system efficient.

3. Survivorship Bias:

Paying attention to the people or things that succeeded and ignoring the rest.

What happens here is that the failures behind reaching the success point aren’t considered at all. Common people tend to adopt the success paths taken by famous, successful and rich people as media loves bragging about rich people, it contributes to influence the common man.

If successful people were the only ones considered during decision making, it affects the reality and completely and makes a person go as far as following their succeeding path blindly without even re-thinking about his/her situation.

How to counteract it?

While making any decision, if a person is found saying things like “Well he/she did it that way,” then that person needs to be stopped right away! It’s not unique, and all the failure stories behind it are being ruled out. Ask that person if they know how many times that particular successful person has failed?

4. Dunning-Kruger effect:

This is something where confidence and experience or abilities is completely imbalanced and mismatched.

This effect explains about two kinds of people:

- The ones who suffer from an illusion of superiority, mistaking their ability as greater than it already is.

- And the ones who are extremely good at what they’re doing, skilled and professional yet hugely lack of confidence. (which is similar to imposter syndrome).

Having confidence with low experience in work might lead to bad decisions as the person might make it seem easier than it is.

How to counteract it?

This can be avoided with self-awareness which requires knowing about one’s strengths and weaknesses. If someone’s new with something and just starting it off, its better if they prepare something beforehand and get ready to tackle situations in which they might need help and support.

5. IKEA effect:

Placing higher values on things personally known or worked on. Being partial is basically what it means and taking the easy way out because you already know the person or thing.

How to counteract it?

Choose what’s best for the organization you work at or the product you work for. It can be anything. Think if you want to maintain your self-confidence or if you want the best option available at what you do to get the best results. This will, in turn, invest in cultivating a good decision-making process.

6. Planning Fallacy:

Inefficient time management and underestimation of a task’s time requirement. This might lead to stress, work overload, and even burnout syndrome.

Planning fallacy is the inefficiency to judge how much time is required by a task.

A common human tendency is to say yes to whoever requires assistance in work even though he/she is aware that they won’t have time to complete which leads to inefficiency and clumsiness in work.

How to counteract it?

Learning to manage time well, reducing the to-do list and being more efficient with compact work would improve this.

Learning to say no is an important aspect of work efficiency. When there is enough work to be done, adding more work to the desk is not a smart idea!

7. Availability heuristic:

If something requires repeating and recalling requiring to be noted as important to is availability heuristic. It needs to be given extra attention.

Losing out on options and not giving equal importance to all the possible solutions to a situation might also come under availability heuristic.

How to counteract it?

Again, self-awareness is required and could help to keep a tab on one’s behavior.

If a situation needs to be tackled, write down all the options available and weight down the pros and cons. Then, move on to decision making.

Good decisions help with an efficient process and getting the desired results in the organization or otherwise.

It’s still difficult to keep, all the seven biases in mind while making a decision but making sure that these biases are not a reason for the decision being made could improve the whole decision making process. The whole process should be made transparent.

** Equality and decision making are correlated. There needs to be an establishment of mutual understanding between giving equal rights to everyone as well as discuss and make the right decision!**


This is a companion discussion topic for the original entry at https://understandbetter.co/blog/a-detailed-study-on-unbiased-decision-making/