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When senior managers and business owners are making critical decisions in their business, are these decisions made irrationally or based on personal bias?

Many academics have carried out research in economics and psychology and suggest that decision-making left down to people will be irrational.

The reasons behind this relate to bias and there are a number of different types that include:

Action Oriented Bias

This can be caused by overconfidence, pressure to deliver and take action, only focusing on positives and ignoring negative events.

Strategies for overcoming this include, mapping out risks, look at a variety of outcomes from best case, worst case, most likely to least likely and all in between. Create check points and deliverables in advance so that the course can be changed if your off track.

Self Interest Bias

People are motivated to obtain favorable outcomes for themselves, company incentives can increase the risk of this type of bias as rewards could be rewarding selfish decisions that are in the long term bad for the company.

Competing interests are always present but need to be discussed openly and explicitly. The criteria for decision-making should be defined up front and stuck to.

Pattern Recognition Bias

Individuals may see things that are not present, they may believe they see a pattern and follow it based on what has happened before. Once someone has a belief and follows their theory then they will see only items that support them and will ignore counter evidence that runs against their direction.

Review all facts and evidence from different angles, look at and discuss alternative explanations and theories. Ask why past experiences are influencing the direction of the current decision?

Social Harmony Bias

Very often decisions are made under the influence of office politics and keeping the statuesque. Staff may support decisions for reward.

Building a diverse decision-making team made up of personalities, expertise and experience together with an environment of trust will help to overcome this.

Stability Bias

Decisions are made in order to keep everything comfortable and safe, removing pressures to change. Decisions are made to avoid risk of cost at the expense of going for higher rewards with innovation, gain and profit.

Starting with a blank sheet of paper and looking at where you really want the business to be and look at potential gains against risk from a positive perspective.

Whilst bias comes in different forms, each with different solutions, key to
overcoming bias is data, being able to see clear data can help to improve the quality of your decision-making.

Talk to us about how QuickBase can help you make informed decisions in the future.

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