Bias in business – where is it thriving in yours?

It’s estimated to cost US businesses $64 billion every year in bad hires, low productivity, poor decision-making processes and a lack of innovation and it’s been blamed for some of the most misguided decisions and catastrophic events in modern history. So is it time to start thinking about how bias could be affecting your business?

Biases are essentially a form of mental shortcut that the human brain takes in order to make sense of the world by forming associations and putting things into categories. This enables us to process large amounts of information quickly, but it can also lead us to make bad business decisions, draw unhelpful conclusions and treat people unfairly. Bias in business brings with it a host of negative repercussions.

The research shows that bias is tough to eradicate. It’s hard-wired in our brains and while bias affects all of us to varying degrees, most of us don’t like to admit that we could be biased and we’re often blissfully unaware of the damaging impact it’s having on our decisions and behaviour.

Bias thrives in non-diverse environments and in non-inclusive cultures, but it can be a problem wherever people are unaware of their biases or are in denial about them, even if they strive on the surface to be fair and inclusive. We’re all far more prone to the influence of bias if we are tired, short of time, under pressure to deliver or lacking support, and people who work in highly pressurised environments in the worlds of finance, healthcare and the legal sector can be particularly at risk.

Organisational structures and processes that perpetuate inequalities can also help to reinforce and normalise biased behaviour. Businesses that place an emphasis on ‘cultural fit’ may inadvertently be allowing bias to thrive by encouraging people to hire in their own image, a phenomenon known as ‘similar-to-me’ bias. Hierarchical organisations can also lead to a propensity for a bias known as ‘groupthink’, where there is pressure to reach a consensus and little room for dissent or debate.

There are many different types of bias that can have an impact across the core activities of a business, with serious negative consequences both for individuals and for the organisation as a whole.

Unconscious bias refers to the subtle and often unintentional prejudices or stereotypes we hold around things like a person’s race, gender, age or physical ability. Also known as implicit bias, it can have an impact across any aspect of a business that involves making decisions about people, such as recruitment, promotion or performance evaluation, but as the name suggests, we are often completely unaware of it – and it may be completely at odds with our conscious beliefs.

Hiring processes are particularly vulnerable to bias, particularly if hiring managers are under pressure to fill roles quickly and candidates aren’t assessed against objective criteria. We may fall prey to ‘similar-to-me’ bias and express a marked preference for people who are like us or with whom we feel some kind of connection, or we may allow our preconceptions about what a ‘leader’ looks to cloud our judgement when hiring someone for a senior role.

The ‘horn effect’ can lead us to focus on one negative characteristic of a candidate at the expense of other positive ones, with its companion, the ‘halo effect’, causing the reverse – and we are all prone to confirmation bias, in which we look for evidence to back up our assumptions about someone and disregard or downplay anything to the contrary.

Research has revealed some alarmingly prevalent biases that can kick in at the interview stage – a recent study showed that 80% of employers admitted to making decisions about candidates based on their accent, and our own research at Pearn Kandola revealed widespread negative associations with people living with obesity. These biases in turn can lead to bad hires, a lack of diversity in the workforce and missed opportunities to bring in fresh perspectives and new skills.

Similarly, career development and promotions can be impacted by bias if performance evaluations aren’t objective or if those with influence in an organisation favour people from their ‘in group’ and give them access to more development opportunities. Gender bias in an organisation, for example, can have a severely detrimental impact on the career prospects of women. A study (Silva et al., 2012) that looked at a cohort of MBA graduates found that men, compared to women:

• were allocated to projects that have more than twice the budget and more than three times as many staff to work on them
• were allocated to work on more visible projects
• were offered more international experiences
• had more direct reports, and
• were more likely to get ‘hot jobs’.

The chance to progress in an organisation can also be scuppered by a lack of understanding of the needs of under-represented groups – with Nasa’s abandonment of the first ever all-female spacewalk for lack of suitably-sized spacesuits for women being a particularly high-profile case in point.

Research by the Sloan School of Management at MIT suggests that women are also significantly less likely to be promoted than their male counterparts, despite being less likely to quit and outperforming their rated potential. This is as a result of biased assumptions that ‘men make better leaders’ or are more dedicated than women, who it’s assumed will at some point decide to have a family and de-prioritise their career.

Even at the highest levels, decisions around policy and strategy can fall victim to bias. The disastrous 1961 US Bay of Pigs invasion was widely attributed to groupthink, with President Kennedy’s administration going along with the CIA assessment of the likelihood of success without pushing back on assumptions about the readiness of the invasion force or the strength of Cuban support.

In another example from the competitive world of space exploration, the catastrophic failure of the Space Shuttle Challenger in 1986 was attributed in part to overconfidence bias among project team members, who disregarded repeated concerns over an element of the design due to an over-optimistic faith in their own abilities.

Bias can influence key financial decisions that affect investments, budget allocation and risk assessments. In extreme cases, it can even lead to the entire collapse of financial institutions, such as in the case of Lehman Brothers Bank where groupthink was held responsible for the bank’s failure to spot its exposure to risk or rein in reckless practices. Bias can also influence the selection of a company’s suppliers and partners, which in turn can affect the quality and sustainability of the wider business ecosystem.

When it comes to public-facing activity, a company’s stance on ethical and social responsibility issues can be skewed by bias. This can lead to poorly conceived products and services, or marketing and advertising strategies that are offensive or exclusionary or that simply fail to resonate with diverse audiences, as in the case of Kendall Jenner’s ill-advised Pepsi ad, which drew widespread criticism for trivialising the Black Lives Matter movement.

Bias can crop up in some seemingly unlikely places. We might for example assume that data is immune to the effects of bias, but the use of biased assumptions, incomplete or inaccurate interpretation and biased collection methods can produce inaccurate and misleading results that lead us to draw inaccurate conclusions. As the saying goes – garbage in, garbage out.

When it comes to AI, while it can help us to identify biases and mitigate their impact, it isn’t immune to bias itself. AI systems learn to make decisions based on training data, and this data can include biased human decisions and reflect things like stereotypes or social inequalities.

Another source of bias is flawed data sampling, where particular groups are over-represented or under-represented in the training data – a 2018 joint study by MIT and Microsoft suggested that facial analysis technologies had higher error rates for minorities as a result of skewed training data.

The good news is that in recent years, digital technology has opened up a huge range of possibilities for identifying and tackling bias in the workplace. Powerful psychometric tools such as implicit association tests, situational judgment tests, motivation and personality assessments and 360 feedback can give people clear and objective insight into their biases and how inclusive they are. This helps to show where their strengths and areas for development lie, laying the groundwork for targeted unconscious bias training and development solutions.

Digital tools can also help to gauge behaviour change and measure progress in tackling bias at both an individual and organisational level, making it easier for us to see whether training and other interventions are working.

Organisational data can also reveal whether bias is having an impact. Indicators that bias is alive and kicking include; a high number of grievances and complaints connected to protected characteristics, low engagement surveys, pay gaps, disparities in representation in certain roles and senior positions and high attrition rates.

Disparities in performance ratings can also indicate that bias is at play. Analysis in 2006 of archival data for 489 upper-middle-level and senior-level managers in a large multinational financial services firm found that when women were in line-manager roles, as opposed to staff roles, they received lower performance ratings when compared to both their male counterparts in the same positions and to women in staff roles.

When it came to promotion, performance ratings were more strongly related to promotion for women than they were for men – with women receiving higher performance ratings for the 2 years prior to promotion than their male counterparts, after controlling for age, tenure, education and organisational level. Additional research has also found that women are less likely than men to get critical developmental feedback, which will impact on their performance ratings and prospects for promotion.

Businesses can take a number of steps to tackle bias in their midst. In addition to implementing robust diversity and inclusion policies and rolling out anti-bias training, inclusive hiring practices such as name-blinding of applications can help to tackle bias in recruitment and selection. The creation of feedback mechanisms and engagement with minorities and employee resource groups in the organisation can all help to uncover where bias is having an impact.

However, as we know from our experience of working with organisations around the world, no amount of anti-bias training and no number of diversity and inclusion policies or inclusive recruitment frameworks will have much effect in reducing bias if individuals don’t first learn how to recognise their own biases and get the tools to address them.

Tackling our biases has to start with insight – and the most effective way is through training that moves beyond awareness-raising and gives us personalised feedback on where our own biases lie and then gives us the tools for tackling them. Increasing accountability for bias is key, and leaders need to set the tone from the top by creating a culture where bias can be discussed openly, by showing that no one is immune.

At Kandola+ we’ve got 40 years’ experience of helping people to identify and tackle their biases and build inclusive working cultures. Contact us today to find out how our DEI learning programmes can help address bias in your organisation.