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Impact of cognitive biases on leadership
Sudhakar Reddy Gade
December 21, 2020
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Anyone who has ever tried to break a bad habit or start exercising or eating healthy knows that change is hard. And it is true for all of us. Human beings are creatures of routine and habit. Anything that does not conform to the known pattern is quickly avoided or seriously resisted.

Change is especially real in the way people work. Bringing about change in an organization is a mammoth task. Adding new technology or more efficient processes does not guarantee change. Change happens when people adapt, evolve, and eventually change. But people are stubborn. We all like to stick to what we know.

Impact of cognitive biases on leadership | peopleHum

Are there cognitive biases on leadership?

To understand this, let us take a step back and look at how the brain works. The brain is designed to conserve energy at all costs. And it takes a lot of energy to understand complex scenarios (like understanding another human being) or change existing routines (like adapting to new software in a job that you have been doing for the last ten years - without it).

"The brain is designed to conserve energy at all costs".

As a result, the mind develops certain biases and stereotypes to gauge situations and people quickly in the hope of saving up on energy. Think of this as a mental shortcut to reach a particular conclusion without considerable deliberations or internal reflections. It also makes us reluctant to new ideas and opportunities, even if we know they might be right for us in the long run.

It is like we look for similarities and box people or situations into specific folders. Next time, when the mind recognizes a similar person or a situation, it can quickly jump to the conclusion and put this person or situation in the same folder.

To further understand how we resist change, let us look at loss aversion, discovered by the renowned psychologist, #DanielKahneman. This theory explains that we all tend to hold onto what we have rather than gain something new that is equivalent.

Impact of cognitive biases on leadership | peopleHum

For example, if you were walking down the street and you dropped a 2000 rupees note, your disappointment or loss of satisfaction will be more than the comfort you would gain if you were to find a 2000 rupees note. Simply put, we value what we have more than what we could have.

Added to this, we could have a bias towards failure, which could make change even harder. We think that failure is more likely an outcome as compared to success. But when we do succeed, we tend to think of it as a fluke. But when we fail, we see it as a confirmation of our failure bias.

Putting these two together, we can quickly gauge why change is hard for us.

  1. First, we value what we have more than what we could have (even if it is good for us). And are creatures of routine, and we seek solace in our habits.
  2. Even when we do overcome that and want to change, we assume that success is by fluke, while failure reinforces our idea of the failure bias.

So why bother?

But considering that change is the only constant, we all need to find ways to recognize, acknowledge, and overcome our biases.


"Biases can be like chameleons. We might not be able to see them even in plain sight. But not addressing them can have huge repercussions in our personal and professional lives. ~ Sudhakar Reddy Gade

Let us look at an example:

Sunil is a young and dynamic leader. He is the VP of Processes for a particular unit of a large manufacturing company. He is a hard worker and has managed to climb up the ladder quickly. He is hopeful of making the next jump to the C-suite level before he hits forty years of age.

Sunil had a modest upbringing in a typical Indian town. His parents had two girls before he was born. Though Sunil never realized it, he always got the 'privileges' of being a boy. He was given more freedom at home. When his sisters questioned it, he simply heard, 'But he is a boy.' Sunil soon assumed this is the way of the world.

But he also experienced the flip side of it. He distinctly remembers an episode from his childhood when his father reprimanded him for crying over a banged-up knee. 'Don't cry like a girl,' he was told. "Men bear pain with a stoic face," he was taught. And Sunil carried this well into his adulthood.

Though not from a premium institution, Sunil considered himself a knowledge expert in manufacturing that he was heading. He took pride in this fact and flaunted it at every opportunity.

Impact of cognitive biases on leadership | peopleHum

As the manufacturing unit grew in size, the methods and processes kept evolving along with newer problems and issues. One of the main problems they were having included the percentage of errors, which resulted in many defect products. Try as he may, Sunil was not able to bring this number down. His top management put a lot of pressure on him to solve this problem as it cost the company a lot of money.  

Though his team kept coming to him with a few ideas to solve the issue at hand, Sunil refused to entertain them. He thought he knew best1 and kept trying one unsuccessful solution after another. This started to frustrate his team, but no one said anything as Sunil was not known to take criticism well, especially from his subordinates. This resulted in a few resignations from his top performers. But Sunil didn't pay any heed.

This further caused a dip in his unit's performance as the new hires he recruited were still learning the ropes. This created more unique challenges that needed to be addressed. When the management questioned his decisions, Sunil stuck to his view-point and promised them optimum results.

Impact of cognitive biases on leadership | peopleHum

After a few failed attempts and a loss of an important client, the management decides to hire Bindu, a Subject Matter Expert, and efficiency specialist. Sunil detests this from the beginning and gives her a less than warm welcome.  

Bindu studies the unit and the issues at hand and comes up with a new solution using a completely different method and technology. This method reduces the workload on the machines and decreases the error percentage by 25%. Her pilot run is unbeaten, and the management decides to go with this solution.

"Sunil gets antagonized. He thinks, 'What can a woman know about manufacturing? 2'"

At the first instance of a slip-up, Sunil is quick to point out the new method's failure and switches back to his old ways of working3.

Bindu realizes this and tries to coax Sunil to see the advantages of the new method. But Sunil is adamant and gets into a heated argument with her. Bindu keeps her cool and decides to talk to the management directly.

The management finally decides to sidestep Sunil and promotes Bindu to take over the entire manufacturing plant.

Sunil is peeved and cannot figure out where he went wrong.

Impact of cognitive biases on leadership | peopleHum

Sunil's biases affected not just his progress but that of his unit and organization at large. The consequences included:

  1. Sunil's group lost some of their star performers due to attrition.
  2. Time and money lost in hiring and training new recruits.
  3. Loss of a significant client as they could not address the problem in time.
  4. Loss of a cohesive working unit that got ruptured due to Sunil's antagonistic attitude towards Bindu.
  5. Loss of time lost in Bindu settling in as Sunil was less than happy to have her on board, let alone help her learn the ropes.
"When biases go unnoticed and unaddressed, apart from the individual, the organization suffers at large".

Our unconscious biases influence how we make decisions and affect what we believe in and the way we behave. As seen in Sunil's example, this can have considerable repercussions that affect an organization's clientele, the bottom line, and its work culture. As leaders, our biases can have a ripple effect.

What could Sunil have done? Or what can you do to avoid falling into a similar trap?

Impact of cognitive biases on leadership | peopleHum
Impact of cognitive biases on leadership | peopleHum

Change inevitably takes time and effort. But as we keep evolving and moving up, unrecognized and unresolved biases can become a hindrance to our growth. These subtle changes in perspective could open up more doors than we can imagine. When change is hard but also the only constant, it only makes sense to embrace it.

None of us has all the answers. But acknowledging and committing to shift perspectives is the first step towards being an open and authentic leader - and thereby building a free and authentic workplace, where everyone has the opportunity to grow along with you.

What biases are you going to unearth today?

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