Team Biases, and How to Avoid Them

Practical lessons for Executive and Non Executive Teams

Following Carillion’s tragic implosion earlier this year the evidence that has emerged about the way the business was led is sobering and informative. The performance of businesses of this size is always a complex area driven by a range of factors. However, listening to testimonies from the commons select committee investigations, both the Board and Executive team appear to have fallen foul of well known and avoidable forms of error.

First, there is the well-established Optimism Bias. This is the tendency that we all share to believe bad things won’t happen to us and that good things will. This bias serves some useful purposes, including providing a basis for resilience when things are not going to plan. The night is always darkest right before dawn and a little bit of positive thinking goes a long way when we are up against it.

Optimism bias also supports us in pushing the boundaries, ensuring that we don’t settle when there is more that could be achieved. However, when unchecked it can lead us to chase outcomes without sufficient evaluation, or mitigation of risk. Given the stakes at play, Carillion’s Executive Team should evidently have put their foot on the ball and changed tack much sooner. The warning signs were clear enough for hedge funds, lenders and whistle-blowing middle managers to see what was coming. So why couldn’t those inside the organisation do so?

Psychologists have identified those factors that lead teams to isolate themselves from reality, resulting in poor decisions. At the heart of many theories is the suggestion that excessive conformity within teams leads to a range of dysfunctional behaviours, including members failing to gather sufficient information and applying selective biases in the way data is processed. Our need for safety and security reduces our willingness to fully consider contrary evidence and our ability to manage healthy conflict. Essentially, team members’ emotions often get in the way of healthy, challenging debate. Group Think therefore comes into play and the optimism bias goes unchecked.

At Wickland Westcott we work extensively with leadership teams, focusing upon practical actions to prevent problematic biases from occurring. One of the most useful features of the Group Think model is that it highlights practical actions that can be applied to prevent it from occurring. Here are five recommendations:

1. Promote constructive debate, ensuring all ideas are examined in full before they can be rejected.
2. Set the expectation that all team members should offer a genuine critical review of proposals.
3. As the leader, avoid expressing your opinions early-on in discussions. Additionally, selectively absent yourself from meetings (or parts of meetings) to ensure your power does not stifle the exploration of ideas.
4. Engage with external experts for valuable perspective. Treat their input objectively rather than simply using it to confirm prior views (and therefore, be wary of any Consultant who agrees with everything you say).
5. Where circumstances and time allow (and especially with the big decisions) set up several independent teams to evaluate the options simultaneously.

These are practical, simple steps to help you ensure information is fully tested and individuals are supported in speaking up to avoid mistakes being made. The easy objection is that these actions slow down the decision-making process, and at times, they will. However, the best leaders look further ahead than minute-to-minute and allocate time to give due consideration to existential questions that rightly demand serious attention.

In conclusion, it can be tempting to look at high-profile leadership failures and to marvel at the foolishness of the decision-making involved. In hindsight and laid out in the stark light of day, the errors look crass. But as leaders we may all be amenable to similar mis-judgements if we do not take steps to encourage openness and objective debate. This kind of constructive leadership climate can be achieved, but it requires strong processes and a robust culture that is supportive of challenge and a diversity of perspective.

This article was first published in the Insight section of Wickland Westcott's homepage where you can find more thoughts on Finding, Understanding, and Developing Leaders and Leadership Teams.