Here are the details of a worrying experiment carried out by Max Bazerman of Harvard Business School. Sadly the results won’t surprise you in the slightest.
Auditors
He took 139 auditors from one of the largest accounting firms in the US.
He asked them to evaluate the accounts of a company (we’ll call them Company A) to see if they met the required standards (GAAP). Half were told they had been hired by Company A and the other half, by Company B. Company B was planning to do business with Company A.
The first half were 30% more likely to say that the accounts complied with the required standards than the group ‘hired’ by Company B.
Impartial?
Each group was explicitly asked to provide impartial judgment. They even knew that this task was not linked to any possibility of employment.
In spite of this, their judgment was still impaired.
Imagine what the bias would be if they stood to gain financially.
Another Group Of Auditors We All Know
I heard a woman being interviewed recently who had worked for the same accountants responsible for ‘auditing’ Enron. Unbelievably she was claiming that there was ‘no conflict of interest’ when a large accountancy firm was auditing a company’s accounts and also did other work for that company.
‘The departments are completely different.’ she explained. The interviewer guffawed audibly (unable to get her hand over her mouth in time). The interviewee became almost indignant.
Even though the interviewer tried her best, she could not hide her astonishment that someone could be so naive.
Don’t Get Too Complacent
I shared the interviewer’s view till I started reading up more on this topic. The trouble is, we are all programmed for self-interest. It’s the old ‘The fish are the last ones to see the water’ problem. We can all recognise the bias of others (those of us living in the UK are being bombarded with news about MPs’ expenses claims at the moment so have plenty of experience in this) but are blind to our own self-interest.
How Objective Are You?
This week I talked to a client, we’ll call him Tony, who has been asked to apply for a more senior job in his company. He knows he won’t get it. He is well aware that they are just following the procedures.
When I asked why he thought he wouldn’t get it, he told me that he knew the man interviewing him favored another candidate. As it happens I also know the other candidate. In my (no doubt completely objective) view it is Tony who is easily the best qualified.
Unfortunately I also know the manager who is conducting the interview and feel sure Tony is right.
Tony was asking for help with his CV and has put a great deal of effort into it already. The trouble is, when it comes to internal applicants, I have a deep suspicion that the manager won’t even read the CVs. Why would he? He is convinced he knows all he needs to know about the candidate.
What Can You Do?
Systems
Wherever you can, set up systems or change them so people are not likely to have conflicting interests.
I think we all need to make sure we are aware that we are biased, and then take appropriate precautions. Some simple ones are:
Set up systems that make objectivity more likely. In my view it is ridiculous that firms can choose their own auditors. Ideally they should be chosen at random every year so that there is no incentive for the auditors to smooth over anything (or indeed blatantly lie).
Ask yourself these questions:
- What are the criteria for making this decision? (For example; does it have to be someone who has a particular set of skills, something that will give a particular result…)
- Which of these options is more likely to be attractive to me personally, given my personal interests?
- Which of these interests conflicts with my interests?
Then ask someone else to answer those questions for you and make sure you listen to the answers.
Set Up Tests
I heard about a teacher who used to tell his pupils always to read the instructions at the top of the exam paper carefully before starting the exam. Of course, none of them did, because they had done lots of practice papers so they ‘knew’ what was coming.
To get round this problem he included the instruction ‘Do not attempt question 1’ in the first paragraph. He gave no marks for the answers to that question. The hapless pupils learned the lesson the hard way.
A Suggestion
My suggestion is that, if you are in a position to, you set up a few bits of information to check if people really are evaluating the information they have effectively.
For example, with internal recruitments, if you are in HR and are responsible for gathering CVs you could always add in something harmless but unusual like ‘Played role of Mickey Mouse at Disneyland’ into the CV of a candidate the interviewer knows.
Then, when you are checking the interviewer has all the paperwork and is prepared, see if they spotted it. At this point, of course, you need to let them know it was simply a test and is not true. However, if they have not noticed, you need to explain to them how they should be preparing.
You need to check what their criteria are for the recruitment and exactly how they are measuring the candidates against those criteria. I think it would also be perfectly acceptable to ask them about their personal interests.
In Summary
Remember that in most decisions you make, your own interests will be invisibly biasing your judgment, just as much as those of the people around you, whose bias is more obvious (and in some cases astonishingly blatant).
Set up systems to mitigate this bias. Make sure you have clear criteria and discuss them with others. Ask others how you might be biased in your decisions. Get them to help you see the blindingly obvious.