Building your bias mitigation toolbox for effective governance

4 min read
Mar 12, 2024 11:54:24 AM

With the potential of cognitive biases to impact critical decision-making, having the tools to mitigate—or eliminate—their effect is essential. In the boardroom environs, tools can help board members to recognise biases, encourage continuous learning, support diverse viewpoints, and therefore make better decisions for effective governance. These tools also support building an organisation's culture by providing a framework on which to make decisions.

This is the third of a series of 3 articles that explore cognitive bias in governance. The first article ‘Navigating cognitive biases for better governance’ explores the evolutionary perspective of cognitive and behavioural bias in the boardroom, and the second article ‘7 cognitive biases in board decision-making and how to overcome them’ explains the different types of bias and how to address them.

While there are individual tools for every type of cognitive bias, it's often best practice to provide a suite of tools that board members can choose from depending on the situations they encounter. 

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Tools to mitigate cognitive bias

  • Acknowledgement of Bias: The first step in combating bias is recognising its existence and potential impact on decision-making. 
  • Continuous Learning and Development: Committing to ongoing education and development on cognitive biases and decision-making best practices can enhance the board's ability to recognise and counteract biases. Workshops, and training sessions can reinforce the importance of vigilance against biases.
  • Structured Decision-Making Processes: Adopting structured decision-making frameworks can help in systematically exploring alternative viewpoints. Tools such as risk-benefit analysis, scenario planning, and cost-benefit analyses can help quantify the potential outcomes of various decisions, making the trade-offs more transparent. Techniques such as pre-mortem analysis—where board members envision a scenario where a decision has led to failure and then work backward to identify potential causes—can reveal risks and opportunities that might have been overlooked.
  • Encouraging Diverse Viewpoints: Inviting input from a wide range of perspectives can help challenge directors thinking. Diversity in background, expertise, and opinion enriches the board's deliberative process, providing a broader range of insights and interpretations that can challenge prevailing assumptions. This might involve consulting with external experts, incorporating younger or less experienced board members, or soliciting feedback from various stakeholders.
  • Regular Review of Decision Outcomes: Instituting a practice of regularly reviewing the outcomes of past decisions can help identify when and how biases may have influenced those decisions, providing valuable lessons for future decision-making.
  • Implement Devil’s Advocate or Red Team Exercises: Designating individuals or groups to intentionally challenge the board's assumptions and decisions can provide a critical counterbalance. These exercises force the board to confront alternative viewpoints and justifications, thereby broadening the scope of discussion and analysis. This role should be rotated regularly to prevent any single individual from being typecast as the perennial contrarian.
  • Foster a Culture of Healthy Scepticism: Encouraging a boardroom culture where questioning and scepticism are valued over conformity can significantly mitigate the effects of Confirmation Bias. This involves creating an environment where dissenting voices are heard and considered, and where challenging the status quo is seen as a contribution to the collective wisdom of the board, rather than as dissent. 
  • Cultivating Humility: Fostering an environment where humility is valued over hubris encourages board members to question their assumptions and remain open to learning from mistakes and successes alike.
  • Rigorous Due Diligence: Emphasising the necessity for comprehensive analysis and validation of data before making strategic decisions can help mitigate some biases,
  • Checks and Balances: Establishing mechanisms for regular review and reassessment of strategic initiatives ensures ongoing scrutiny and adjustment in light of new information or outcomes. 
  • Anonymous Voting Mechanisms: Utilising anonymous voting methods for key decisions can reduce the pressure on individuals to conform to the perceived majority view, enabling a more accurate representation of the board’s collective judgement.
  • Break Down Complex Decisions: Decomposing complex decisions into smaller, more manageable parts can help reduce reliance on a single anchor point by encouraging more comprehensive analysis of each component.
  • Conduct Thorough Risk Assessments: Utilise comprehensive risk assessments that incorporate statistical analyses to ensure that decisions are based on data and not just on recent or vivid memories.
  • Foster a Culture of Learning and Adaptability: Encourage an environment where curiosity, learning, and adaptability are valued. This can help create a mindset that is more open to change and less tethered to the comfort of the familiar.
  • Set Aside Resources for Innovation: Allocate specific resources for research and development, experimentation, and exploring new business avenues. This can help overcome the inertia associated with the Status Quo Bias by institutionalising the pursuit of innovation.
  • Scenario Planning and Future Forecasting: Engage in scenario planning exercises that explore a variety of future possibilities, including disruptive changes. This can help board members visualise the potential benefits of adaptation and innovation, making the prospect of change less daunting. 
  • Reframing Perspectives: Shift the focus from the potential for losses to the opportunity costs of inaction. This involves emphasising the potential benefits of taking calculated risks and considering the long-term implications of conservativeness.
  • Fostering a Culture of Innovation: Cultivate an organisational culture that values calculated risk-taking and views failures as learning opportunities. 
  • Long-Term Visioning: Emphasise the organisation's long-term goals and visions over short-term losses. This can help reorient decision-making towards future growth and resilience, rather than immediate risk avoidance.

Download your own Cognitive Bias Toolbox worksheet to assess your board's current environment and any actions to take

Cognitive Bias Toolbox

The future of governance

The call to action for board directors is clear: embrace the complexity of cognitive and behavioural biases, commit to ongoing education and awareness, and implement structured processes and practices to mitigate their impact. By doing so, boards can enhance their governance, make more informed and objective decisions, and lead their organisations toward sustainable success.

In the future, board governance will increasingly need to adapt to the challenges posed by cognitive and behavioural biases. As organisations face more complex, global, and interconnected challenges, the ability of boards to navigate biases effectively will be a significant determinant of organisational resilience and success. The journey toward understanding and mitigating biases is ongoing, but with commitment and strategic action, boards can turn these challenges into opportunities for growth and innovation.

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