Chapter 7
What Are the Dangerous Judgment Errors in Your Workplace?
Chapter Key Benefits
Learn how to use a research-based assessment tool that identifies the prevalence of dangerous judgment errors in any workplace.
Use this tool to identify the most common and impactful dangerous judgment errors for yourself and your organization.
Decide on what specific judgment errors you and your team will work on next to protect yourself from business disasters.
So what kind of dangerous judgment errors are most prevalent in my business? Which of them bear the most threat for my bottom line? What should I tackle first, second, and third?
These are the most common questions asked in the latter parts of my keynotes and workshops after I describe the specific cognitive biases that carry the biggest risks for leaders and organizations, and relate a variety of strategies to address these problems. In other words, the audience grasps the content, and they are strongly motivated to defend themselves and their organizations from the devastating consequences of the problems I described. However, there's still a large gap between their emotional commitment to address cognitive biases and actually doing so. Namely, they don't know what the biggest dangers are and in what order they should tackle them; in other words, they're not confident about how to adapt this knowledge to their specific context.
At one point, the only option I had to offer involved hiring me as a consultant or coach to help them figure it out. However, given the limits of my time and the laws of supply and demand, many folks could not afford my services or needed help at a time when I and others from Disaster Avoidance Experts were committed to a different project. To address this challenge, I devised an assessment tool designed to help audience members answer their own questions called “Dangerous Judgment Errors in Your Workplace.”
You are at that point in the book right now. By now, I hope you are inspired to protect your business and career from the systematic and predictable feelings and thinking errors we make as human beings. And because you did the exercises (right?) you're ahead of my audiences in regards to learning how dangerous judgment errors impact your business and career, and how you can apply the proven science-based strategies to address these problems.
This information will prove particularly valuable to you as you go through the assessment on the next pages. This tool will enable you to organize and categorize the information from the necessarily scattered exercises throughout the book and develop a plan of action for tackling cognitive biases to protect your bottom line.
Moreover, it will be helpful for others in your team and organization to take the assessment. Remember, just telling them about cognitive biases (according to extensive research on debiasing) will not be nearly enough to have them commit to these judgment errors. You need them to acknowledge where these biases lead to minor or major disasters in their workplace; the best strategy for doing so involves your team members diagnosing these problems independently of your direct input. One of the big strengths of the assessment is its orientation at the workplace as a whole, not the individual taking the assessment. This focus provides safety for individuals to diagnose problems caused by anyone—including themselves or others—without being blamed or admitting to personal faults.
There is an additional strength of the assessment: it asks the participant to attempt an evaluation of the financial impact of cognitive biases. Doing so will get your coworkers to recognize the bottom-line impact of such dangerous judgment errors. That impact on profits helps to convince them of the wisdom of taking steps to solve these problems. Fortunately, the assessment also provides guidance on how to decide and plan out these next steps.
In the first part of the assessment, you will evaluate how frequently each of these judgment errors occurs in your workplace. Next, you'll give your workplace a score based on your answers to reflect the prevalence of these cognitive biases. Then—because we are focusing on financial impact—you'll assess how much money they cost you, and decide how much you'd like to invest into addressing them. In the next section, you'll start transitioning to a more broad-picture approach that is needed to address these challenges by considering which of four key competencies in your organization is most threatened by judgment errors: evaluations of oneself, evaluations of others, strategic evaluations of risks and rewards, and tactical evaluations in project implementation. The final section provides specific directions for the next steps to resolve the systematic and predictable errors you've identified as most in need of addressing. To get a digital version of this assessment that you can share with your peers and colleagues, go to www.DisasterAvoidanceExperts.com/NeverGut.
Questionnaire
Each question refers to a problem that might occur in everyday professional situations. Your goal is to indicate how often the problem occurred in your workplace in the past year. The answer for each question will be in percentage terms out of all the possible times the problem might have occurred. If you are doing this assessment with a focus on a specific organizational department, team, or group, apply your evaluation only to that unit. Don't overthink it! Go with your initial impression, and don't try to be precise. If you feel something occurs infrequently, give it a low score; if you think it occurs frequently, give it a high score. Each question should take you no more than fifteen to twenty seconds. If it takes longer, you're overthinking. Take out your professional journal, and record your answers there, alongside all the other exercise answers.
Scoring Rubric
Add up all the answers to get the numerical score for your workplace. For the letter score, use the following guidelines to give your workplace a letter score. Treat the guidelines as an approximation, not as a conclusive determination.
For example, if the overall numerical score is 700, but four of the questions have a score of 90, this indicates that some areas of your workplace are experiencing high levels of dangerous judgment errors that need to be addressed. In that case, you should give your workplace a C as the letter score.
By contrast, if the score is 1,000 and all questions had a score of 30 or less, your workplace might need only minor tweaks to address dangerous judgment errors. These tweaks might include conducting some basic training on these errors and making some changes in your processes. In that case, you should give your workplace a B as the letter score.
Note that some judgment errors are much more dangerous than others. For instance, many strong companies suffered major setbacks when they inaccurately evaluated the intensity of feelings among stakeholders, such as the strength of customer loyalty or resistance to change among employees. Give your workplace a lower score if the identified judgment errors are particularly dangerous, based on your own estimate of the situation. Please make sure to provide a justification if your letter score differs from your numerical score.
0–300: A
Your workplace is experiencing a minimal level of dangerous judgment errors. Current processes and practices are working well and require normal vigilance for cognitive biases to protect your bottom line.
310–900: B
Your workplace is experiencing a slight level of dangerous judgment errors and requires some fine-tuning in current processes and practices to stop harming its bottom line.
910–1500: C
Your workplace is experiencing a moderate level of dangerous judgment errors and requires a substantial intervention to adjust current processes and practices to stop harming its bottom line.
1510–2100: D
Your workplace is experiencing a high level of dangerous judgment errors and requires major changes to current processes and practices in order to stop significant harm to its bottom line.
2110–3000: F
Your workplace is experiencing a catastrophic level of dangerous judgment errors and requires a full-scale overhaul of current processes and practices to stop harming its bottom line.
Write down your numerical score and then your letter score in your journal. If they differ, write down your justification for why they differ.
Impact Evaluation
This section provides a rough estimate of the financial impact of the judgment errors you uncovered and how much money you, your organization, department, or team will lose in the next year if the errors are not addressed.
Some of these errors are easy to quantify. For example, it's relatively easy to estimate the costs of missed deadlines, going over budget, or the costs of throwing good money thrown after bad. It's harder to assess the costs of judgment errors that result in issues like internal conflict or misinterpreted evidence. For these issues, you may choose to evaluate the financial consequences of the loss in productivity because of employee disengagement, time spent on internal politics over external productivity, and increased sick days due to a decrease in mental and physical well-being, as well as the losses that result from higher turnover and increased costs of hiring and training new employees.
Write down your current annual revenue and expenses, to the extent that these are applicable to your role.
Write down how much can you increase your revenue and decrease your expenses in the next year if you eliminate 20 percent of judgment errors in your workplace (20 percent is a conservative estimate of the impact of effective interventions as shown by behavioral science research).
Given these numbers, write down how much you should invest into eliminating judgment errors.
Competencies
Dangerous judgment errors fall into four broad competencies: evaluations of oneself, evaluations of others, strategic evaluations of risks and rewards, and tactical evaluations in project implementation. Although these competencies overlap somewhat, we can generally place each question within one of these four competencies. Follow these steps to identify the competencies that are most affected by judgment errors in your workplace. Focus on improving performance in these areas for maximum impact.
SELF-EVALUATIONS
How good are the employees in your workplace at evaluating themselves?
Add your scores for the following questions:
Then, divide the total by 5. This percentage represents how frequently the employees in your workplace fall into judgment errors when evaluating themselves.
Anything over 10 percent is an issue. Anything over 30 percent is a problem. Anything over 50 percent is a serious problem.
OTHER EVALUATIONS
How good are your employees at evaluating others?
Add your scores for the following questions:
Divide the total by 7. This percentage represents how frequently the employees in your workplace fall into judgment errors when evaluating others.
Anything over 10 percent is an issue. Anything over 30 percent is a problem. Anything over 50 percent is a serious problem.
STRATEGIC EVALUATIONS
How good are the employees in your workplace at evaluating risks and rewards, making plans, and having foresight?
Add your scores for the following questions:
Divide the total by 11. This percentage represents how frequently the employees in your workplace fall into judgment errors when making strategic evaluations.
Anything over 10 percent is an issue. Anything over 30 percent is a problem. Anything over 50 percent is a serious problem.
TACTICAL EVALUATIONS
How good are the employees in your workplace at project development, implementation, and problem-solving?
Add your scores for the following questions:
Divide the total by 7. This percentage represents how frequently the employees in your workplace fall into judgment errors when making tactical evaluations.
Anything over 10 percent is an issue. Anything over 30 percent is a problem. Anything over 50 percent is a serious problem.
Next Steps: Address Judgment Errors
If your results suggest that some work is needed, the next step is to determine what areas require further work. Look over your answers from the assessment and focus on the ones you answered with 30 percent or higher. Prioritize a set of questions that require the most immediate work, next a set to work on in the short term, then a third set for the medium term, and delay action on the rest until later.
From my consulting and coaching experience, it's best to select no more than three questions per set if the questions are unrelated, although it's fine to select more if they are within a single competency. You can prioritize one of two ways: 1) based on the frequency of occurrence, namely, ones to which you gave a higher score, or 2) those having the most negative impact on your workplace, or other factors particular to your organization and your role. For example, you can focus on addressing a single competency if you are in a position to influence that competency most effectively. You can either determine these priorities by yourself or in collaboration with others (your colleagues, coach, consultant, or mentor).
Next, decide on how you'll work on these issues, using either in-house resources or tapping external resources. In either case, but especially if you use in-house resources, see the commentary on the following questions to help grasp the nature of and dangerous consequences of each judgment error to your workplace. Use this commentary to inform your work on the set of questions you chose, and refer back to the relevant section in the book that contains the specific case studies for each judgment error as well as the strategies best suited to address this problem.
QUESTION 1: What percentage of projects missed the deadline or went over budget?
This refers to the cognitive bias known as the planning fallacy, our tendency to assume that everything will go according to plan and consequently failing to build in needed resources to address the almost-inevitable problems that arise. In organizations, this tends to result in systematic cost and time overruns, which harm the bottom line through poor planning.
QUESTION 2: What percentage of team conflicts occurred because someone overestimated the effectiveness of their communication skills and persuasiveness?
This refers to the illusion of transparency, where we tend to overestimate how well other people understand how we feel and what we are trying to communicate, and overestimate how well we understand how other people feel and what they are trying to communicate to us. As a result, individuals make inaccurate assumptions about how other people will evaluate situations and make decisions, and these false assumptions lead to unneeded team conflict that decreases employee engagement and motivation, harms retention, and results in worse decisions.
QUESTION 3: Of all significant decisions, in what percentage of cases someone was overconfident about the decision?
This refers to overconfidence bias, our tendency to have excessively strong confidence in our evaluation of the situation. In organizational settings, overconfidence bias results in rushed decisions that have not been sufficiently examined. Such decisions hurt the bottom line because they fail to address threats or fail to take advantage of opportunities, either of which might have been recognized with additional information gathering before making the decision.
QUESTION 4: Of all situations when someone had evidence that would contradict their beliefs (or clear information that would disprove their interpretation of the situation), in what percentage of cases did they ignore the evidence (or misinterpret the information)?
This refers to the confirmation bias, which consists of two parts: a tendency to ignore information that goes against our preferred beliefs, and a tendency to look only for information that confirms our beliefs. The confirmation bias leads to the launch of pet projects that harm profitability and fail to address behaviors that lead to lawsuits, failure to give due consideration to suggestions that would substantially improve the bottom line, and other problems.
QUESTION 5: When an individual or a team had to deal with difficult and/or uncomfortable issues, in what percentage of situations did they focus on trivial issues instead?
This refers to the Parkinson's law of triviality or bikeshedding, which involves individuals or teams that focus on easy-to-address but comparatively trivial issues while they ignore difficult or uncomfortable issues that are much more important. For example, members of the marketing department spend their time on the nitty-gritty of website design while their overall advertising strategy is failing to bring potential customers to the website, or the sales department might debate the layout of the sales floor while the competition is increasingly outselling them.
QUESTION 6: When a potential or current employee was evaluated, in what percentage of the situations was the evaluation too positive due to factors not relevant to their job competency or organizational fit?
QUESTION 7: When a potential or current employee was evaluated, in what percentage of the situations was the evaluation too negative due to factors not relevant to their job competency or organizational fit?
These refer to a pair of judgment errors, the halo effect and the horns effect. The halo effect (question 6) refers to a tendency where if we like one characteristic of an individual that we consider important, we tend to rate all other characteristics of that individual as more positive than they really are. The horns effect (question 7) refers to the opposite tendency. These two biases are the bane of assessments and evaluations, whether for hiring or promotion, and have led to problems ranging from promotions for incompetent people while competent people are held back to serious lawsuits that crippled organizations and gravely tarnished their brands.
QUESTION 8: What percentage of team conflicts occurred because someone proposed ill considered or insufficiently thought out ideas?
QUESTION 9: What percentage of team conflicts occurred because someone opposed innovative or surprising ideas?
Questions 8 and 9 also refer to a pair of judgment errors, the optimism bias and the pessimism bias. The optimism bias (question 8) describes the many people who tend to make overly positive assessments of risks and rewards, while the pessimism bias (question 9) refers to those who make excessively negative assessments. Optimistically minded people are great at coming up with innovative new ideas without thinking through all the potential problems. By contrast, pessimistically inclined individuals come up with new ideas much less often because they tend to see all the potential problems in a magnified manner, and frequently criticize others who come up with new ideas because they can see all the risks that come with them. As a result, optimistic and pessimistic team members often have tension if they do not recognize and play to their strengths effectively.
QUESTION 10: Of all times when someone could have passed up the chain of command valuable but negative information, they failed to do so in what percentage of cases?
This refers to the MUM effect (also known as shooting the messenger), the tendency to blame the bearer of bad news for the bad news. This cognitive bias results in an organization's higher-level leaders failing to learn about the problems occurring at the grassroots level, with a resulting backlog of problems building up over time, thus damaging profitability and demoralizing employees.
QUESTION 11: Of all times when someone defended an idea too strongly, in what percentage of cases did they come up with the idea?
This refers to two related biases, the IKEA effect and not invented here bias. The IKEA effect refers to our tendency to overvalue our own ideas, products, and projects, while the not invented here bias describes an excessively negative evaluation of ideas, products, and projects that were not developed by us, our team, or our organization. Both of these tendencies are especially damaging for organizations that interact with the external environment, for instance when bringing products to market or when deciding whether to develop technologies internally or get them off the shelf.
QUESTION 12: In what percentage of cases did someone continue investing resources into an ongoing project, even though they had substantial evidence that the project was not succeeding?
This refers to the sunk costs bias, our tendency to continue to invest additional resources into projects, products, or relationships despite evidence that they are not working out. This tendency to throw good money after bad can be seen in companies that invest money into products or services that are not selling, who double down on a strategic direction when evidence suggests that it's going in the wrong direction, or stick with employees who should have been moved to a different position or let go much earlier.
QUESTION 13: Of all times when someone claimed that they had accurately predicted a specific development or outcome, in what percentage of cases did they actually not predict it?
This refers to the hindsight bias, our tendency to remember our evaluations and decisions as much more accurate than they actually were. In organizations, this tendency causes individuals to be excessively confident in their assessments in a way that undermines future decision-making and also leads to team conflicts when people disagree about the quality of past evaluations and decisions.
QUESTION 14: Of all times when someone opposed making a change, in what percentage of cases did they did so only because it was a change, regardless of whether it would help the bottom line overall?
This refers to the status quo bias, our tendency to prefer that things stay the same and to fear any changes. The status quo bias poses a high danger to organizations in our rapidly shifting world because it impedes their ability to adapt to changes quickly, as well as to forecast and adapt to changes.
QUESTION 15: Of all times when an inaccurate claim about something (a person, project, or other topic) became widely accepted, in what percentage of cases did this occur because the inaccurate claim was frequently repeated?
This refers to the illusory truth effect, our tendency to grow increasingly comfortable with statements that lack evidence and accept them as true just because they are frequently repeated. In an organizational context where certain individuals have control over trusted formal or informal channels of communication, said individuals can spread incorrect information for the sake of personal benefit and have it be accepted as true through mere repetition while harming the organization's ability to make wise decisions.
QUESTION 16: Of all times when there was an opportunity to take a worthwhile risk, in what percentage of situations was it not taken?
This refers to loss aversion, our tendency to avoid risking small losses at the cost of substantially larger gains. The result in organizations is a tendency to play it safe in lieu of taking smart risks, thus harming profitability.
QUESTION 17: Of all times when someone claimed that they made no errors in judgment, in what percentage of times were they wrong?
This refers to bias blind spot, our tendency to believe that we have no blind spots and have a perfectly clear vision of reality and that our decision-making is optimal, even though our vision is clouded by dozens of cognitive biases. The result of this bias in organizations is arrogance. As the saying goes, “Pride goeth before a fall.”
QUESTION 18: Of all times when a disagreement occurred, in what percentage of times did someone let their desired conclusion influence their evaluation of the evidence?
This refers to belief bias, the tendency to permit our personal beliefs and preferences to sway our perception and interpretation of evidence, especially when making decisions. As a consequence of belief bias, decisions in organizations are made based on the personal likes and dislikes of leaders rather than the quality of evidence, inevitably undermining the company's bottom line.
QUESTION 19: Of all times when someone's behavior was attributed to their personality, in what percentage of cases was their behavior actually a result of the situation in which they found themselves?
This refers to the fundamental attribution error, our tendency to attribute negative behaviors to the personality of other people rather than the context. Such incorrect attribution can gravely damage relationships within an organization or with external stakeholders, with the former undercutting employee motivation and engagement, and the latter harming reputation and external collaborations.
QUESTION 20: What percentage of individual or team plans did not include contingencies for threats (or opportunities) that were unlikely to occur but could have significant consequences if they were to arise?
This refers to the normalcy bias, our tendency to ignore predictable major threats that did not happen previously. Thus, organizations might not pay proper attention to the need to protect themselves against potential disasters despite having more than sufficient information about a major threat, with devastating consequences when these disasters happen to them. The same applies to organizations that fail to prepare themselves to take advantage of outstanding opportunities.
QUESTION 21: What percentage of individual or team plans overemphasized short-term and medium-term outcomes over long-term outcomes?
This refers to hyperbolic discounting, our tendency to prefer immediate gains over larger rewards later, even if the latter would be more beneficial in the long term. An orientation toward such short-term rewards in organizations, usually caused by problematic incentive structures for performance evaluation or external market pressure from investors, undermines long-term profitability.
QUESTION 22: Of all times when someone claimed credit for themselves in a team project, in what percentage of cases did they claim more credit than they deserved?
This refers to egocentric bias, our tendency to claim more credit for ourselves from successful joint projects than is accurate, and vice versa for failed projects. This tendency damages relationships within teams and exacerbates internal organizational politics, undercutting employee engagement, motivation, and retention.
QUESTION 23: Of all times when there was clear evidence of a problematic situation, in what percentage of cases did someone ignore it?
This refers to the ostrich effect, our tendency to deny clear negative facts. A study found that of all CEOs fired, more than 20 percent are dismissed for failing to acknowledge negative information about an organization's performance. This tendency impacts people at all levels of the organization. Such failure results in further deterioration of performance and needed organizational changes are not brought about.
QUESTION 24: Of all times when a decision was evaluated, in what percentage of times did someone focus mainly on the outcomes rather than consider the quality of the decision-making process?
This refers to the outcome bias, our tendency to evaluate decisions by their outcome rather than the quality of the process by which decisions were made. Even broken clocks are right twice a day, and failing to evaluate the process results in the highly problematic tendency of rewards, such as promotions going to the lucky as opposed to the good. Of course, luck runs out while quality persists; it's much more beneficial for an organization to reward and promote those who are good even when they are unlucky.
QUESTION 25: Of all times when someone had to evaluate themselves, in what percentage of situations did they overestimate their positive qualities and underestimate their negative qualities?
This refers to illusory superiority, our tendency to evaluate our positive qualities as better than they are, and dismiss our negative qualities. This tendency results in unnecessary team conflicts and internal politics.
QUESTION 26: Of all situations when an outcome was being measured, in what percentage of cases did someone conflate the means used to measure an outcome with the outcome itself (e.g., equate employee responses on satisfaction surveys with actual level of employee satisfaction)?
This refers to surrogation, our tendency to lose sight of the outcome that a specific measuring technique is supposed to evaluate, thus conflating the measure with the outcome. In an organization, the danger comes when those in leadership positions mistakenly equate the various reports and statistics they receive to what those reports and statistics are supposed to measure. For instance, a report on customer satisfaction does not equate to actual customer satisfaction; the report is only as good as the data that went into the report, combined with the biases of those who prepared the report. This is especially problematic in larger organizations where the leadership is further away from the front lines. In these cases, surrogation causes the leadership to try to improve the measure rather than the outcome—what gets measured gets managed—harming the organization's performance and profitability.
QUESTION 27: Of all situations when someone had all the relevant information needed to make a decision, in what percentage of cases did they continue to request additional information before making the decision?
This refers to the information bias, our tendency to seek more information than is needed to make decisions and take action. Organizations where information bias is common are characterized by analysis paralysis, that is, not taking actions and making decisions quickly enough, and as a result failing to compete effectively in the marketplace.
QUESTION 28: Of all times when someone thought that others in the organization agreed with them, they were wrong in what percentage of cases?
This refers to the false consensus effect, our tendency to overestimate the extent to which other people share our beliefs, preferences, and conclusions, also known as typical mind fallacy. This tendency causes significant internal team conflict when these disagreements become apparent as the rubber hits the road on projects and decisions, and undermines employee motivation, engagement, and retention. It also causes organizations to make products and offer services that do not satisfy customer needs because they are making unwarranted assumptions about how well they know their customers.
QUESTION 29: Of all situations when an action was considered, in what percentage of cases were the costs of failing to act not adequately considered?
This refers to the omission bias, our tendency to judge harmful action as worse than harmful inactions (omissions to act). Harmful inactions—whether failing to address threats or take advantage of opportunities—are just as damaging to an organization's bottom line, reputation, and other assets, as are harmful actions, and need to be treated the same.
QUESTION 30: Of all times when someone was evaluating a situation and making a decision, in what percentage of cases did they underestimate the intensity of feelings of other people (employees, customers, vendors, or other stakeholders)?
This refers to the empathy gap, our tendency to underestimate the intensity of feelings of people with whom we disagree or whom we do not see as belonging to the same group as we do. The empathy gap is one of the most insidious biases for organizations, as its occurrence is often hard to recognize; it becomes apparent only when new internal changes or external offerings are met with great resistance, to the utter surprise of those behind the changes or offerings.
CHAPTER SUMMARY
The “Dangerous Judgment Errors in Your Workplace” assessment has five functions:
Adapt the cutting-edge research on dangerous judgment errors to your specific context.
Identify the most common and problematic cognitive biases in your workplace.
Inform your team members who take the assessment about such dangerous judgment errors in a persuasive manner that encourages them to avoid these errors.
Assess the financial impact of these cognitive biases as the first step to address these problems.
Decide which specific dangerous judgment errors to target first, and plan specific next steps to tackle these errors.