Stakeholder Biases: Knowing Them Is Half the Battle

 

By Lynda Bourne

Are your stakeholders biased? The short answer is: yes. To make matters worse, your opinions of your stakeholders, your team and yourself are also biased.

As in all relationships, complete objectivity is nearly impossible to achieve in stakeholder relationships. We are all innately biased. We must be aware of our biases and work to minimize their effect on decisions, actions and communication. We also need to allow for the effect of bias in the reactions of stakeholders toward our communications and project, and seek out a diverse group of team members to mitigate biases.

Here are some of the more important biases in the way we interact with stakeholders.

Confirmation bias.We tend to proactively seek out information that confirms our existing beliefs and associate with people who think like us. While this makes sense in one respect, it also means we subconsciously begin to ignore or dismiss anything that threatens our views.

Given that most project managers, sponsors and steering committees start out thinking their project is going to be a great success, confirmation bias can cause them to ignore the subtle early warning signs of problems until it’s too late.

The comment from the project scheduler about the loss of float on noncritical activities may be caused by a poor process and the scheduler’s lack of skills, or it may be an early warning of a lack of productivity that will emerge later as a major project delay. If you believe the project is going great, confirmation bias will lead you to dismiss the warning, while an awareness of the bias may allow you to investigate further.

Confirmation bias also affects our memories. In a 1979 experiment at the University of Minnesota, participants read about a woman named Jane who acted extroverted in some situations and introverted in others.

Later, the participants were divided into two groups. One group was asked if Jane would be suited to a job as a librarian; the other was asked about her having a job as a real-estate agent. The librarian group remembered Jane as being introverted and said she wouldn’t be suited to a real-estate job. The real-estate group did exactly the opposite: They remembered Jane as extroverted and said she would be suited to real estate. 

The “swimmer’s body illusion.”This occurs when we confuse selection factors with results. Rolf Dobelli’s book, The Art of Thinking Clearly, explains how our ideas about talent and training are completely off-track.

Professional swimmers don’t have perfect bodies because they train extensively; they are good swimmers because of their physiques. Similarly, are the top-performing universities the best schools, or are they able to choose the best students (because of their reputation), who then do well regardless of the school’s influence?

When reviewing project success and failure, one of the key questions is: Was the project manager the factor that created the success or failure, or was the project predestined to one outcome?

Consider two organizations that decided to undertake identical projects with a normalized value of US$1 million. Organization A assessed its project and set the budget at US$800,000. Organization B assessed its project and set the budget at US$1.2 million.

Organization A’s team ended up spending US$900,000—a cost overrun of US$100,000, nominally a project failure. Organization B’s team spent US$1.1 million—under budget by US$100,000, nominally a project success.

But considering that both projects produced the same output, which project manager was actually most successful—the one that exceeded stakeholders’ expectations by coming in under budget, or the one that delivered the same results with a smaller budget?

The sunk-cost fallacy. The term “sunk cost” refers to any cost (monetary, time or effort) that has been paid already and cannot be recovered.

As psychologist Daniel Kahneman explains in his book Thinking Fast and Slow, organisms that placed more urgency on avoiding threats than they did on maximizing opportunities were more likely to pass on their genes.

Over time this has become an automatic, subconscious bias—the prospect of losses is a more powerful motivator on everyone’s behavior than the promise of gains.

Consider this scenario: You buy a movie ticket only to realize the movie is terrible. You could stay and watch it to “get your money’s worth” since you’ve already paid for the ticket (sunk-cost fallacy), or you could leave the theater and use that time to do something you’ll actually enjoy.

More than half the population will waste their afternoon by staying to avoid the loss. 

The anchoring effect. The anchoring effect works like this: Rather than making a decision based on pure value, we factor in comparative values.

Behavioral economist Dan Ariely, author of Predictably Irrational, uses the following experiment to illustrate this. He sells two kinds of chocolates in a booth: Hershey’s Kisses and Lindt Truffles. The Kisses are priced at 1 cent each, while the truffles are 15 cents each.

Considering the quality differences between the chocolates and their normal prices, the truffles were a great deal, and the majority of visitors to the booth chose the truffles.

For the next stage of his experiment, Ariely lowered the prices by one cent each. So now the Kisses were free, and the truffles cost 14 cents. Of course, the truffles were even more of a bargain now, but since the Kisses were free, most people chose those instead.

From a project perspective, the first price or cost estimate will always anchor everyone’s consideration of “better or worse.”

These are just four examples out of many hundreds of biases. The good news is you can seriously limit their effect by being aware of the problem and embracing diversity. Everyone has their own set of biases; working with a diverse group of people can balance out many.

Conversely, taking the comfortable option and surrounding yourself with people who think like you will amplify the effect of biases.

How objective do you think you are?