Similarity bias in business decision-making
Explore the impact of similarity bias on business decision-making, revealing how this unconscious preference affects recruitment, innovation, and diversity.
Key takeaways
- Similarity Bias Explained: A cognitive bias favouring individuals who share similar qualities with oneself, affecting judgments and decisions unconsciously.
- Impact on Business: Limits diversity in the boardroom and hiring, potentially hindering innovation and organizational performance.
- Recruitment Challenges: Predominantly masculine criteria in job descriptions and a tendency towards homogeneity reduce opportunities for women and diverse talents.
- Consequences: Leads to groupthink, reducing creativity and problem-solving capabilities within teams.
- Strategies for Mitigation: Raising awareness, embracing diversity as a core value, and implementing inclusive recruitment practices can help combat similarity bias.
- Benefits of Diversity: Diverse teams are shown to outperform homogeneous ones, driving innovation and competitive advantage.
Background
In our fast-paced business world, the ability to make sound and unbiased decisions is critical for success. However, a commonly overlooked factor that impacts business decision-making is a distinctly human one: similarity bias.
This psychological phenomenon can have far-reaching consequences for businesses and their stakeholders. So, what is behind the concept of similarity bias and what is the potential impact it can have on various aspects of business decision-making?
Understanding similarity bias
Similarity bias – also referred to as similar-to-me bias or affinity bias – is a cognitive bias that is rooted in our tendency to favour people that display the same or similar qualities as we do, such as appearance, background, values, etc. This bias mostly operates unconsciously, influencing our judgment and decision-making without us even realising it.
This is because we are highly motivated to view ourselves and others who are similar to us in a favourable light. Alternatively, we are generally inclined to be sceptical of those with whom we don’t share qualities. Similarity bias is pervasive, and taking time to analyse how it affects our own behaviour can be revealing.
For example, it is common to see children in a playground playing together according to their gender: boys commonly play with boys, girls with girls. Nobody tells us to do this when we are a child, yet we are all instinctively drawn to people and situations that are more known to us than not. Unsurprisingly, this bias remains with us long after we leave the playground.
As we develop, we tend to unconsciously follow our biases when we form friendship groups, choose romantic partners, sports teams, fashion preferences, etc. We instinctively like those that look, act, and perform as we do, and consequently view those who do not in a slightly negative light. However, while this phenomenon filters into most people, the same is true for people-powered businesses.
When it comes to business decisions, similarity bias can limit diversity and prevent alternative perspectives and ideas from being explored. This ultimately impacts innovation and overall organisational performance.
Similarity bias in the boardroom
Similarity bias can permeate an entire organisation and often has its roots at C-suite and board levels. The makeup of many corporate business boards displays tendencies toward similarity bias. While it does make business sense when looking at a homogenous ecosystem working toward the same goal to have board members with similar backgrounds and experiences, a lack of diversity has also been proven to hinder business performance.
But bias has many faces in business, especially in the boardroom. Cognitive bias – where decision-makers tend to seek out information which validates their initial judgement and ignores contradictory data – is a common boardroom bias that is mostly unconscious.
Similarity bias can result in a limited pool of potential boardroom candidates and neglect different perspectives – removing the possibility of alternative insights that could help improve decision-making processes. The results of a lack of boardroom diversity do not only impact businesses but can extend to shareholders too. This is because boards lacking in diversity might fail to represent the broader interests of the company and its stakeholders.
If similarity bias is common in the boardroom, how does it impact a business’s hiring decisions?
Similarity bias in recruitment
A recent report indicates that an alarming 78% of hiring decisions are informed by similarity bias. Gender is a large component of the bias as women are still underrepresented in key decision-making roles. While similarity bias is often unconscious, it has a real-life impact on women’s ability for career growth.
Generally, the hiring criteria for most business roles are traditionally masculine, such as assertiveness. Of course, women possess other equally as important characteristics but these are not commonly prescribed in job descriptions. This lean toward masculine characteristics in recruitment processes limits female candidates from the hiring pool.
Despite the social justice movement proliferating the global conversation in recent years which calls for inclusivity for all genders, sexual orientations, cultures, religions and races, there is still work to be done. Similarity bias and gender inequality are closely intertwined as women continue to face significant barriers when it comes to accessing positions of power and leadership roles. The prevalence of similarity bias can further hinder their progress.
By favouring candidates who resemble the existing leadership, businesses inadvertently reinforce gender disparities and maintain the status quo. This perpetuation of gender inequality not only impacts individual women but also undermines the potential of businesses to tap into a diverse talent pool and achieve long-term success.
Yet, another problem exists with similarity bias in recruitment – groupthink. The issue with hiring professionals unconsciously seeking out candidates who share similar qualities to them is that an organisation has the potential to become homogenous very quickly.
Homogenous teams are a hindrance to organisations as they are likely to be less productive and creative. This is due to the fact that a reduction of diversity in thinking and approach creates a linear approach, limiting a team’s ability to be flexible.
When an organisation thinks and acts the same, it essentially limits its problem-solving and dispute-settling capabilities creating a linear approach. In the fast-paced and fluctuating world of business, this can spell disaster.
This bias limits opportunities for underrepresented groups and perpetuates a cycle of inequality. Consequently, businesses may miss out on diverse talents, unique perspectives, and innovative ideas that could drive growth and competitiveness.
Combatting similarity bias in business decision-making
Recognising and addressing similarity bias is crucial for promoting diversity and inclusion in business decision-making. To combat this bias, organisations must implement strategies that foster a more inclusive and equitable environment.
Raising awareness about similarity bias and its potential impact is essential. By educating decision-makers about the dangers of all forms of unconscious bias they can become more mindful of their own biases and work towards mitigating them.
Additionally, embracing diversity and inclusion as core values can help counter similarity bias. Actively seeking out candidates from diverse backgrounds, implementing blind recruitment practices, and utilising structured decision-making processes can help reduce the influence of bias.
Establishing mentorship programs and employee resource groups can also provide support networks and opportunities for underrepresented individuals to thrive within the organisation.
Furthermore, recognising the tangible benefits of diversity and inclusion can motivate businesses to combat similarity bias. Studies consistently demonstrate that diverse teams outperform homogeneous ones regarding problem-solving, creativity, and overall performance.
By capitalising on the unique strengths and perspectives of a diverse workforce, businesses can foster innovation, increase adaptability, and gain a competitive edge in an increasingly globalised world.
Final words
Similarity bias poses a significant challenge to businesses striving for inclusivity and excellence. Recognising this bias and its impact on decision-making processes is the first step towards combatting it.
By actively embracing diversity, implementing inclusive practices, and raising awareness about the importance of overcoming similarity bias, businesses can create an environment where diverse perspectives are valued and nurtured. In doing so, they pave the way for a more equitable, innovative, and prosperous future for themselves, their employees, and society as a whole.
Elvire Jaspers
Working Machines
An executive’s guide to AI and Intelligent Automation. Working Machines takes a look at how the renewed vigour for the development of Artificial Intelligence and Intelligent Automation technology has begun to change how businesses operate.
