Mitigating bias in performance management

Deloitte Insights

Several social, behavioral, and neurological studies validate that humans are biologically conditioned to be biased. Although biases themselves aren’t good or bad, right or wrong, benevolent or malicious, they often result in unfair and irrational decisions.

Especially in the workplace, biases can cause decisions that are unfair and irrational, lead to systemic discrimination, limit innovation, and create a negative brand perception. Particularly within performance management, biases can lead to inconsistencies in goal difficulty and evaluation, coaching and feedback, development opportunities, and rewards. Given the potential negative impact of biases on workers, organizations cannot just accept that bias is only human and natural. They need to mitigate bias proactively and intentionally, before it penetrates work processes.

In this article we’ll discuss how bias can impede performance, why bias needs to be addressed, and a threefold approach for mitigating bias in performance management.
 

What does bias do?

Unmitigated biases can dilute the perception of objectivity and fairness in an organization and can negatively impact employee productivity, engagement, and well-being. Findings of Deloitte’s 2019 State of inclusion report, which surveyed 3,000 individuals in the United States from organizations with 1,000 or more employees, give a direct insight into how employees experience bias.

  • Sixty-eight percent respondents reported that bias had a negative effect on their productivity
  • Seventy percent believed the bias they experienced negatively impacted how engaged they felt at work
  • Eighty-four percent said that bias negatively affected their happiness, confidence, and well-being
     

Bias also impacts an organization’s ability to pay for performance. Several studies indicate that women frequently earn less than men for the same work, and some studies even have found that body size or hair color can often impact women’s pay. However, bias is not prevalent with just male business leaders—a study of university scientists found that both men and women leaders were more likely to hire men, rank them higher in competency, and pay them significantly more per year than women.

Bias, as well as the potentially negative environment it can create, presents a real risk for organizations—nearly 40% of respondents in Deloitte’s Unleashing the Power of Inclusion research reported they would leave their current organization for a more inclusive one, where they are valued, feel valued and empowered, and are treated with objectivity and fairness.

Mitigate bias in performance mangement

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Unconscious bias requires conscious action

Unconscious biases are instinctual shortcuts—inherent tendencies or learned associations that are based on an individual’s experiences and circumstances, often unknown to the conscious mind.

As organizations move toward human-centered performance management approaches that catalyze development and growth, bias can adversely affect the fairness and integrity of these approaches and impact overall business and talent outcomes. As such, organizations need to mitigate biases and build an ecosystem where behaviors and decisions are rooted in facts, input from various sources and conscious reflection. We propose an approach—that we call ACT—to mitigate biases in performance management and manage the consequences of biases.
 

Awareness

Biases are often blind spots for people, influencing decision-making and day-to-day interactions in a way that can deeply impact individuals and teams. As many biases are unconscious, awareness is of the essence; it’s important for all workers to have access to methods that help them understand—or be aware of—biases and how to mitigate them. Our research shows that highly inclusive organizations offer programs to their entire workforce—not just leaders or specific populations—that touch on a variety of diversity and inclusion topics.
 

Calibration

Calibration is a deliberate and thoughtful process of making data-informed and fact-driven decisions as opposed to making decisions driven by groupthink or gut instinct. It can be used in any context of decision-making, especially in performance reviews and multisource feedback with real-time data to provide continuous developmental and coaching feedback throughout the year.

In these contexts, calibration implies the conscious reliance on continuing conversations, real-time feedback, and credible multisource data—the very foundations of continuous performance management. Continuous performance management is one of the 10 dimensions of high-impact performance management, significantly differentiating business and workforce outcomes.Therefore, managers and leaders in particular will do well to shift gears from sharing opinions to interpreting data to improve performance through objective, meaningful, and unbiased feedback.
 

Technology

Technology is a force that can drive the change forward, make it scalable, and embed bias mitigation in the very workflow of an organization. Technology can aid in providing trend summaries or decision patterns. Being able to identify the sources of bias in the performance management cycle can enable organizational equity and fairness. As such, many performance management solution providers are incorporating elements that help steer individuals and organizations toward objectivity in performance management. These elements include ongoing feedback and coaching, regular dialogue, collaboration, and goal agility. Various human capital technologies offer embedded analytics dashboards and reports to help identify bias. In our 2019 study, Performance Management Solutions: Market Capabilities and Differentiators, we found that 21 percent of the surveyed performance management solution providers offered bias-identification capabilities (such as highlighting different wording of feedback for workers of difference sexes). Pure-play performance management tools—those focused exclusively on performance management capabilities—are also starting to include capabilities around bias identification, objectivity, and inclusion as market differentiators.

Additionally, artificial intelligence (AI) and nudging can help drive the behavior shift needed to address unconscious biases, and an increased number of AI tools will likely continue to emerge in the coming years to help people—and thereby organizations—make better and more informed people decisions. On the horizon is organizational network analysis (ONA), a new way of looking at people analytics data by studying informal information exchange patterns within an organization. In doing so, ONA generates valuable insights into workplace productivity and trust networks, which can be used to identify bias and lack of inclusion.

So, while technology is available to support the pursuit of mitigating bias across performance management and other people processes, merely adding a layer of technology isn’t sufficient. The performance management scale also hinges on optimizing existing technologies and processes to help highlight behavior patterns and create specific summaries of talent-related decisions. It’s these attributes that allow validation and probing to enable fairness.

ACT now!

Our research shows that high-performing organizations—those that have the highest level of financial performance, customer satisfaction, workforce engagement, and agility—are 2.6 times more likely than low-performing organizations to have their performance evaluations perceived as fair. So, addressing bias in performance management presents an incredible opportunity. Organizations need to lead with a focus on elevating the human experience of their workforce, create a sense of belonging, and prioritize making everyone in the workforce feel valued and treated fairly. Despite the many people processes to elevate the workforce experience, bias can often get overlooked and be counterproductive to the experience organizations strive to create. ACT on bias, now!

  • Create Awareness—of not just biases but how to manage them
  • Calibrate continuously—to lead and act based on data and facts rather than instincts
  • Leverage the power of Technology—to filter biases in performance decisions.

While it is impossible to eliminate bias from humans, bias in itself is not inherently bad. It’s a shortcut and it’s innate in humans. Mitigating it can improve organizations’ financial performance and generate superior business and workforce outcomes. Organizations can help people understand their biases and design processes that mitigate bias so that fair and objective performance management is not just the means to an end, but the end itself.

Download the report for more information about what you can do based on your role.

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