4 project stakeholder biases to watch

Are your project stakeholders biased? The short answer to this question is ‘yes’ and to make matters worse, your opinion of your stakeholders, your team and yourself are also affected by bias.

Complete objectivity is nearly impossible to achieve especially in the realm of stakeholder and other interpersonal relationships. We are all innately biased, the best that anyone can achieve is being aware of their various biases and working to minimise their effect on decisions, actions and communication. We also need to allow for the effect of bias in the reactions of stakeholders towards our communication and project.

Projects are performed by people for people, with the key determinants of success being the relationships between people in the project team and the team’s relationships with key project stakeholders. This web of relationships will either enable or obstruct the flow of information between people and, as a consequence, will largely determine project success or failure.

The focus of this post is on the way biases distort communication. You cannot remove the distortion but you can plan for it. Some of the more important biases to consider in the way we interact with stakeholders are:

1. 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 that we subconsciously begin to ignore or dismiss anything that threatens our views.

Given most project managers, sponsors and steering committees start out thinking their project is going to be a great success, the big danger in succumbing to confirmation bias is ignoring the subtle ‘early warning signs’ of impending issues and problems until it is too late.

The comment from the project scheduler about the loss of float on non-critical activities may be caused by poor process and the scheduler’s lack of skills; or it may be an early warning of a serious lack of overall 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, an awareness of the bias may allow you to investigate further.

Confirmation bias also affects our memories. In an experiment in 1979 at the University of Minnesota, participants read a story about a woman called Jane who acted extroverted in some situations and introverted in others. When the participants returned a few days later, they were divided into two groups. One group was asked if Jane would be suited to a job as a librarian, the other group was asked about her having a job as a real-estate agent. The librarian group remembered Jane as being introverted and later said that she would not be suited to a real-estate job. The real-estate group did exactly the opposite: They remembered Jane as extroverted, said she would be suited to a real-estate job, and when they were later asked if she would make a good librarian, they said no.

2. Correlative bias

The ‘swimmer’s body illusion’ 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/failure or was the project pre-destined to one or the other outcomes? Consider this situation: two organisations decided to undertake identical projects with a normalised value of $1 million.

Organisation A assessed their project and set the project budget at $800,000. Organisation A’s team did their best to ‘meet the challenge’ and achieved an outcome of $900,000: a cost overrun of $100,000 nominally a project failure.

Organisation B assessed their project and set the project budget at $1,200,000. Organisation B’s team did ‘a good job’ and achieved an outcome of $1,100,000: a profit of $100,000 nominally a project success.

But which project is really successful?? The one that cost $900,000 or the one that cost $1,100,000 to produce the same output?

3. The sunk-cost fallacy

The term sunk cost refers to any cost (not just monetary, but also time and effort) that has already been paid and cannot be recovered. Psychologist Daniel Kahneman explains this in his book, Thinking Fast and Slow: organisms that placed more urgency on avoiding threats than they did on maximising 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 behaviour than the promise of gains.

Consider this scenario: you buy a movie ticket only to realise the movie is terrible, you could either:

• Stay and watch the movie, to ‘get your money’s worth’ since you’ve already paid for the ticket (sunk-cost fallacy); or
• Leave the cinema and use that time to do something you’ll actually enjoy.

More than half the population will stay to avoid the loss and waste the afternoon.

4. The anchoring effect

We make decisions based on the anchoring effect. The anchoring effect essentially works like this: rather than making a decision based on pure value, we factor in comparative values by considering how much value the current option offers when compared to another option or value.

Behavioural economist Dan Ariely, the author of Predictably Irrational, uses this example to illustrate the bias. He places two kinds of chocolates for sale in a booth: Hershey’s Kisses and Lindt Truffles. The Kisses were priced at 1 cent each, while the Truffles were 15 cents each. Considering the quality differences between the two kinds of chocolates and the normal prices of both items, the Truffles were a great deal, and the majority of visitors to the booth chose the Truffles.

For the next stage of his experiment, Dan offered the same two choices, but lowered the prices by one cent each. So now the Kisses were free, and the Truffles cost 14 cents each. 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 (for more see ‘The innate effect of bias’).

The good news is you can seriously limit the effect of bias by firstly being aware of the problem and secondly embracing diversity; as everyone has their own set of biases, working with a diverse group of people can balance out many individual biases. Conversely, taking the comfortable option and surrounding yourself with people who think just like you will amplify the effect of bias.