What Is The Recency Bias Effect? 5 Ways To Overcome It

Decision-making is a key skill for managers. Moreover, the decision-making needs to be rational as well! The recency bias is a cognitive bias that can affect how people make decisions. Recent events indeed tend to have a greater impact on our decisions than older events. We’re often more likely to act on the most recent information in the time frame or relevant to us. This phenomenon is known as the recency bias effect. But how does the recency bias effect impact decision-making in managers? And can we overcome it? This blog explores the impact of bias on decision-making in managers and offers ways to overcome it. Understanding the recency bias effect will better equip you to make informed decisions that will positively impact your team’s success.

What Is The Recency Bias Effect?

The recency bias effect is the tendency to focus on recent events and forget past experiences. In other words, when you think of choosing between some options, you are more likely to pick the one that is freshest in your memory. In behavioral economics, this is known as the availability heuristic. The recency bias manifests in various scenarios – from natural life settings to investing! For example, when investing, recency bias can often refer to investors’ tendency to overweight recent performance over past performance. However, recency bias is not limited to the financial sector. Recency bias can also manifest in other fields, such as education, health care, and definitely people management.

There are a few reasons why recent events tend to have a more significant impact on our decisions. First, recalling information close in time or relevant to us is easier. This is because our brain works better when things are familiar, and we can easily connect the dots between what we know and how it impacts our current situation. Second, recent events often carry more weight than older ones because they’re seen as more important. Staff members in decision-making positions often succumb to the recency bias effect since they are responsible for quickly making high-impact decisions!

Check out The Top 10 Manager Biases to save your team from harm.

Recency bias examples at work

• Performance reviews: A manager may focus solely on recent performance when evaluating an employee’s overall performance throughout the year, ignoring earlier achievements or struggles.
• Promotions: A manager may give priority to an employee who has recently demonstrated good performance, overlooking the contributions of other employees who may have consistently performed well in the past.
• Hiring decisions: A manager may be more inclined to hire a candidate who recently graduated from a prestigious university, even if other candidates with more relevant experience or qualifications apply.
• Project assignments: A manager may assign a high-profile project to an employee who recently completed a successful project, without considering the strengths and abilities of other team members.
• Disciplinary action: A manager may only focus on recent mistakes or misconduct of an employee, without considering their overall track record or previous contributions to the organization.

The impact of the bias on decision-making in managers

The recency bias is a cognitive bias that can distort decision-making in managers. It’sIt’s the tendency to form judgments based on recent events instead of considering all the information available. This bias can significantly impact decision-making, as managers may make decisions based on what has recently happened rather than taking into account all the information available. As a result, managers’ decisions suffer from short-sightedness and blind spots.

Distorted performance reviews

A performance review is designed to serve many functions. In the ideal scenario, they offer an objective assessment of the employee’s performance over a period. However, issues arise when recency bias creeps in.

The recency bias leads to distorted performance reviews. Managers may give high ratings to employees who performed well recently, even if the employee didn’t perform as well in the past. It is because recent events are more salient and memorable than older ones. Consequently, managers are influenced by recent factors instead of considering all the factors that led to those performances. Effectively, the performance reviews are unfair as they are not based on objective and broad judgment. Resultantly, employees who consistently maintain performance standards tend to lose.

Check out the comprehensive guide to performance reviews too!

Impact on employee’s performance and motivation

The recency bias can also hurt employee motivation. By giving high ratings to employees with recent performance, managers understand that excellent performance is expected in the short term. This creates blind spoilsport tendencies among employees. Employees become less likely to try new things or take risks, fearing losing their rewards if they don’t meet expectations immediately. As a result, companies may miss out on innovations and creativity because their employees are not driven enough. Instead, they just focus on being in the good books of managers.

Develops blind spots in managers

The recency bias can also lead to blind spots in managers. Managers may not be able to accurately assess employees’ past performances because they are focusing too much on recent events. This could be a big issue if the employee has been performing poorly in the past and their recent performance is just a fluke. In this scenario, the manager might not realize a problem until it’s too late, and the employee loses their job or status. Blind-spots of managers can cause a lot of trouble for teams.

Ways to overcome the recency bias effect

Diligently record performance

One way to overcome the recency bias is to record employee performance information systematically. It will allow managers to objectively assess an employee’s past performances and make more accurate judgments about their prospects. By doing this, companies can avoid making hasty decisions based on recent events.

Consult others

Another way to overcome the recency bias is to consult with other professionals who are around in similar settings. As they are not directly a part of the environment, they are more likely to take a broad, holistic approach to draw conclusions. You can also consult your colleagues to see if you have missed any relevant points. Further, you can introduce peer reviews in your assessment process too.

Create clear expectations

One of the best ways to overcome the recency bias effect is to create clear, concise expectations from the beginning onwards. This will allow employees to understand what they are expected to do and how their performance affects their rewards. Setting expectations this way will also encourage employees to strive for excellence rather than just meet minimal requirements.

Use technology to reduce subjectivity

Technology can be a great way to reduce subjectivity and bias in decision-making. By automatically tracking employee performance data, managers can quickly identify any patterns or trends that might indicate an issue. Managers can then use this information to create better training guidelines or adjust expectations accordingly.

Increase frequency of reviews

Another way to reduce the recency bias effect is to increase the frequency of reviews. This will give you an opportunity to revisit past performances and make corrections where necessary. By doing this, you can ensure that you consider the relevant facts and do not overlook an outstanding share of information.

Conclusion

Overall, the recency bias effect is a tendency for people to take more sweeping and less specific actions in light of new information. By understanding how this bias works and implementing strategies that can counteract it, you can foster a more objective decision-making process overall.

Thanks for reading! In this blog post, we have discussed the recency bias effect and how it can impact your decision-making. After reading this, you will be better equipped to overcome bias and make better decisions in various fields. So, stay tuned to Risely, and we’ll discuss ways to be a better manager and leader in our subsequent blog posts!

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