The Office Ostrich Effect: Outgroups Damaging Organisational Resilience

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The Workplace

In the high-stakes world of business, decision-making is paramount. Every choice made by leaders and teams can have far-reaching consequences for the organisation’s success. However, what if I told you that lurking beneath the surface of these decisions lies a subtle yet powerful force that can distort judgment and hinder progress? This force is known as outgroup bias, and its effects on decision-making at all organisational levels but particularly in the boardroom can be profound and often overlooked.

What is Outgroup Bias? Outgroup bias refers to the tendency to favour members of one’s own group (the ingroup) over those who belong to other groups (the outgroup). These groups can be based on various factors such as race, gender, nationality, or even departmental affiliation within an organisation. While often unconscious, outgroup bias can influence perceptions, attitudes, and behaviors, leading to unfair treatment and missed opportunities for collaboration and innovation.

The Impact on Decision-Making: 

In the People Plus Science Boardroom Psychological Safety Benchmark (Australia), only 25% of board and executive leaders said that they felt their decisions were highly effective. More than 70% felt this was because they were not valued for their skillsets and experience. More than 60% said it was because they did not feel safe to speak up – leaving a lot of room for insights, learning, sharing and discussion outside of the boardroom and in the decision making process.

In the context of the boardroom, where critical decisions are made about the direction and strategy of the organisation, outgroup bias can manifest in subtle yet significant ways. 

Let’s look at Blockbuster video as an example:

Blockbuster Video was a dominant force in the video rental industry, with thousands of stores worldwide and a loyal customer base. However, in the late 1990s and early 2000s, as the internet began to revolutionise the way people consumed media, a new outgroup emerged: tech-savvy consumers who preferred the convenience of streaming movies online.

Despite warnings from industry analysts and some forward-thinking employees within the company, Blockbuster’s leadership failed to recognise the significance of this shift and the threat it posed to their business model. Instead, they remained focused on their traditional brick-and-mortar rental model and were slow to embrace digital distribution and online streaming.

As a result, Blockbuster lost ground to competitors like Netflix, which capitalised on the growing popularity of streaming services. By the time Blockbuster attempted to adapt by launching its own online platform, it was too late. The company filed for bankruptcy in 2010, and the once-iconic brand became synonymous with missed opportunities and failure to listen to outgroup perspectives.

Workplaces should be psychologically safe, welcoming and value the skills, and experience around the room. The power of diversity is the power of the collective . Inclusion fuels innovation, unlocks potential, and fosters a sense of belonging where everyone can thrive. We need to get the foundations right.

The predictive brain

Neuroscience says that your brain dismisses outgroup members within a fraction of a second – a problematic response that is hardwired into how the brain categorises social groups.

Humans have a deep-seated tendency to categorize others into “us” and “them,” a process that occurs within fractions of a second.

This innate response, deeply embedded in our neural circuitry, influences how we perceive and interact with the world around us. While this might have served evolutionary purposes by helping our ancestors quickly identify allies and threats, it also shapes how we respond to people in our modern, interconnected societies, particularly in diverse settings like the workplace.

Survival Mode

Far reaching consequences

Findings published in Social Cognitive and Affective Neuroscience reveal how our brains might react differently to feedback depending on the group affiliation of the observer.

In this study, results showed that the presence of an outgroup observer could reduce neural reactions crucial for learning from feedback, specifically affecting the feedback-related negativity response in the brain. Conversely, the presence of an ingroup member triggered typical neural feedback responses, which are essential for learning and behavioral adjustments.  This suggests that the brain’s mechanism for processing feedback is less active when dealing with perceived outgroup members, potentially inhibiting learning and adaptation.

In workplaces where diverse groups must work together, ignoring feedback from outgroup members — whether due to unconscious bias or explicit social categorisations — can hinder organisational resilience (effectiveness and growth). This points to a crucial area for leaders and managers to address: fostering an inclusive culture where feedback from all members is equally valued and considered.

The consequences of outgroup bias in the boardroom can be far-reaching. By favouring certain voices over others based on group affiliation, decision-makers may miss out on valuable insights and alternative perspectives that could lead to better outcomes. Moreover, outgroup bias can erode trust and cohesion within the leadership team, creating divisions and hindering collaboration.

“One of the most fundamental challenges organizations face is how to manage the interpersonal threats inherent in employees admitting ignorance or uncertainty, voicing concerns and opinions, or simply being different. These threats are subtle but powerful, and they inhibit organizational learning. For people to feel comfortable speaking up with ideas or questions — an essential aspect of organizational learning — without fear of ridicule or punishment, managers must work to create a climate of psychological safety” (Edmondson & Lei, 2014, p. 39).

Migitating outgroup bias

  1. Promote Diversity and Inclusion Initiatives: Implementing diversity and inclusion programs can help foster a culture where individuals from different groups feel valued and included. Research by Katherine W. Phillips, Paul Calello Professor of Leadership and Ethics at Columbia Business School, emphasises the benefits of diversity in decision-making processes, leading to more innovative and effective outcomes (Phillips, 2014).

  2. Provide Bias Awareness Training: Offering training sessions that raise awareness about unconscious biases can help employees recognize and address their own biases. Studies, such as those conducted by Banaji and Greenwald (2013), highlight the effectiveness of bias awareness training in reducing prejudicial attitudes and behaviors.

  3. Encourage Cross-Group Collaboration: Facilitating opportunities for intergroup interactions and collaborations can help break down stereotypes and foster positive relationships among team members. Research by Pettigrew and Tropp (2006) demonstrates the positive effects of intergroup contact in reducing prejudice and promoting social cohesion.

  4. Implement Fair Evaluation Processes: Ensure that performance evaluations and promotions are based on objective criteria rather than subjective judgments, to mitigate the impact of bias. Studies by Dovidio et al. (2008) suggest that fair evaluation processes can help minimize the influence of stereotypes on decision-making outcomes.

  5. Establish Clear Communication Channels: Promote open and transparent communication channels where all team members feel comfortable expressing their ideas and concerns. Research by Edmondson (1999) underscores the importance of psychological safety in enabling effective communication and learning within teams.

  6. Encourage Perspective-Taking: Encourage employees to actively seek out and consider different perspectives, which can help challenge stereotypes and biases. Research by Galinsky and Moskowitz (2000) suggests that perspective-taking can lead to more accurate perceptions and less biased decision-making.

  7. Lead by Example: Leaders should demonstrate inclusive behaviours and actively challenge biased attitudes and behaviours within the organization. Studies by Rink et al. (2013) highlight the role of leadership in shaping organisational culture and promoting diversity and inclusion.

  8. Provide Opportunities for Skill Development: Offer training programs and resources to help employees develop skills in areas such as empathy, active listening, and conflict resolution, which can facilitate effective intergroup interactions. Research by Kearney et al. (2009) emphasises the importance of skill-building interventions in reducing prejudice and promoting positive intergroup relations.

  9. Monitor and Address Bias in Decision-Making Processes: Regularly review decision-making processes to identify and address any instances of bias or discrimination. Research by Pager and Shepherd (2008) underscores the need for organisations to actively monitor and intervene in decision-making processes to ensure fairness and equity.

  10. Create a Culture of Accountability: Hold individuals accountable for their actions and behaviors, particularly those that perpetuate bias or discrimination. Research by Paluck et al. (2020) suggests that accountability mechanisms can help deter prejudicial behaviours and promote a culture of respect and inclusion.

Key Takeaways:

  • Leadership involves creating psychological safety – an environment where diverse thoughts and perspectives are encouraged
  • Understanding and mitigating the natural biases that impact how feedback is received and integrated can lead to better team performance and innovation
  • Outgroup bias is a pervasive yet often overlooked phenomenon that can have profound effects on decision-making at all levels of the organisation but in particular in boardrooms.
  • By raising awareness of this bias and taking steps to mitigate its influence, organisations can foster a more inclusive and effective decision-making process, ultimately leading to better outcomes and greater success in the long run.
  • Take steps to ensure that all feedback – regardless of the source is valued equally.

“Neuroscience is the foundation for the approach we bring to every engagement, and it provides a means for consistently making informed decisions that accelerate organisational performance and well-being”.  Carolyn Grant

Interested in Learning More?

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