What We Miss When We Judge a Decision by the Outcome https://hbr.org/2016/09/what-we-miss-when-we-judge-a-decision-by-the-...

Behavioral Economics

What We Miss When We Judge

a Decision by the Outcome
by Francesca Gino

September 02, 2016

When people are judging the

quality of leaders’ decisions, they
tend to focus much more on
outcomes than intentions. For
example, they judge hiring
decisions not on the basis of
whether the decision was made
thoughtfully or fairly but on
whether the new employee
performs well. They judge the
quality of a product decision on
whether the product was well
received in the market, rather than
the quality of the process that led
to the decision in the first place.

As it turns out, this tendency affects virtually all human beings. When
evaluating others’ actions, most people focus more on the outcome of
decisions than on intentions, a phenomenon that psychologists call
outcome bias. A decision — such as taking time to review an
employee’s performance data and provide feedback carefully — is

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often judged to be lower in quality when it leads to a poor, rather than
a good, outcome.

The outcome bias is costly to organizations. It causes employees and

leaders to be blamed for negative outcomes even when they had good
intentions and used a thoughtful decision-making process,
considering all the information that should be taken into account.

Organizations and their leaders can benefit from understanding how

to help individuals look beyond end results. Ovul Sezer and Max
Bazerman of Harvard, Ting Zhang of Columbia, and I decided to
investigate potential ways to eliminate (or at least reduce) the
outcome bias. We focused on two possible solutions: evaluating
multiple scenarios simultaneously rather than in sequence in order to
best evaluate the quality of a person’s decision, and highlighting the
role of intentions during the evaluation process.

First, in a series of studies, we

YOU AND YOUR TEAM SERIES
asked various groups of
Decision Making
participants to evaluate situations
in which an individual who
wanted to be fair obtained an
unfavorable outcome, an
individual with selfish intentions
obtained a favorable outcome, or
both individuals were evaluated
How to Tackle Your Toughest
Decisions jointly. We expected that when
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evaluators had a chance to
Stop Second-Guessing Your
Decisions at Work compare the well-intentioned and
by Carolyn O’Hara selfish participants head to head,
How Leaders Can Let Go Without the evaluators would give more
Losing Control
weight to the individuals’
by Mark Bonchek
intentions than to their outcomes,
as compared to evaluators who
only focused on one of the individuals.

We made this prediction based on prior research that showed that

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common biases can be reduced or eliminated when people evaluate
courses of actions at the same time (simultaneously) rather than one
after the other (separately). For instance, Iris Bohnet, Alexandra van
Geen, and Max Bazerman found that when leaders assess employees’
likely future performance jointly (i.e., candidates are compared to one
another) rather than separately (candidates are evaluated one at a
time), they focus more on employees’ past performance and less on
gender and implicit stereotypes. Thus, this research suggests, joint
evaluation increases both efficiency and equality.

Contrary to this prediction, our participants weighed individuals’

outcomes more — and their intentions less — when evaluating them
jointly rather than separately.

In one study, for instance, participants evaluated a physician who

could choose between two equally effective drugs to treat a patient.
Participants also learned that, although the drugs were equally
effective in clinical tests, one was cheaper for the patient and the
other would generate more revenue for the physician. Participants in
the separate-evaluation condition evaluated one of the following two
conditions:

A physician prescribed the cheaper drug to save the patient money.

Despite these good intentions, the patient suffered from adverse
side effects and spent the night at the hospital.
A physician prescribed the more expensive drug to generate more
revenue for the clinic. Although the physician had selfish
intentions, the patient made a full recovery without side effects or
hospitalization.

Participants in the joint-evaluation condition evaluated both

physicians.

When participants evaluated physicians jointly, they rated the selfish

physician more positively than they did the well-intentioned
physician. However, when participants made their evaluations
separately, ratings for the well-intentioned physician did not differ

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from those of the selfish physician, suggesting that separate
evaluators were less affected by the outcome bias than joint
evaluators. That is, joint evaluators were more likely to neglect
intentions and overweight outcomes as compared to separate
evaluators. Thus, contrary to our expectations, joint evaluation
exacerbated, rather than lessened, the effect of the outcome bias.

Such evaluations affect behavior. In follow-up studies, we found that

they affect how people reward and punish others as well as whether
they want to interact with these individuals in the future. For
instance, participants rewarded with monetary bonuses the selfish
partner they had been assigned to work with because the outcome of
this person’s decision was good, but they did not award a bonus to the
well-intentioned partner whose decision led to a poor outcome. And
when participants had to decide whom to work with on a follow-up
task, they preferred the selfish partner over the well-intentioned one.

Next, we explored whether highlighting intentions would help

evaluators — particularly those who compare two or more people at a
time — overcome the pernicious effects of the outcome bias. In one
study, we found that requiring evaluators to make judgments about
decision makers’ choices before the result of those outcomes was
known reduced the outcome bias under joint-evaluation contexts but
not in separate-evaluation contexts.

The lesson: Requiring individuals to make judgments about people’s

decision-making process before the outcomes have been achieved is
an effective strategy to reduce the outcome bias in contexts in which
scenarios or decisions are evaluated simultaneously rather than one
after the other. For instance, when deciding whom to hire or promote
or what raise to give to employees, organizations usually evaluate
multiple people at the same time. In these situations, asking those
who are evaluating candidates to make decisions about them prior to
looking at whether the decisions the candidate made led to good or
bad outcomes for the organization would assure an unbiased process.

It is easy to celebrate or lament a particular decision or action based

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on how it turns out. But it is important to remember that the process
that led to the outcome, including the decision maker’s initial
intentions, deserve to be taken into account in evaluating the results.

Francesca Gino is a behavioral scientist and the

Tandon Family Professor of Business
Administration at Harvard Business School. She is
the author of the books Rebel Talent: Why It Pays
to Break the Rules at Work and in
Life and Sidetracked: Why Our Decisions Get
Derailed, and How We Can Stick to the Plan.
Twitter: @francescagino.

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