How Optimism Bias Can Undermine Small business management

Presented by Paystrubmakr.com      By John Wolf    

Do we fall into no base optimism? Most of the population is influenced by optimism bias.  You may say that the people are suffering from having a positive view of the future with no solid base to do so. A question can arise about the use of the definition as suffering; it may be better to use the term positive thinking and determine that optimism is a positive way to view a situation.

Quote from The optimism bias Prop. Tali Sharot

Optimism bias definition can be done

When you over-predict success and under-predict failure, that’s optimism bias.

Cognitive Neuroscience Professor at University College London, Tali Sharot, defines optimism bias as a phenomenon in which “we overestimate the likelihood of positive events, and underestimate the likelihood of negative events.”

Examples of optimism bias include:

• The idea of getting divorced
• The risk of suffering a car accident
• The possibility of suffering from cancer

Overestimating

•  Your life span
• Workplace success
• One’s children

Being a biased optimist can make you lose the understanding of the reality of your workplace. Overestimating your success in the job market can cause you to think that it is hard work that made you successful.

With this in mind, It’s easy to have the idea that if you did it with hard work, another person can work hard and do it. When you meet someone that has no job, you will think that this person did not work hard enough.

00  Some average full-time recruiters can hire up to fill 54 positions per year. An average hiring manager will hire less.

If you are a hiring manager and you make yourself believe that your hiring skills are highly above average, you may commit a vanity sin and ignore the advice of a practical hiring expert that lives in the real world.

Your optimism bias will make you believe in being a super HR executive. You’re better at hiring than you are, which will impact the quality of your team for the future negatively.

1. Recognize your problem with optimism bias. It affects you the same as unconscious bias creeps in when you think about race or gender, optimism bias can sneak in the same way and make you believe that you are an above-average hiring super manager. Once you are convinced that it’s possible, that you can think you’re doing better at hiring than you do.
2. Consult actual experts. It can be an experienced recruiter or another HR manager who has a good hiring record, looking for advice will help you get a balanced and unbiased decision when you decide between candidates.
3. Make sure that you evaluate all the candidates against objective criteria. Having solid reasons and standards will help you to see clearly and can protect you from optimism unconscious biases.

A 2017 study found that close to half of all small businesses do not last after their fourth year. Are you going to be one of those four-year live span or those who survive and become the successful ones?

Under the influence of your optimism bias, you may believe so. In the case that you ignore the danger of optimism bias, you will not act appropriately to avoid it and end failing.

According  Creditdonkey

There are no 100% guarantees for the success of your business, but if you do not offer something that the public loves, you will undoubtedly fail. No one cares about what you love.

For example, you can love your food and think that it is excellent and open a small restaurant offering this ethnic food of you or healthy organic food you believe that people should eat. That is a biased optimism and a baseless business. You should cook some food at home and go out to the street to give it to the public to try, and according to the reaction of the people who tried it, you could take the final decision about what you are going to offer in your restaurant or if you are going to open it or not.

Take yourself far from your dreams by having your eyes opened to reality. Opening a business starts long before you invest in the actual business. Look at the industry you are thinking of joining, Learn about the succeeded and failed to avoid making the same mistakes that those who failed made.

Do not hesitate to spend money on studies and consulting professionals. Your business plan should be made with no optimism bias but on facts that are based on reality.

If you are thinking, “It will all work out,” whenever problems come up, you are in a dangerous optimism that can hurt your business.

“whatever can go wrong, will go wrong.”

You can be lucky in part of the time that you were counting on your luck or “your dreams come true,” but reality will mostly hit your face when you have employees that are not capable of doing the right things. Read these articles to learn how to avoid falling with your workforce feedback and performance improvement plans.

If you fall into the illusion that things will always miraculously resolve themselves and that you’ve hired the perfect employees, you got the optimism bias striking your business again.

Nevil Maskelyne, A British stage magician, wrote in 1908:

There is a difference between having a positive attitude towards your workforce and treat your employees kindly and thinking that they can do what they are not well trained or even lake the traits or the skills for it.  Hiring the right employees is the same as buying the right tool for the job.

Read Hiring The Right Employee

Before you hire your first employee, create a Handbook. Read  How to Write an Employee Handbook, a Tutorial for Small Business. That will give you clear guidelines for everything that your employees should know, from vacation accruals to dress codes.

Problems will come, you can not avoid it; you are dealing with human beings of different types; you will see the cultural difference that affects your workers and may cause conflicts at the workplace. Do not drag the issue; address it right away.

Do not tolerate negative cases like harassment or other bad behavior like Bulling. Got a bully? Here is what to do.

You can not be “optimistic” when it comes to trouble makers at your workplace. You better take the right measures before you fall into legal cases filed by the victims or losing good employees because your workplace is not protecting them as they are entitled. Do not let your emotions to put your business in danger. Act instantly towards any problem defending your team and your business.