Are You Anchoring Your Business to the Wrong Data?
Have you changed your views about COVID-19 months into this pandemic? Or are you anchoring to the same views you did in March?
For example, many people still believe the false claim spread by many prominent leaders in March that COVID is no worse than the common flu. They protest against public health measures such as wearing masks, despite top health experts frequently clarifying that masks save lines.
They also ignore new developments, such as the recent urgent requests by governors to stay at home and telecommute to tamp down the explosive third wave of COVID. Likewise, they fail to pay attention to just-published research showing that restaurants, gyms, hotels, and other crowded indoor spaces with prolonged exposure – including workplaces that fit such criteria – significantly increase COVID risk.
We tend to continue treading the same path based on information we initially received. That’s regardless of strong new evidence that our path leads off a cliff. The name cognitive neuroscientists and behavioral economists give to this dangerous judgment error is anchoring.
Anchoring is one of the many cognitive biases that lead us to make poor decisions. Recognizing its danger and impact helps us make much better decisions to manage risks wisely and survive and thrive in this pandemic.
Anchoring in Financial Services: A Case Study
Let’s consider the case of Lauren, CEO of a 130-people regional financial services company based in Texas that had a lot of difficulty with remote work at the start of the pandemic.
The company’s leadership team didn’t think they needed to prepare for a disruption of more than a week or two. This was because they followed early guidelines from the CDC to prepare for nothing more than a brief interruption due to a short-term outbreak.
As a result, the leadership team asked all of its workforce to come back to the office as states reopened, despite news reports of an increase in cases in Texas.
However, because of the company leadership’s perception that COVID-19 isn’t a big deal, neither the leaders nor employees took appropriate precautions when they returned to the office. Most did not follow guidelines on social distancing or wear masks.
Unfortunately, there was an outbreak of COVID-19 in the office traced to an all-hands meeting. Over two dozen employees caught COVID-19, including three C-suite leaders.
Several employees, including the COO, ended up in the hospital, and two older employees died. This led to a plunge in productivity, attrition, and low morale within the company, which led to the resignations of some key employees.
Lauren decided to contact me for a consultation in late April after learning about my work through a webinar I conducted about how business leaders can adapt to the changes brought by the pandemic.
Adapting to the New Abnormal
When I met with Lauren as well as the company’s COO and HR head over Zoom, I told them upfront that they have to start acknowledging the disruptions brought about by COVID-19. Continuing as they did will endanger their company’s bottom line and even survival during this pandemic.
At the start of the pandemic, most companies activated their business continuity plans and then just followed along as the months rolled by.
However, I wouldn’t advise continuing with these emergency measures throughout the minimal two years of the pandemic.
Companies need to go beyond emergency measures if they want to survive and thrive in the next few years. You need to adapt to the pandemic and accept the current reality of ongoing waves of restrictions as the new abnormal.
This essentially means transforming your internal and external business model if you want your organization to chart a productive and rewarding course during these troubled years.
Doing so will include taking a long, hard look at the elements that drive your business. It will also entail revising or, in some cases, even totally revamping your daily operations and business continuity plan.
Moving Forward From Anchoring
When I last spoke with Lauren a few months ago, she told me that after serious deliberation, she called for a leadership meeting to reexamine the facts on COVID-19. Fortunately, after being presented with overwhelming evidence that COVID-19 was a serious matter and that they needed to take immediate steps, the executives eventually acknowledged the gravity of the situation. The leadership team then decided to take the following steps:
- Lauren held a company-wide virtual town hall to debunk the erroneous information on COVID-19 on which the majority of the company had anchored.
- The leadership team rolled out a comprehensive remote work program, where employees were provided tech and equipment support. Employees can also report to the office, but it was strictly optional. The leadership team made sure that the office had all the necessary visual and physical cues to encourage social distancing. Reminders on wearing masks were placed strategically.
- The marketing team updated its external and internal collateral to include what the company was doing to make its virtual and physical spaces safe for its employees.
- The COO worked with the HR head on numerous retention efforts to prevent more employees from jumping ship.
- The sales team built on the marketing team’s actions. They also reached out to clients who had been previously irked with the company’s slow response to inquiries and complaints. The sales team presented all the changes being made to get the company up to speed operationally and assured clients of better service.
As a result of these efforts, the company was able to correct its course and finally get back to a productive path.
The strict policies on working onsite also minimized health risk, thereby lessening the company’s risk of accountability in case of an outbreak in the office. This was a heavy load off the C-suite’s back. They were finally able to focus on product development and saving client relationships.
Lauren informed me how relieved she was that they made the changes once the numbers of COVID-19 cases began to increase, prompting a pause of the reopening process that eventually led to a cycle of reopening and restrictions.
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