Who is the most famous traitor?
Judas Iscariot? Benedict Arnold? Scar from The Lion King?
In the UK, the current season of Traitors on BBC is riveting viewing, especially if you are as keen on psychology and human behaviour.
I won't ruin it for anyone who has been tuned in but the one thing I have noticed is that there is a lot of groupthink and momentum voting when the contestants get to the round table. Kudos to the producers for this as the best part of this segment is letting players "discuss/debate" their "evidence" before casting their individual votes.
It has made me think quite a lot about group decision-making in the investment space. We have all been in meetings when someone puts forward an impassioned case that gathers a momentum all of its own. You can blink and before you know it, you are being asked to cast your vote.
This can be especially pernicious if the person putting forward the proposal is the highest paid or most senior. This is known as the HIPPO effect.
HIPPO = Highest Paid Persons Opinion
A 2016 study from the Rotterdam School of Management found that projects led by senior leaders failed more often while projects led by junior managers were more likely to be successful. The junior managers had the benefit of critiques to their project plans from others that helped them build a stronger plan, while employees didn’t feel as able to give critical feedback to high-status leaders.
There are a couple of ways that you can avoid this bias if it becomes noticeable in your decision-making setting.
1. Slow down. It is important to review a proposal properly before making a decision, so allowing more time will help remove some of the emotion in the moment.
2. Rely on data. When you depersonalise the decision and rely on the evidence, it takes away some of the power of the HIPPO.
An overall strong decision-making process will mitigate this bias naturally as well as good corporate culture. Neither of these things are easy but they are achievable with the right guidance/support.
Back to the Traitors. The game is great because it includes bluff, double-crossing and hidden agendas. It is almost like a normal investment committee....
