A company initiates a reorganization of its marketing department aiming for a 40% increase in productivity within six months, influenced by optimistic industry benchmarks. This ambitious target, set early on, becomes the anchor for all subsequent planning and action.
As the reorganization progresses, it becomes evident that achieving a 40% productivity boost is unrealistic due to unanticipated challenges with integrating new digital tools and the team’s need for additional training. Despite these signals, leadership persists with the original target, leading to resource misallocation, resistance to critical feedback, and declining team morale. Stress and burnout ensue as the team struggles against the tide to meet an unattainable goal, causing dissatisfaction and disengagement.
Do you know what went wrong? Its called Anchoring bias
Anchoring bias is a cognitive bias that refers to the human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making decisions. Once an anchor is set, subsequent judgments or decisions are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor.
For instance, if you are negotiating the price of a car and the first number mentioned is $30,000, that figure sets the anchor. Any negotiation or counteroffer tends to hover around that number, even if the actual value of the car might be significantly lower or higher. The initial price significantly influences your perception of the value of the car, regardless of the information that comes afterward.
This bias can affect various aspects of decision-making and judgment in everyday life, including financial decisions, negotiations, and assessments of value or probability. Understanding and being aware of anchoring bias can help individuals and organizations make more informed and less biased decisions
Do you recognise Anchoring bias in your team? here are the 5 stages of anchoring bias
Stage 1: Initial Anchor Setting
The leadership sets an ambitious goal for the reorganization based on an optimistic initial assessment or external benchmark—increasing team productivity by 40% within six months.
This goal becomes the anchor for all planning and expectations, creating a fixed point of reference that shapes the entire reorganization effort.
Stage 2: Confirmation and Commitment
Despite new information suggesting the initial target may be overly optimistic, the team’s planning and actions remain committed to achieving the 40% productivity increase. This commitment is driven by the desire to validate the initial decision, leading to a search for information that supports the anchor and ignoring or discounting contradictory evidence.
Resources are allocated aggressively toward achieving the anchored goal, potentially leading to inefficiencies or misallocation of efforts.
Stage 3: Resistance to Adjustment
As challenges arise, such as integration issues with new tools or the need for additional training, feedback indicating the need for goal adjustment is met with resistance. The anchored goal exerts a strong influence, causing leadership to underestimate or dismiss these challenges.
The organization continues to push towards the unrealistic goal, causing stress and potential burnout among team members.
Stage 4: Realization of Consequences
The consequences of pursuing the anchored goal become increasingly apparent—resource strain, declining morale, and missed opportunities for more realistic and adaptable planning.
The team may face increased dissatisfaction and disengagement, as the gap between expectations and reality widens.
Stage 5: Late Adjustment and Reflection
Eventually, the necessity for adjustment becomes undeniable. The organization may reluctantly revise goals, often after significant time and resources have been expended towards the unrealistic anchor.
Do you recognise these stages? Which stage is your project? Before you go to the 5th stage, lets plan how we can solve this anchoring bias in your team? Nothing is impossible when you join hands and ideas.