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Accountability makes for better decisions

May 08, 2000

Is there a way to get people to make workplace decisions using "just the facts," rather than their own biases? Yes, with some caveats, say the authors of a new study comparing auditors and salespeople.

The study, by J. Edward Russo, Margaret G. Meloy and T. Jeffrey Wilks, shows that auditors are much less likely to distort new information when they make decisions than salespeople, who are drilled to believe in themselves and their message. Neither group is able to make completely unbiased decisions, however. And when salespeople are held more accountable for their decisions by supervisors, they are likely to shed their biases, whereas auditors' decisions don't improve with more accountability.

Russo is a professor of behavioral science at Cornell University's Johnson Graduate School of Management, Wilks is completing a Ph.D. at the Johnson School and Meloy is an assistant professor in Cornell's College of Agriculture and Life Sciences. Their study, "Predecisional Distortion of Information by Auditors and Salespersons," compared people in the two professions and observed how they made decisions.

"Decision makers should not believe things simply because they want them to be true," says Russo. "As obvious as this principle may be, however, it is often violated."

As people are deciding between two alternatives, they may distort new information to support whichever alternative is tentatively preferred, he asserts. Russo also warns that "predecisional distortion of information can be costly. If an important business decision has to be made and new information can't get through, how do you make the right choice?"

The presence of predecisional distortion of information was tested by Russo and his fellow researchers in a decision-making experiment administered to two groups of professionals: 90 auditors with KPMG Peat Marwick, a Big Five accounting firm, and 76 salespeople with a large pharmaceutical company that requested its name not be disclosed.

The researchers selected auditors as a group of professionals less likely to distort information, among other reasons, because they are held legally liable if they produce biased audits. They chose salespeople as a group more likely to distort information, in contrast, because successful salespeople are characterized by their sense of conviction. They posited that this trait, needed to persuade buyers, might make salespeople more likely to persuade themselves and, therefore, to distort information to support their tentatively preferred option.

The study's results: While both groups exhibited substantial distortion of information with little reduction for professional decisions compared to nonprofessional ones, the auditors' distortion was substantially less than that of the salespeople.

However, when the salespeople were held accountable for their decisions, akin to a supervisory review, their pre-decisional distortion was cut nearly in half. Auditors, on the other hand, showed roughly the same amount of pre-decisional distortion when told they would be held accountable for their decisions by a supervisory review as they did without that extra layer of accountability. The researchers linked that second finding with the auditors' belief that they were always accountable, with or without immediate oversight.

For those seeking practical remedies from the experiment's results, the researchers sound a note of caution. They write that because people seem unaware they are distorting information, at least at the moment that bias is occurring, they are fully convinced of the soundness of their choices. That may make it difficult for distortion to be detected, either by decision makers or their supervisors, who cannot completely duplicate their subordinates' knowledge.

The auditors were tested during a three-day KPMG Peat Marwick training session. The experiment was administered to the pharmaceutical salespeople during a three-day company quarterly meeting.

Members of each group were presented with three scenarios: one related specifically to their profession, one that was a business question that could be answered by members of either profession and one that would produce responses that could be compared to those from a control group of students. The experiment also included variations that were used to test the effectiveness of accountability measures.

The decision specific to auditors involved a scenario in which the subjects had to prioritize responsibilities to two publicly traded client companies. The decision specific to salespeople involved a scenario in which the subjects had to decide which of two physician clients to visit during a brief trip to a small city in the salesperson's territory. The second professional decision involved choosing between two restaurants for a business dinner. The third decision, which could be compared to a student group, involved the professionals' acting as consumers choosing between the merits of two dry cleaners.
-end-
The study appears in the January 2000 issue of Management Science, a publication of the Institute for Operations Research and the Management Sciences (INFORMS(r)), an international scientific society whose 12,000 members apply scientific methods to help improve decision making, management and operations. Members work in business, government and academia and include Nobel laureates. For more details, visit this web site: http://www.informs.org.




Cornell University

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