CEO coronavirus response swayed by 3 biases

CEOs don't have road maps for unprecedented situations like the coronavirus pandemic, and instead rely heavily on their existing skills and personality traits in their response. 

When relying on these personal traits, leaders have their own decision-making biases, researchers from the University of Applied Sciences & Arts Western Switzerland, the China Europe International Business School and the University of Geneva, wrote for the Harvard Business Review. To better understand these biases, the researchers surveyed the CEOs of more than 500 Chinese firms and their COVID-19 response.

Here are the three opposing biases the researchers found, and how they affect crisis response:

1. "The glass is half full" versus "the glass is half empty." Whether a CEO's perspective is optimistic or pessimistic affects how they respond in a crisis. Both have their setbacks — being overly optimistic can put leaders out of touch with reality, while being overly pessimistic may lead to employee disengagement. The researchers recommend an open and approachable method that allows for employees to give feedback.

2. Costs versus people. CEOs shouldn't solely focus on cost or people at the expense of the other, the researchers said. Negative operating returns and a lack of motivation among employees are both detrimental to business. The authors recommended that instead of seeing where costs can be cut, asking, "How can we continue to compete?" 

3. Short-term versus long-term thinking. CEOs who are too focused on the short-term may make decisions that are harmful for future business, while those who are too focused on the long-term may miss needs that are essential for survival. The researchers recommend having a counterpart who can help map out the effects of short-term and long-term decision-making. 

More articles on strategy: 
Cleveland Clinic is advising United Airlines, whose CEO says 'airplanes don't have social distancing'
A case against using the term 'second wave' now: 5 takeaways
COVID-19 hasn't changed public opinion that private sector will drive healthcare reform

© Copyright ASC COMMUNICATIONS 2020. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Featured Content

Featured Webinars

Featured Whitepapers