Anchoring – Why do we miss out on this golden opportunity?

Time and again I find my colleagues withering away a golden opportunity offered to them on a platter. The boss wants something to be done and asks a subordinate to initiate a proposal. As initiating a proposal takes a lot of time and energy, managers tend to postpone it for the second and third reminder by the boss, or till they are forced to initiate action in the subject against a deadline. When finally faced with a deadline, the manager misses out on the thought process which should have gone into it.

It is my belief (a theory Y believer) that managers often fail to recognize the full benefits of the initiating process, and hence miss out on the golden opportunity of initiating proposals. What is this golden opportunity? Initiating a proposal provides an anchoring point. Psychologists have long recognized the key role played by anchoring in decision making. Moreover, two Israeli professors Kahneman and Taversky have got wide recognition for their study on the subject, and Kahneman also received the Nobel prize for Economic Sciences ‘2002 for his contributions on the subject.

What is the role of anchoring in decision making? Anchoring is the bias towards the initial value, recognizing that different starting points in decision making may lead to different estimates. If the decision making can be logical, and unbiased anchoring would be of no consequence, however decision making suffers from biases. And one of these is the adjustment bias, wherein human beings tend to make insufficient adjustment, they get biased in their evaluation by conjunctive and disjunctive events, and further anchoring in the assessment follows a subjective probability distribution.

What we managers often miss is that initiation of a proposal provides the anchoring point and hence sets a reference point against which all subsequent evaluations are done. As the initiation process for any activity involves a lot of mental input, the manager has the advantage in logically creating an anchoring point which is most suitable to his requirements. It is quite obvious that a hurriedly initiated proposal against a deadline, will not only miss out on the quality of the proposal but also miss such features which the manager could have put in, which could have better suited him.

A simple recognition that the initiation process will be giving one the opportunity to anchor the initiative to ones advantage, and subsequently all adjustments will get biased by the anchor point provided, enables a manager in steering the future actions to his advantage position, a position in which every manager aspires to be in.