Young businessman hiding head in the sand

Imagine that two people died in their sleep last night while in hospital. One patient died because his nurse didn’t inject him with his life-supporting medication. The other one passed away because his nurse injected him with the wrong drug.

In critical assessment, most people would be far more lenient on the nurse who failed to administer the medication than on the one who injected the wrong substance. The latter would likely be investigated to determine if the act was negligent or criminal.  Yet, the outcome was the same: both patients died.

The paragraph above describes a prevalent yet rarely talked about human cognitive flaw – the Omission Bias. In layman’s terms, we have the tendency to judge activity that causes damage as far worse and less moral than inactivity that causes the same damage.

This raises obvious questions:

  1. What are the consequences of such flawed thinking patterns in business, particularly in retail?
  2. If the individuals and teams within retail organisations operate unaware of the potential impact of omission, what is the damage? What opportunities are lost?

To get an idea about how the Omission Bias may impact a retail organisation, let’s consider three scenarios: one involving a customer, another one involving an employee, and finally an operational case related to stock delivery.

Neglected Customers

A customer becomes frustrated in a store due to a perceived lack of service, but a staff member does nothing to rectify the situation. Another customer walks out of the store equally angry, but this time he was aggravated by the actions of a staff member.

The outcome is identical, but management will be much tougher on the second employee.

Negligent Employees

A manager gives incorrect instructions to a store staff member and as a result promotional materials are damaged. In another store, the manager simply leaves the promotional collateral unpacked. The result in both stores is the absence of promotional displays during a key trading period.

Yet again, the manager who took action, albeit incorrectly, would be dealt with harsher than the manager who did nothing. The latter would likely be given the benefit of the doubt – possibly something important impacted his ability to act.

Incorrect Stock Delivery Management

A message arrives from the Head Office that approximately half of the stock in the next delivery is defective, so the stores must check the consignment carefully and separate faulty items. In one store, a staff member physically moves all the stock into the store without recording the delivery in the stock system. In another store, the receiving person accepts the entire delivery into the system as correct.

Both people created considerable inventory errors, but the latter will be treated more severely than the former as, again, the omission looks less objectionable than the deliberate incorrect action.

Countering the Omission Bias

When trying to address flawed thinking patterns, the first step is the clear recognition that a problem exists. Management teams within retail organisations must be made acutely aware that – for no fault of their own – they carry biased thinking patterns in their minds. The Omission Bias is just one of them. And, that these biases can impact rational decision making.

But, merely relying on individuals to be aware that their thinking could be flawed is not a systemic solution, and consequently it doesn’t guarantee that their decision making behaviour will change. To consistently reduce the impact of the Omission Bias retailers must rely on the process – business procedures must be documented and clear in equating bad action with inaction if the net effect is the same.

Research shows that when the consequences / penalty for omission or bad action are the same, peoples’ reactions change and the bias is at least partially muted.

Retailers needs to recognise that omissions are not as innocent as they may appear. They make organisations sloppy, eroding the discipline required to run a quality organisation.  Furthermore, because they are judged less harshly than wrong actions, they are more prevalent.

I encourage you to start seeing omissions for what they truly are: passive misconduct. The fallout for the retailer is the same as blatant wrongdoing, so they must be treated as equally unacceptable.

Will this approach have immediate, massive positive impact? Not to start with, but if every instance of an omission (starting with the blatant ones) is properly handled, then as James Kerr said in Legacy: if everything we do gets better by 1%, the whole team will definitely became more powerful.  It’s an initiative that costs little to implement, but in long term can boost your organisation.

This article was first published by Inside Retail, Australia’s leading retail trade publication.


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Andrew Gorecki, MD of Retail Directions, has worked with the retail industry since 1985. Industry insiders appreciate his strategic advice and insights, as he lives and breathes for the industry. Andrew received a nomination for the Australian Entrepreneur of the Year Award in 2010.
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