Uncovering Unconscious Bias

We may not be aware of them, but Corporate and Business Development Expert Mona Sabett says our unconscious biases are deeply rooted in our evolutionary pasts. Take the loss aversion bias, identified in 1992 by Amos Tversky and Daniel Kahneman, for example.

“That bias says that the pain that we experience from loss outweighs the pleasure that we experience from gain,” Sabett said during NICSA’s 2019 Strategic Leadership Forum. “That made a lot of sense back when we were hunters and gatherers in the savanna because even though the risk of being attacked by a lion may have been one percent, you didn’t want to weigh that against the value of foraging for food. You just wanted to avoid the ultimate loss.”

Of course, that doesn’t make sense today, Sabett said. In fact, unconscious biases can have negative impacts on our economic decision-making — and our decisions about people in the workplace. Sabett said multiple studies indicate that the typical workplace is not representative of our population — and it’s because of the biases we unconsciously express.

But why should this be important to asset managers? Sabett turned to a panel of diversity and inclusion experts from within the asset management industry to find out.

Panelist Dr. Stephen Horan, Managing Director, Credentialing, CFA Institute, said firms are interested in diversity and inclusion because it drives real results. “Today, 75 percent of equity and fixed income mutual funds are managed by teams,” he said. “This creates collective intelligence composed of diverse experiences and perspectives, which fundamentally allows the firm to solve complex problems in more efficient ways.”

Colleen Powell, Vice President, Director of Corporate Citizenship and Diversity, MFS Investment Management, said diversity and inclusion also improve the decision-making process. “If you need to solve complex problems, heterogeneous groups will have a more difficult experience working on that problem, but the result is highly superior to the result you can get working with a homogenous group.”

Rudy Rodriguez, Vice President, Diversity & Inclusion, Ameriprise, said part of the problem is we all have different professional networks. So when you lean on employee referrals, if the majority of your employees are white males, they will tend to refer white males as well. “Quite often, women and people of color also don’t have access to the same types of networks, which limits opportunities,” he said. “We’re focused on connecting people with different backgrounds and encouraging senior leaders to build their networks externally through diverse organizations.”

Powell’s experience as a woman of color in the workplace taught her an important lesson on exceptionalism. “I had to be open to people, and I needed other people to be open to mentoring and sponsoring me,” she said. “I’ve luckily found that in my company, but I think instead of searching for the exceptional unicorn in terms of diversity, what we need to do is build a culture that propagates success. We do this with white men, and we’re starting to do this more with white women.”

Rodriguez said senior leaders must actively demonstrate that they’re taking responsibility for diversity and inclusion. “One of the things we’ve done is had all of our executives take unconscious bias training and talk about it with respective staff,” he said. “That has started a really positive conversation.”

To that end, The Diversity Project, a NICSA initiative geared toward leveraging collective knowledge and wisdom to change the industry, is working to encourage a broader range of new candidates. For more information on how you can get involved, click here.

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