Cognitive biases policy (CBP) in performance improvements – the example of benchmarking

Abstract

PurposeDespite evidence showing that cognitive biases – the systematic errors made by humans during cognitive processing, are prevalent among decision-makers, there is a lack of theoretical models providing insight into how these limitations of human mind might affect decisions made during performance management. This study aims to fill this gap and contribute to performance management scholarship by proposing a conceptual framework broadening our understanding of the role of cognitive biases in performance improvements practices and by highlighting remedies for cognitive biases.Design/methodology/approachUsing benchmarking as an example, the authors integrate the knowledge from performance management and cognitive psychology literature. Examples of cognitive biases possible during benchmarking are used to illustrate how the limitations of human mind might have a critical role in performance management.FindingsThe cognitive biases might diminish the positive effect of performance improvement practice on organizational performance. As there is a prevalence of cognitive biases coupled with the inability of individuals to recognize and face them, the remedy for cognitive biases should be sought not at an individual but rather on an organizational level, in creating organizational cognitive biases policy (CBP).Originality/valueThe presented model provides new insights into the role of cognitive biases in performance management and allows seeing CBP as a safeguard against the effects of cognitive biases on performance. By referring to cognitive biases and CBP, our model also helps to understand why the same performance improvement practices might incite different opinions among decision-makers.