Credit managers in construction must be aware of the factors influencing decisions.
In a recent Building Blocks Community webinar hosted by Handle.com’s Lori J. Drake, CBA, A-Core Concrete Cutting Inc.’s Corporate Credit and Contracts Manager D’Ann Johnson, CCE, delivered an insightful presentation titled “Unintentional Bias: Prejudice & Assumption.” Johnson emphasized how unconscious biases can impact professional decisions, offering valuable insights into how these biases affect the construction credit industry.
Here are five essential takeaways from her presentation that credit professionals can implement to enhance fairness in decision-making:
Recognize the Existence of Unconscious Bias
Unconscious biases affect everyone, shaping decisions without notice. These biases can influence risk assessment and stakeholder interactions in construction credit management. “Biases shape our decisions in ways we might not even notice,” Johnson noted. Recognizing these biases is the first step to making fairer decisions. For instance, Johnson shared a scenario where a credit manager favored long-term clients over newer ones without realizing it, leading to missed opportunities with potentially reliable new clients.
Understanding unconscious bias also means looking inward and being open-minded. Activities like implicit bias tests and open discussions can help credit professionals better understand biases. Creating a culture where it’s safe to discuss and challenge biases can lead to a more inclusive workplace and more objective decisions, enhancing credit management‘s fairness and effectiveness.
Understand Bias Impact on Decision-Making
Biases result in unjust treatment and flawed decisions, potentially leading to overlooking creditworthy clients or making unfair judgments based on assumptions in credit management.
“When we let bias guide us, we risk making decisions that aren’t based on facts,” Johnson emphasized. For example, she described a situation where a contractor from a minority group was given stricter credit terms than others with similar credit histories. Credit professionals can focus on objective, data-driven decisions by understanding how bias skews perceptions, ensuring fairness and accuracy.
Recognizing the impact of bias can reveal patterns that aren’t immediately obvious. Credit professionals might see trends in clients who are misjudged due to bias. Adjusting evaluation criteria to be more inclusive improves credit decisions and builds a diverse client base, contributing to long-term growth and resilience.
Implement Strategies to Mitigate Bias
Standardizing credit evaluation procedures, using diverse review teams, and incorporating checks and balances can help reduce biases.
“By standardizing our processes, we can reduce the influence of bias,” Johnson advised.
These strategies ensure consistent criteria for all evaluations, minimizing personal biases. Johnson highlighted a scenario where a standardized scoring system helped a team realize they unfairly penalized small businesses. Regularly updating these procedures keeps them effective against new biases.
Using technology and data analytics can further reduce bias. Automated credit scoring systems and predictive analytics provide objective insights but must be designed fairly. Regular audits and updates ensure these tools remain impartial. Combining human oversight with technology creates a robust framework for unbiased credit management.
Promote a Culture of Inclusivity
Training programs that raise awareness about unconscious bias and encourage inclusivity are crucial. “Inclusivity isn’t just a policy; it’s a practice,” Johnson asserted.
Credit professionals can support and participate in these programs, fostering a more equitable workplace. Johnson recounted a success story where a team’s inclusivity training led to a more diverse supplier base, which improved innovation and business outcomes. Valuing diversity and encouraging different perspectives lead to more innovative and effective credit management practices.
Inclusivity also means celebrating diversity within the team. Encouraging team members from different backgrounds to share experiences enriches decision-making and leads to innovative solutions. This approach improves morale and helps serve a diverse client base. In the long run, inclusivity drives better business results by leveraging diverse strengths and insights.
Commit to Continuous Learning and Adaptation
Addressing unconscious bias is an ongoing effort. Regular training and staying informed about the latest research on bias and inclusivity are essential. “We must commit to lifelong learning to combat bias effectively,” Johnson advised.
Credit professionals should seek out resources, attend workshops, and engage in discussions about bias. Johnson shared a personal anecdote about attending a workshop that changed her perspective on age-related biases in credit terms. This commitment to learning ensures that individuals remain conscious of their biases and are equipped with the latest strategies to address them.
Staying updated with industry best practices and regulatory changes impacting credit management is also essential. Participating in professional associations, attending conferences, and engaging with thought leaders provide new insights and tools to address bias. This proactive approach ensures effective, equitable credit management practices in the construction industry.
Progressing Toward Fairness
By recognizing unconscious biases, understanding their impact, implementing mitigation strategies, promoting inclusivity, and committing to continuous learning, credit professionals can enhance decision-making processes and contribute to a fairer, more equitable construction industry.
Watch the webinar in full on the Building Blocks channel.