FP&A is biased as everyone else…
FP&A professionals are human, and like all humans, we may have our own biases.
It's important to be aware of them, make efforts to minimize their impact on our work and eventually provide objective and unbiased insights and recommendations.
Questioning other peoples’ standpoints is part of FP&A’s daily job, for example, challenging our colleagues’ assumptions when analyzing business initiatives, budgeting or forecasting.
However, when it comes to our own knowledge and opinions, we rarely do this.
According to various studies, the better we are at crunching numbers and math, the more we fail at analyzing patterns that contradict our views.
Well, FP&A guys are good candidates to fall into this trap…
Be aware of these 4 biases common in FP&A:
🟡 Confirmation bias: seeing what we expect to see.
🟡 Overconfidence bias: overestimating one’s abilities, for example, accuracy of predictions.
🟡 Loss aversion: higher sensitivity to losses than to gains.
🟡 The bias of all biases – “I’m not biased” bias when people believe they are more objective than others.
Seeking out diverse perspectives, challenging our own assumptions, and being open to feedback and alternative viewpoints are crucial to overcome those biases.
By approaching analysis and decision-making with an open mind, we can bring greater value to our companies and stakeholders.
Consider the following kind of an anti-bias manifesto:
🟢 When performing your analysis start with key questions and problems rather than with ready answers and solutions,
🟢 Rely on evidence rather than personal intuition,
🟢 When challenging others base on supporting arguments rather than on a healthy skepticism.
❓ What kind of biases are you guilty of and how do you overcome them? Let me know in the comments.
#fpandaclub #fpanda #financialplanningandanalysis #finance
OK Boštjan Dolinšek