Business Law 2: Exploring Cognitive Biases, Examples, and Solutions

This assignment, addressing concepts from the textbook "Human Resource Management: People, Data, And Analytics," delves into ten types of cognitive biases prevalent in decision-making within a business context. Each bias is thoroughly described, accompanied by real-world examples illustrating its manifestation, and concludes with actionable strategies to counteract its influence. The assignment covers biases such as recency, primacy, halo effect, central tendency, leniency, "similar to me," idiosyncratic rater, confirmation, gender, and the law of small numbers. The analysis extends to practical scenarios involving employment law, including the classification of employees as exempt or non-exempt under the Fair Labor Standards Act, and addresses issues of termination and employee performance. The solution also provides a comprehensive overview of the legal implications of employee termination and the necessary documentation involved, offering a detailed understanding of how biases can affect different business processes.

Running head: BUSNESS LAW 2
BUSINESS LAW 2
Name of the Student
Name of the University
Author note

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RECENCY BIAS:
This is when a person can recall and remember something which may have occurred recently
to him and then compare it with the thing that may have happen a while back. It is based on
recalling things at the end of the list.
Example:
A person is told to remember 15 names that he might have met throughout the day. It is
observed that he will mostly remember the names that he first met with.
Ways of overcoming:
Working in control is very important and it is more important that one should not get carried
away by the performance that he had observed recently.
PRIMACY BIAS:
This is when one remembers better the things that are presented at the first or the information
is shared at the beginning than that of the information presented later.
Example:
A person is given with a list which has items noted down and then is asked about his own
liking; it is observed that the person will pick the first item rather than the items in the middle
or at the last of the list.
Overcoming:
A research can be done on the things needed and list must be prepared that includes longer
presentations.
HALO EFFECT:

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It is based on a judgment made for a person by someone. It is the way of perceiving things
about a particular person being good every time believing that the person has better values
than others.
Example:
Selecting one particular person in interview and rejecting others on the basis of only
perception that he or she can do it better than others and not making any remarks on others
who came for the interview.
Overcoming:
Judgment made must be a little conscious and expressions must be given at the second
chance given to the person. Also an interrogation must be made to self.
CENTRAL TENDENCY BIAS:
This is when a person considers most of the people around him as an average one and the
rates are given accordingly based on this perception.
Example:
A person placing most of the people at the middle on a 10 point scale and few with high or
low rate performances.
Overcoming:
Questions that are made must be clear and easy to interpret and no justification is required for
higher ratings along with raters must have the liberty to rate on the basis of perception he
made for others.
LEIENCY BIAS:

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This is when a person is more lenient to one person may be due to the relationship they have
or something other as compared to the other having no relationship with the person.
Example:
Two person doing the same task faces same problem but ne is managed and told properly
how to comeback and other not the result turns out to be satisfactory on the other side.
Overcoming:
Each one should be given equal importance and must be treated equally. Ratings given must
be objective and not subjective and it may depend on how one is performing and not anything
else (Brown, Inceoglu, & Lin 2017).
SIMILAR TO ME BIAS:
This is when a person prefers a person who is more similar to him and this influences the
work issues and also the decision making of the person. Here the chance of getting
information about the person becomes less as the cloud of biasness gets over the person and
disables him from doing the work properly.
Example:
During an interview a candidate may get selected as the interviewer is very quick to judge
him because of the similarity in clothes, way of talking and even personality.
Overcoming:
Areas of overlapping the potential must be checked and implemented to overcome this kind
of biasness (Nasie et al. 2014).
IDIOSYNCRATIC RATER BIAS:

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The simple meaning of this is that the human beings are very unreliable raters when it comes
to rate others and it is all about rating self and not others.
Example:
Ratings are important in organization for measuring the performance level and appraisals
associated. This bias distracts the person from doing the same and give appropriate ratings to
others that should be given actually.
Overcoming:
Eliminating performance reviews is very important also proper management tools must be
undertaken in order to have a description of the situation (Sezer et al. 2016).
CONFIRMATION BIAS:
This is a type of cognition which involves favoring information that gives a confirmation of
the previously existing beliefs and biases.
Example:
The best example can be given as a person believing that left handed persons are more
creative and innovative than that of right-handed people.
Overcoming:
People must be okay with the disagreements that others make and it is completely normal to
ask questions if any doubt occurs (Tsohou, Karyda, & Kokolakis 2015).
GENDER BIAS:
This is when people discriminate others on the basis of genders they have. This kind of bias is
mostly seen in workplace and is mostly based on the opposition to personal bias.
Example:

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Unequal pay is the most common example of this kind of bias where women are paid less for
the same work that men do in the same organization they may have the same experience and
opportunity in the organization as well but are still paid less than their opposite gender.
Overcoming:
It is important that the employer gives and pays equal attention to both the genders despite of
the fact that they both are working for the same organization equally. Women must be given
equal importance as that of men if working n the same field and project (Bonita & Beaglehole
2014).
LAW OF SMALL NUMBER BIAS:
This is basically a judgmental bias where an assumption is made that the characteristics of a
sample population can be derived from a small number or a data sample and the observations
made.
Example:
A drug is effective for 80 percent people therefore out of 5 how many will respond. Many
people will give a reason that 80% means 4 out of 5, so if 5 people are treated, exactly 4 will
respond.
Overcoming:
Different people have different opinions and perceptions and hence react accordingly.
Selection method criteria must be made concise and clear and decision making should be firm
in this case (Busenitz & Barney 1997).
1) In this scenario, the outside employee is regarded as an exempt employee under the
Fair Labour Standard Act. Therefore, as per provisions of fair labour standard Act, an
employee to be regarded as an exempt employee must ensure the following,

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 his or her salary is at least $23,600 per year ($455 per week), and
 his or her payment is made on a salary basis and
 Performs the exempt job duties (Blyton, 2017).
However, the person moves from outside to inside sale, become a non-exempt
employee from an exempt employee, therefore, he is liable for the following rights of an non-
exempt employee,
 A fixed salary for the week instead of paying the employee by the hour.
 Right to get over time overtime payment for hours worked over 40 per
workweek which includes any fixed and regularly recurring period of 168
hours in seven consecutive business day and 24-hour periods, at a rate not less
than one and one-half times the regular rate of pay.
2) A highly skilled machine mechanics is recognized as a exempt employee under the
Fair Labour standard Act. Further, as per the provision of FLSA, an exempt employee
needs to earn $455 per week to be considered as an exempt employee (Andrias,
2018). In this case, the person earns $700 per week and works for 40 hours.
Therefore, he is not liable to overtime like any other exempt employee under FLSA.
3) 1ST Job-
10 Hours per week on $10 per hour. Therefore, 2hours per day work (calculated on a
minimum 5days workweek)
Per day income- 2*10= $20

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Per week income- 20*5= $100
Regular rate of pay- total compensation per week/ total working hours per week =
100/10 = $10
OT to be calculated on the basis of one or one half time of $10, that is either $5 or $10
per extra hour if works more than 40 hours in a workweek.
2nd job:
30 Hours per week on $12 per hour. Therefore, 6 hours each day (calculated on a
minimum 5days workweek)
Per day income- 6*12= $36
Per week income- 36*5= $180
Regular rate of pay- total compensation per week/ total working hours per week =
180/12= $15
OT to be calculated on the basis of one or one half time of $15, that is either $7.5 or
$15 per extra hour if works more than 40 hours in a workweek.

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Some of the questions that would be asked to the supervisor are why Jane is being
considered for termination what are the performance benchmarks that she has failed to meet
while working for the organization and if she has provided any legitimate reason for reporting
late to work on a regular basis (Falcone, 2017). The latter is especially important for
clarification given that working professionals who are also full time parents and who have
dependents at home often find it difficult to come to work on time or at a fixed hour, hence
this is something that needs to be considered when contemplating the termination of an
employee (Falcone, 2017).
Some of the questions that would be asked to Jane are how long she has been working
for the organization, the terms and conditions under which she has been hired by the
organization and her personal reasons for coming in late to work on a regular basis. Jane will
also be asked what it is that she is finding difficult about her work to the extent that her
performance is seen to suffer, and whether or not her relationship with her supervisor is
positive as a negative relation with an immediate boss can have an impact on the work
standards and patterns of employees (Fijalkowska et al., 2017).
Some of the documents that would be asked for review are her contract letter, which
was provided to her at the time of joining, evidence or a history of her medical records and
documents of awards, recognition or appraisals that she may have received from her firm
until date. She would also be asked to provide a copy of her latest salary slip. All of these
documents will provide an understanding of whether or not Jane is a competent worker and
whether or not the firm has the right to terminate her services based on the grounds that have
been cited in the given scenario (Tullar et al., 2016).
The fact that Jane is not being able to meet the standards of the organization is itself
ground enough to terminate her services. Furthermore, her inability to maintain discipline

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while doing her work and her coming in late to work in particular is something that is setting
a bad standard for the employees at the organization. It is therefore fair that she be terminated
from the ranks of the organization and be handed over the documents that are necessary for
her release from the organization to be officially sanctioned (Razack & Upadhyay, 2017).
The documents that Jane is going to be provided with at the time of her termination
are her release letter, her last updated salary slip and an outline of all the voluntary work that
she partook while serving the organization, if any at all. All this will serve as evidence of the
fact that she has served the organization for a significant period of time, and that for as long
as she was with the organization, she worked just like any other employee, meeting the goals
and objectives of the organization, albeit with a lot of difficulty (Razack & Upadhyay, 2017).
The termination meeting for Jane will be conducted by the HR manager of the
organization. This is the person who will sit together with the operations manager of the
organization to finally decide on why it is that Jane is being released from the organization
and why her termination from the organization is not something that can be re-considered.
Thereafter the HR manager will go through all the important documents that will have to be
handed over to Jane at the time of her release of the organization so that there are no dues on
the part of the organization where Jane is concerned (Huizinga et al., 2019).
Once the termination meeting has taken place, and Jane has been informed as to why
she is being released from the organization and has also been handed over all of the necessary
or required documents so that she can immediately apply for another job in a different
organization, the HR Manager will have to sit together with the Operations Manager to
decide why again, the decision to let her go was taken and a decision in this respect will have
to be arrived at as to how the change can be communicated to other employees of the
organization (Huizinga et al., 2019).

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The day after Jane is released, the employees of the organization will be called
together and they will be offered an explanation as to why Jane was released from the
organization, especially the type of standards that she failed to meet and which got her fired.
The employees of the organization will then be provided with the suggestions and
recommendations that they must consider in order to be able to work well for the long term,
so that they are able to carry themselves and work in the manner desired instead of
displeasing the upper management of the organization (Falcone, 2017).

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large organizations: Biases and heuristics in strategic decision-making. Journal of
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