The cost of unconscious bias in the workplace

Unconscious bias: The cost to your bottom line and how to disrupt it

As conversations around diversity, equity, and inclusion (DEI) and unconscious bias shift, I’m reminded of Shakespeare’s words: “A rose by any other name would smell as sweet.”

In other words, changing the terminology doesn’t change the reality. Research consistently shows that bias exists and impacts businesses daily. Instead of getting caught up in semantics, companies should stay focused on the tangible benefits—both cultural and financial—of fostering diversity and counteracting bias.

What it means for your bottom line - and how to address it

Changing an attitude you’re aware of is one thing. But what about the biases you don’t even realize you have? That’s the challenge of unconscious bias or implicit bias—deep-seated perceptions that shape our decisions without us realizing it.

According to the Kirwan Institute for the Study of Race and Ethnicity at Ohio State University, unconscious bias refers to “the attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious manner.” These biases, both positive and negative, are triggered automatically, without intentional control.

Unconscious bias influences hiring, promotions, and everyday interactions in the workplace. It can be based on factors like gender, race, age, education, appearance, and even something as simple as a name or accent. In fact, researchers have identified more than 150 types of unconscious bias in the workplace.

If you doubt the impact, consider this: As mentions of diversity, equity, and inclusion have declined on earnings calls, so has progress in leadership representation. For the first time since 2005, the percentage of women in C-suite positions across publicly traded U.S. firms dropped—from 12.2% in 2022 to 11.8% in 2023 (S&P Global, 2024).

Similarly, the share of Black workers in the S&P 100 workforce declined from a peak of 17% in 2021 to 16.8% in 2023—signaling that post-George Floyd-era progress has stalled or reversed (Bloomberg, 2024).

Why does unconscious bias happen?

Our brains are wired to categorize information quickly—it’s a survival mechanism that helps us process large amounts of data. But in today’s workplace, these mental shortcuts can reinforce stereotypes, leading to biased decision-making.

Bias can show up in hiring (favoring candidates who are “similar” to us), performance evaluations (associating confidence with competence), and everyday interactions (whose ideas get heard, who gets promoted). The result? Companies miss out on diverse talent, perspectives, and innovation—all of which impact business performance.

The cost of bias: Why it hurts business performance

Beyond the ethical concerns, bias carries a real financial cost. 

• Employees who perceive bias are more likely to be disengaged at work. According to the Gallup State of the Global Workplace: 2024 Report, disengagement costs the global economy $8.9 trillion, or 9% of the global GDP.
• Bias impacts retention. A report by McKinsey and Lean In found that women who experience microaggressions are 2.7x more likely to consider leaving their company, leading to costly turnover.
• Bias stifles innovation. Employees who perceive bias are approximately 2.6x more likely to withhold ideas—holding back market solutions and competitive advantages.

From a leadership perspective, bias also limits who reaches the top. Research consistently shows that companies with diverse leadership teams outperform their competitors. A 2023 McKinsey & Company study found that companies in the top quartile for diversity were 39% more likely to financially outperform companies in the bottom quartile, up from just 15% in 2015.

In short: Bias isn’t just a workplace fairness issue—it’s a business performance issue.

How to identify and address unconscious bias

If you’re not measuring unconscious bias in your organization, you’re likely underestimating its impact. Here’s where to start:

1. Know your baseline

You can’t fix what you don’t measure. Go beyond surveys—often skewed by social desirability bias—and use tools that assess real decision-making patterns through simulations. Complement this with quantitative and qualitative data from hiring, promotions, and exit interviews for a more accurate picture.

2. Recognize common workplace biases

Unconscious bias shows up in many ways, including:

• Affinity Bias: Preferring people who are similar to you (e.g., hiring someone because they went to your alma mater).
• Perception Bias: Making assumptions about people based on stereotypes (e.g., assuming a woman will leave after having children).
• The Halo Effect: Letting one positive trait influence overall judgment (e.g., thinking a tall candidate is naturally a better leader).
• Confirmation Bias: Seeking out information that supports existing beliefs (e.g., only noticing when women leave the workforce but ignoring those who stay).
• Groupthink: Prioritizing conformity over individual opinions (e.g., employees staying silent in meetings to fit in).

3. Take action: Train, reinforce, and measure

Addressing bias isn’t a one-time training—it requires continuous reinforcement. Best practices include:

• Scenario-Based Learning: Placing employees in realistic workplace situations to practice identifying and addressing bias.
• Data-Driven Insights: Analyzing how employees respond in learning simulations to identify patterns and improvement areas.
• Leadership Accountability: Ensuring managers and executives are trained in recognizing and mitigating bias in decision-making.

Final thoughts

Unconscious bias is costly—hurting engagement, innovation, and the bottom line. But it’s not inevitable. With the right data, training, and behavioral insights, organizations can shift mindsets, improve decision-making, and build more inclusive, high-performing workplaces.

Want to measure and reduce unconscious bias in your workplace?

Learning Pool’s adaptive compliance solutions help organizations pinpoint biases, track improvements, and drive real behavior change—ensuring that bias doesn’t stand in the way of business success.

 This post was updated on 6 March 2025 to reflect new insights and industry updates.

Deborah Mercier, Senior Compliance Counsel, is a licensed attorney with over 13 years of experience in the compliance field, spanning a diverse range of sectors.

She is deeply committed to developing engaging and effective ethics and compliance training programs and helping organizations align their business objectives with legal and regulatory requirements.