Overconfidence at Work

Overconfidence is the state of having too much confidence — confidence beyond levels justified by evidence. One trouble with that definition is that it provides little useful insight: how much is too much? A second trouble is that it exemplifies itself, in that it presumes that levels of confidence can be assigned with, um, confidence. Often we can do no such thing. Situations affected by overconfidence include hiring, making strategic choices, chartering projects, cancelling projects — indeed, most workplace decision-making. Despite the vagueness of the concept of overconfidence we can make useful conclusions, if we examine the concept more closely.

That's what Don Moore and Paul Healy did in a 2008 paper — cited in over 800 other works (according to Google Scholar), which is a goodly number for such a short time. The authors note that conflicting results in overconfidence research can be resolved when one realizes that the term overconfidence had been used to denote three different classes of judgment errors. They are:

• Overestimation: assessing as too high one's actual ability, performance, level of control, or chance of success.
• Overplacement: the belief that one is better than others, such as when a majority of people rate themselves "better than average."
• Overprecision: excessive certainty regarding the accuracy of one's beliefs.

These tendencies are not character flaws. Rather, they arise from the state of being human — not in the sense of "to err is human," but, as a direct consequence of human psychology.

What is surprising is how little we do in organizations to protect ourselves and the organization from the effects of overconfidence. Indeed, some of our behaviors and policies actually induce overconfidence. Here are three examples.

Unrealistic assessments of the capabilities of others

A phenomenon known as the Dunning-Kruger Effect causes us to confuse competence and confidence. That is, we assess people as more capable when they project confidence, and inversely, less capable when they project uncertainty. This can lead to decision-making errors in hiring, and in evaluating the advice we receive from subordinates, consultants, experts, and the media.

Unrealistic standards of precision

When we Situations affected by overconfidence
include hiring, making strategic choices,
chartering or cancelling projects —
indeed, most workplace decision-makingevaluate projected performance for projects or business units, we require alignment between projections and actuals. The standards we apply when we assess performance typically exceed by far any reasonable expectations of the precision of those projections. This behavior encourages those making projections to commit the overprecision error.

Unrealistic risk appetite

Assessments of success in the context of risk, and our ability to mitigate risk, are subject to overestimation errors. By overestimating our chances of success, and our ability to deal with adversity, we repeatedly subject ourselves to higher levels of risk than we realize.

Cognitive biases that contribute to overconfidence in its various forms include, among others, the planning fallacy, optimism bias, illusory superiority, and, of course, the overconfidence effect. Most important, the bias blind spot causes us to be overconfident about the question of whether we ourselves are ever overconfident. We surely are. At least, I think so.  Top    Next Issue

Is every other day a tense, anxious, angry misery as you watch people around you, who couldn't even think their way through a game of Jacks, win at workplace politics and steal the credit and glory for just about everyone's best work including yours? Read 303 Secrets of Workplace Politics, filled with tips and techniques for succeeding in workplace politics. More info

For an extensive investigation of the role of overconfidence in governmental policies that lead to war, see Dominic D. P. Johnson, Overconfidence and War: The Havoc and Glory of Positive Illusions, Cambridge, Massachusetts: Harvard University Press, 2004. Order from Amazon.com

Read Kruger and Dunning's original paper, courtesy the American Psychological Association.

For more about the Dunning-Kruger Effect, see "The Paradox of Confidence," Point Lookout for January 7, 2009; "How to Reject Expert Opinion: II," Point Lookout for January 4, 2012; "Devious Political Tactics: More from the Field Manual," Point Lookout for August 29, 2012; "Wishful Thinking and Perception: II," Point Lookout for November 4, 2015; "Wishful Significance: II," Point Lookout for December 23, 2015; "Cognitive Biases and Influence: I," Point Lookout for July 6, 2016; and "The Paradox of Carefully Chosen Words," Point Lookout for November 16, 2016.

Your comments are welcome

About Point Lookout

Thank you for reading this article. I hope you enjoyed it and found it useful, and that you'll consider recommending it to a friend.

Point Lookout is a free weekly email newsletter. Browse the archive of past issues. Subscribe for free.

Support Point Lookout by joining the Friends of Point Lookout, as an individual or as an organization.

Do you face a complex interpersonal situation? Send it in, anonymously if you like, and I'll give you my two cents.

Related articles

More articles on Personal, Team, and Organizational Effectiveness:

Figuring Out What to Do First

Whether we belong to a small project team or to an executive team, we have limited resources and seemingly unlimited problems to deal with. How do we decide which problems are important? How do we decide where to focus our attention first?

Communication Refactoring in Organizations

Inadequate communication between units of large organizations is one factor that maintains the dysfunction of "silo" structures in large organizations, limiting their ability to act coherently. Communication refactoring can help large organizations to see themselves as wholes.

Office Automation

Desktop computers, laptop computers, and tablets have automation capabilities that can transform our lives, but few of us use them. Why not? What can we do about that?

Paradoxical Policies: I

Although most organizational policies are constructive, many are outdated or nonsensical, and some are actually counterproductive. Here's a collection of policies that would be funny if they weren't real.

Paradoxical Policies: II

Because projects are inherently unique, constructing general organizational policies affecting projects is difficult. The urge to treat projects as if they were operations compounds the difficulty. Here's a collection of policies for projects that would be funny if they weren't real.

See also Personal, Team, and Organizational Effectiveness, Critical Thinking at Work and Cognitive Biases at Work for more related articles.

Forthcoming issues of Point Lookout

Coming January 23: Judging Others

Being "judgmental" is a stance most people recognize as transgressing beyond widely accepted social norms. But what's the harm in judging others? And why do so many people do it so often? Available here and by RSS on January 23.

And on January 30: Conway's Law and Technical Debt

Conway's Law is an observation that the structures of systems we design tend to replicate our communication patterns. This tendency might also contribute to their tendency to accumulate what we now call technical debt. Available here and by RSS on January 30.

Coaching services

I offer email and telephone coaching at both corporate and individual rates. Contact Rick for details at rbrenlAqQpxcUxqjkoBZDner@ChacIKAFQKCSUoMlHhHDoCanyon.com or (650) 787-6475, or toll-free in the continental US at (866) 378-5470.

Get the ebook!

Past issues of Point Lookout are available in six ebooks:

• Get 2001-2 in Geese Don't Land on Twigs (PDF, USD 11.95)
• Get 2003-4 in Why Dogs Wag (PDF, USD 11.95)
• Get 2005-6 in Loopy Things We Do (PDF, USD 11.95)
• Get 2007-8 in Things We Believe That Maybe Aren't So True (PDF, USD 11.95)
• Get 2009-10 in The Questions Not Asked (PDF, USD 11.95)
• Get all of the first twelve years (2001-2012) in The Collected Issues of Point Lookout (PDF, USD 28.99)

Are you a writer, editor or publisher on deadline? Are you looking for an article that will get people talking and get compliments flying your way? You can have 500 words in your inbox in one hour. License any article from this Web site. More info

Public seminars

The Power Affect: How We Express Our Personal Power

Many people who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program. Here's a date for this program:

• A recording of a program presented 6:00 PM June 29 (Eastern Time), Monthly Webinar, Technobility Webinar Series. You can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
   
• A recording of a program presented 6:00 PM June 29 (Eastern Time), Monthly Webinar, Technobility Webinar Series. You can earn 1.0 Category 'A' PDU by viewing this program. View this program now.
   

The Power Affect: How We Express Our Personal Power

Many people who possess real organizational power have a characteristic demeanor. It's the way they project their presence. I call this the power affect. Some people — call them power pretenders — adopt the power affect well before they attain significant organizational power. Unfortunately for their colleagues, and for their organizations, power pretenders can attain organizational power out of proportion to their merit or abilities. Understanding the power affect is therefore important for anyone who aims to attain power, or anyone who works with power pretenders. Read more about this program. Here's a date for this program:

• A recording of a program presented 6:00 PM June 29 (Eastern Time), Monthly Webinar, Technobility Webinar Series. You can earn 1.0 Category 'A' PDU by viewing this program. View this program now.