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Bias in the Hiring Process, Part 7

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The Problems Created by Knowledge Bias and Overconfidence Bias

Most people think they know more than they actually do and, as a result, become overconfident.  How do we know that?  Because, when put to the test, most people who think they have a solid understanding of simple things can’t actually explain the workings of everyday things… things they believe they fully understand.  For example, how does a refrigerator work? Or cell phone.  Zipper.  Sewing machine.  Crossbow.   Fountain pen.  Calculator.  Light bulb.   Most people think they know how these things work.  But when asked to explain it, they can’t.   This was discovered by Yale University researchers Leonid Rozenblit and Frank Keil, who conducted a series of studies asking hundreds of random people if they understood how a refrigerator (and other common things) works.  Rozenblit and Keil reported their findings in a paper titled “The misunderstood limits of folk science: an illusion of explanatory depth” published in Cognitive Science in September 2002. 

In these studies, the researchers asked people, in the first phase of the experiment, if they knew how a refrigerator worked and asked for them to give themselves a rating of self-knowledge.  Most said they had a high level of understanding.  But, in phase 2, they were then asked to produce a detailed, step-by-step explanation of exactly how a refrigerator works.  The vast majority were either silent or stammered nonsensical explanations.  Then they were asked to rate their self-knowledge of how a refrigerator works again.  Their ratings of self-knowledge dropped dramatically from phase one to phase two, after they were forced to face the fact that they were unable to explain how a refrigerator operated.  They did this with other items too.  Same result.  (If you doubt the validity of the experiment, try it with someone you know and watch the result.)   

Rozenblit and Keil dubbed this the Illusion of Explanatory Depth, IOED, saying that “Most people feel they understand the world in far greater detail, coherence, and depth than they actually do.”  They also found that IOED extends well beyond artifacts, to how people think about scientific fields, mental illnesses, economic markets and virtually anything most people think they are capable of understanding. People, in general, have overly positive self-evaluations of their own intellect and talent.  In fact, the more complex the information, the more likely the person is to have a knowledge gap and a blind spot to that gap.   Likewise, the harder the task, the more overestimation that happens. 

Unlike Socrates, who is credited with saying “The only thing I know is that I know nothing”, people tend to believe that they know more than they actually know and are better at tasks than they actually are.  Most self-evaluations are unrealistic and result in an overestimation of their chance of success.  So IOED leads to the Overconfidence Effect and Overconfidence Bias.  

Why does this happen?  Humans don’t like uncertainty.  So we collect information when faced with uncertainty.  But it is usually a superficial amount of information; just enough to get by.  With this, we are deceived into thinking that we ‘know’.  The more a person thinks they know, the more he believes he knows all about it.  This tendency to hold false and misleading assessment of one’s own skills, intellect, or talent – an egotistical belief that one is more knowledgeable or talented than one actually is – is extremely common.  This attitude is viewed as confidence.

What’s more, people are rewarded for playing the part of knowing it all.  We are drawn to super-confident people.  We are biased to favor highly confident people.  Instead of rewarding humility, we admire those who exhibit a superiority complex.  Why?  This is because we generally assume others have the self-knowledge to know how confident they should be, and we assume they will truthfully communicate this confidence.  So whenever we encounter highly confident people, we tend to find it compelling, and expect that it is justified.  This encourages people to be boastful and rewards the Overconfidence Effect… this exaggerated level of confidence.

Overconfidence Effect and Overconfidence Bias

If Overconfidence Effect is an exaggerated level of confidence, then Overconfidence Bias occurs when those overconfident people – believing their own bluster – start acting and making decisions from a belief in their own superiority.  As a result, they are less careful, methodical and systematic in their work because they believe they know more than everyone else.

So what happens when Knowledge Bias and Overconfidence Bias seeps into work?  Depending on what the person does for a living, it can be very damaging.  The more important the job, the worse the impact of overconfidence bias.  It also happens more frequently than one might think and in more professions than one might imagine.

Consider the study done by James Montier, a member of the asset allocation team at Grantham, Mayo, Van Otterloo & Co (GMO) who has worked in the investment industry for two decades, specializing in the application of psychology to finance.  In his study, Montier wanted to know how well investment fund managers / market analysts thought they understood where the financial markets were going, since this is one of the most important skills in finance and investing.  He was trying to determine if Knowledge Bias and Overconfidence Bias existed in the world of financial investing.

Montier asked 300 professional fund managers/analysts if they believe themselves to be above average in their ability to predict where the markets are going.  Of those, 74% believed that they were above average analysts with analytical skills that were better than average at investing.  Of the remaining 26%, most thought they were average analysts.  Virtually no one thought they were below average analysts.  Of course, it is statistically impossible for no one to be below average since average exists only in relationship to above and below average.  He published his findings in “Behaving Badly” in February, 2006.

Overconfidence leads people to make mistakes and it typically manifests itself in one of four ways. 

  1. Over-ranking (such as in Montier’s study) is where the person rates their own personal performance as higher than it actually is. 
  2. Illusion of control is where a person thinks they have more control over a situation than they actually do. This makes the person minimize potential risk.  And, failure to accurately assess risk leads to failure to adequately manage risk. 
  3. Timing optimism is when a person overestimates how fast he can do work and/or underestimates how long it takes to get things done.  For complicated tasks, business people constantly underestimate how long a project will take to complete because they are overconfident in their knowledge and abilities. In investing, the danger of an overconfidence bias is that it makes the ‘experts’ prone to making mistakes. They tend to be less than appropriately cautious in investment decisions.  As a result, investment analysts frequently underestimate how long it will take for an investment to pay off. 
  4. Desirability effect, what some might dub the “wishful thinking effect”, is when a person overestimates the odds of something happening simply because the outcome is desirable.

These are all ways in which Overconfidence Bias seeps into the workplace. 

Overconfidence Bias in Hiring

The danger of overconfidence bias is that it makes the ‘experts’ prone to making mistakes. They tend to be less than appropriately cautious in investment decisions.  But it is not restricted to just investment analysts.  It can happen often with surgeons, who overestimate their ability to heal patients (dubbed by some as the “God complex”).  Notoriously, it happens often with General Contractors, who underestimate the time it will take to complete construction of a project.  And, it happens with hiring managers, recruiters and HR officers, who overestimate their ability to find the best individual for a position.  They are so sure they know who is going to be the best fit for the job that they don’t really take the time to evaluate candidates fully.  Minor comments and small details are used as reasons to reject otherwise solid candidates.  Instead of utilizing a systematic method and objective scoring system to recruit and hire, they forego process because they are overly confident in their ability to judge and assess others. 

Overcoming Overconfidence Bias

So how does a hiring manager or HR professional know if they are being reasonably confident in their assessments and decisions or overconfident?  It’s not like there is a way to measure confidence to determine when a feeling of confidence is adequate or excessive.  One logical thought is to ensure that hiring managers, recruiters and HR professionals undergo Hiring Objectivity Training so that they know how to implement an objective, unbiased hiring process.

Unfortunately, studies have found that that is NOT enough.  One Yale University study found that male and female scientists — who had taken a training course on how to hire objectively — failed to hire objectively.  The results found they still preferred to hire men over women, viewed them as more skilled, and were willing to offer about $4000 more per year in salary. The participants of the study were bewildered by the study results. They were surprised to find their bias was completely unconscious and persisted despite training on hiring objectively.  Bias still seeped into the process.  So what then? 

  1. Provide Awareness and Bias Elimination Training.  This is a good first step, which teaches employees to understand that everyone has unconscious biases, it is not foolproof.  But that’s not enough to counteract Knowledge Bias, Overconfidence Bias and other common Unconscious Biases.

  2. Set Diversity Goals for the Organization.  Describe what kind of diversity the company would like to see or achieve. What ethnicities, age groups, genders, and other groups (who are commonly discriminated against) are underrepresented? Set goals for each stage of the candidate pipeline, such as applicant funnels, interview conversion rates, and acceptances.  Just recognizing that the company already has diversity deficits helps highlight that some Knowledge Bias and Overconfidence Bias already exists.

  3. Define the Position, not the Person.  Write a proper job description listing the activities the right candidate will need to perform rather than a list of qualities they must possess.  By describing work as performance objectives, it is possible to appeal to a broader range of talent (which in a tight job market is a positive) while also decreasing bias.  The idea is to look at every candidate’s historical performance on similar work instead of the person’s presentation skills and first impressions.  It stops the in-house experts from passing judgment too soon or making snap decisions.

  4. Use an online Testing Service to Blind-Screen Applicants – Services like TestGorilla, eSkill, iMocha, TestDome, Predictive Index, and others offer pre-employment testing that identifies the best candidates at the start of the recruitment process.  Companies save valuable time, make hiring decisions objectively, and avoid expensive mis-hires by ensuring all viable applicants take objective tests — replacing subjective, incomplete, and often inflated CVs – that measure aptitude, practical job skills, culture add, and motivation.  Scientifically validated assessments help recruiters and HR managers to hire top talent in a way that is bias-free.

Quote of the Week

“When you get overconfident, that’s when something snaps up and bites you.” Neil Armstrong

© 2022, Keren Peters-Atkinson. All rights reserved.

The post Bias in the Hiring Process, Part 7 first appeared on Monday Mornings with Madison.


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