Many organisations undertake performance management of employees based on a rating system that requires the people manager to make a judgement of his or her employees by stack-ranking them. Stack ranking is a system where “Every manager ranks their employees into buckets of a certain size. X percent are top performers, Y percent are the next tier down, and so on. On a team of 15 people, there might be three top tier slots, eight middle tier slots, and four bottom tier slots. No matter how good the team is overall, everyone’s going into one of those tiers.”
The crux of a stack ranking methodology is that a few gain (at a perceived cost to others). Typically most rating systems will only allow for 20% of rated employees to be above the average but I have fielded questions and taken feedback from many of the remaining 80% (average or below average performers) employees wondering whether their manager’s rating accurately reflects their effort. [For a review of the debate on stack ranking refer to this Forbes article by Robert Sher].
One benefit of having had large teams report to me has been my ability over time to assess and measure the gap between what an employee feels about his or her performance and what I the manager ultimately rated them. I detected a pattern where the poor performing employee would rate themselves much higher than my assessment. [I have a habit of going through substantial detail during a review and then seeking the employee’s own assessment of their performance against the agreed upon objectives.]
For the sake of a scenario let us assume that we are using a performance rating scale from 1 to 5, where 5 is the highest level of performance possible. I then attempted to translate my subjective experience into an intuitive visual for making this blog meaningful. Leveraging the work of Dunning-Kruger I put together a simple graphic aimed at illustrating this dissonance.
It is visually possible to discern that those who got lower ratings from their managers also seem to have an inflated opinion of their own performance. Just compare the distance or gap (I prefer the word dissonance) between the blue line (manager’s assessment) and red line (employee's assessment) at low performance scores i.e. scores of 1 & 2.
A substantial proportion of this dissonance can be attributed to the individual’s assessment of self, whereas it is very likely that the manager’s rating is based on stack ranking the individual vs. his or her peers. An individual would typically rate their own performance rather than attempt to rate their performance vs. that of peers as that prerogative can never be delegated from the manager to the employee!
My perception is that managers tend to use subjective criteria when attempting to stack rank. This can take the form of assessing the employee’s attitude or loyalty to the employee's manager (yes…I had one manager telling me that it was critical!) or by gauging ‘stake-holder’ and/or peer feedback about the employee(s). Given the range of criteria that can be applied we are sure to see differences between the judgement of self by the employee vs. judgement of employee by the manager! Additionally, traditionally far more time is spent on limiting the number of top achievers by interrogating ratings for high-performers rather than doing the inverse i.e. interrogating the large deviations as I feel that this dissonance will negatively impact an employee's engagement levels, job satisfaction and organisational commitment!
I have also noted that employees at the lower end of the performance scale generally have the highest misconception of their talent and ability. They tend to consistently over-emphasise their contribution and achievements as well as spend an inordinate time in ‘marketing’ their ability despite there being evidence of ‘inability’ or lack of competence. On occasion when reviewing such individuals I would be reminded of an old Indian adage that translates loosely as follows: "a half full container of water will slosh around and make it difficult to handle the container whereas a full container is easier to handle as the water is calmer!" The English equivalent might be ‘Empty barrels make the loudest noise’.
Dunning-Kruger found that people who were poor or bad at specific activities also had the notion that they were actually good at the activity. The Dunning-Kruger effect is about over-rating one’s competence but readers will realise that it is also a common practice for humans to have an illusion of superiority and hence why it is said that 80% of humans believe they are above average! Clearly in the truly mathematical sense that would be an anomaly!
Dunning-Kruger proposed that, for a given skill, incompetent people would in general have (1) a propensity to overestimate their own level of skill; (2) be incapable of recognising the same genuine skill in others and (3) not understand how extreme their inadequacy is i.e. being incompetent rather than having low levels of competence. As Dunning clarified in a blog posting - “poor performers are overly confident relative to their actual performance. They are not more confident than high performers.”
Dunning-Kruger’s findings are not intended to be used to label people. Their research highlighted that for a person to assess one’s own expertise at something, that person should need to have a certain amount of expertise already and that as the person’s expertise increased their ill-conceived notion of their true competence also became closer to the actual result or the manager’s assessment.
As a people manager, the revelation is that this dissonance needs to be handled via dialogue and by exposing the employee to activities that can allow them to develop further expertise and over time close off the dissonance arising from an over-statement of true competence.
As a people manager I spend a large proportion of my time in helping such low-performers who do not believe or agree that they are low-performers. For me poor performers need to be made to learn from their mistakes as failure to learn from past mistakes is simple a reflection that poor performers are not even realising that they have made mistakes. The benefit of a performance appraisal is that such individuals can be made to realise their short-comings and how it has a direct bearing on their growth and can negatively impact earnings as most performance measurement systems and stack-ranking methodologies are used to direct scare resources in the form of incentives, increases and promotions! As a manager the best way to handle employees that have an overly optimistic view-point of their competence is to tell them that they are not as competent as they believe. Technically, this involves telling such individuals that they are incompetent in politically incorrect terms, which is an extremely difficult task to do but necessary!
The critical message is that the right feedback at the right time is critical and one must aim to confront an employee at the point of a failure rather than wait for a formal meeting on performance management, which also points to why regular performance appraisals are more critical than having an annual review that does not allow the manager to leverage the ‘recency’ of an event or learning i.e. feedback at the precise point of failure or incompetence.
My simple advice to those employees who are observing dissonance in what they perceive as their performance and what the manager is assessing is to:
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The crux of a stack ranking methodology is that a few gain (at a perceived cost to others). Typically most rating systems will only allow for 20% of rated employees to be above the average but I have fielded questions and taken feedback from many of the remaining 80% (average or below average performers) employees wondering whether their manager’s rating accurately reflects their effort. [For a review of the debate on stack ranking refer to this Forbes article by Robert Sher].
One benefit of having had large teams report to me has been my ability over time to assess and measure the gap between what an employee feels about his or her performance and what I the manager ultimately rated them. I detected a pattern where the poor performing employee would rate themselves much higher than my assessment. [I have a habit of going through substantial detail during a review and then seeking the employee’s own assessment of their performance against the agreed upon objectives.]
For the sake of a scenario let us assume that we are using a performance rating scale from 1 to 5, where 5 is the highest level of performance possible. I then attempted to translate my subjective experience into an intuitive visual for making this blog meaningful. Leveraging the work of Dunning-Kruger I put together a simple graphic aimed at illustrating this dissonance.
It is visually possible to discern that those who got lower ratings from their managers also seem to have an inflated opinion of their own performance. Just compare the distance or gap (I prefer the word dissonance) between the blue line (manager’s assessment) and red line (employee's assessment) at low performance scores i.e. scores of 1 & 2.
A substantial proportion of this dissonance can be attributed to the individual’s assessment of self, whereas it is very likely that the manager’s rating is based on stack ranking the individual vs. his or her peers. An individual would typically rate their own performance rather than attempt to rate their performance vs. that of peers as that prerogative can never be delegated from the manager to the employee!
My perception is that managers tend to use subjective criteria when attempting to stack rank. This can take the form of assessing the employee’s attitude or loyalty to the employee's manager (yes…I had one manager telling me that it was critical!) or by gauging ‘stake-holder’ and/or peer feedback about the employee(s). Given the range of criteria that can be applied we are sure to see differences between the judgement of self by the employee vs. judgement of employee by the manager! Additionally, traditionally far more time is spent on limiting the number of top achievers by interrogating ratings for high-performers rather than doing the inverse i.e. interrogating the large deviations as I feel that this dissonance will negatively impact an employee's engagement levels, job satisfaction and organisational commitment!
I have also noted that employees at the lower end of the performance scale generally have the highest misconception of their talent and ability. They tend to consistently over-emphasise their contribution and achievements as well as spend an inordinate time in ‘marketing’ their ability despite there being evidence of ‘inability’ or lack of competence. On occasion when reviewing such individuals I would be reminded of an old Indian adage that translates loosely as follows: "a half full container of water will slosh around and make it difficult to handle the container whereas a full container is easier to handle as the water is calmer!" The English equivalent might be ‘Empty barrels make the loudest noise’.
Dunning-Kruger found that people who were poor or bad at specific activities also had the notion that they were actually good at the activity. The Dunning-Kruger effect is about over-rating one’s competence but readers will realise that it is also a common practice for humans to have an illusion of superiority and hence why it is said that 80% of humans believe they are above average! Clearly in the truly mathematical sense that would be an anomaly!
Dunning-Kruger proposed that, for a given skill, incompetent people would in general have (1) a propensity to overestimate their own level of skill; (2) be incapable of recognising the same genuine skill in others and (3) not understand how extreme their inadequacy is i.e. being incompetent rather than having low levels of competence. As Dunning clarified in a blog posting - “poor performers are overly confident relative to their actual performance. They are not more confident than high performers.”
Dunning-Kruger’s findings are not intended to be used to label people. Their research highlighted that for a person to assess one’s own expertise at something, that person should need to have a certain amount of expertise already and that as the person’s expertise increased their ill-conceived notion of their true competence also became closer to the actual result or the manager’s assessment.
As a people manager, the revelation is that this dissonance needs to be handled via dialogue and by exposing the employee to activities that can allow them to develop further expertise and over time close off the dissonance arising from an over-statement of true competence.
As a people manager I spend a large proportion of my time in helping such low-performers who do not believe or agree that they are low-performers. For me poor performers need to be made to learn from their mistakes as failure to learn from past mistakes is simple a reflection that poor performers are not even realising that they have made mistakes. The benefit of a performance appraisal is that such individuals can be made to realise their short-comings and how it has a direct bearing on their growth and can negatively impact earnings as most performance measurement systems and stack-ranking methodologies are used to direct scare resources in the form of incentives, increases and promotions! As a manager the best way to handle employees that have an overly optimistic view-point of their competence is to tell them that they are not as competent as they believe. Technically, this involves telling such individuals that they are incompetent in politically incorrect terms, which is an extremely difficult task to do but necessary!
The critical message is that the right feedback at the right time is critical and one must aim to confront an employee at the point of a failure rather than wait for a formal meeting on performance management, which also points to why regular performance appraisals are more critical than having an annual review that does not allow the manager to leverage the ‘recency’ of an event or learning i.e. feedback at the precise point of failure or incompetence.
My simple advice to those employees who are observing dissonance in what they perceive as their performance and what the manager is assessing is to:
- Talk to other people whose opinion they trust
- Review and observe other employees in similar roles to see what they are doing
- Be willing to undertake self-assessment to understand the basis of the manager’s comments/guidance. Can they truly describe themselves based on a clear understanding of their strengths and weaknesses?
- Focus on exposing themselves to training and means to gain a better understanding of how they fit into the bigger picture etc.
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