For better and for worse, being the boss is an ego booster.
The authority, control, and power inherent in every leadership role tend to increase our self-esteem and self-worth. People appointed to leadership roles thus tend to feel better about themselves than they did beforehand, and the longer they are a leader and the higher the rise, the more this tends to be so (Wojciszke, B. (2007).
This changed perception of ourselves inevitably filters through to affect how we think and behave. Self-esteem and self-confidence are not inherently bad things to have, as they have been shown to improve performance on many tasks in a wide variety of settings. Yet, like most things, when overdone, self-confidence can become a problem. And unfortunately, for leaders, this is all too easy and common.
Decades worth of studies have repeatedly shown that just being the boss of someone or something makes us far more prone to overestimating three aspects of our leadership.
- Leaders are more likely to be overconfident in their knowledge and beliefs, assuming their understanding is accurate and their conclusions are correct (Schoemaker, J. E. R. and P. J. H. (1992, January 15). They are, therefore, less likely to take on other’s advice and more likely to be overconfident in their decision-making (K. E., Morrison, E. W., Rothman, N. B., & Soll, J. B., 2011) and Fast, N. J., Sivanathan, N., Mayer, N. D., & Galinsky, A. D., 2012).
- Leaders are more likely to over-rate their abilities on a range of tasks and are more likely to be judged as acting with a sense of superiority to others (Hofstede, G., Van Deusen, C. A., Mueller, C. B., Charles, T. A., & The Business Goals Network. (2002).
- Leaders are more likely to overestimate the degree of personal control they have over outcomes (Langer, E. J. (1975). This is thought to be one of the main causes of the over-optimism commonly found in leaders. And just like the other aspects of overconfidence, this tends to be stronger the more senior leaders become.
In fact, the evidence here is so strong that it is safe to assume that almost all leaders will over-rate at least one aspect of their abilities. And the problem with this is that the more overconfident a leader becomes, the more variable and less predictable their impact tends to be (Jiang, F., Stone, G. R., Sun, J., & Zhang, M. (2011). Some overconfidence can sometimes be good. For example, overconfident CEOs are more able to secure credit and negotiate lower financing costs with investors (Dai, N., Ivanov, V., & Cole, R. A. (2017). But, overconfident leaders of all levels are also more likely to make mistakes, pursuing initiatives that end poorly and making decisions that destroy value (Malmendier, U., & Tate, G. (2008). And what makes this variable performance a particularly pernicious risk is that overconfidence tends to grow gradually, making it hard to detect until it is too late.
So, what can leaders do to take the benefits of having their confidence boosted a bit without falling into overconfidence? Four things stand out.
Actively discourage ingratiation.
An excellent rule of thumb for life as much as work, is to treat ingratiation like poison. It feeds overconfidence, reduces openness, and creates psychological distance. So, do nothing to encourage or countenance it. A neutral response or making a point of ignoring it often works best. Other times, you can say something like, “I appreciate your support, but I’d really like to hear your honest thoughts – what do you really think?” This is especially important if someone is ingratiating in front of other people. Because if the people around you see you as enjoying ingratiation, then more of them will start behaving that way.
Ask questions.
Lots and lots of questions. Seek out different views like they are essential nourishment. Because for you, as a potentially overconfident leader, they are. Another way of thinking about this is to assume you are in an information bubble of some sort (because you probably are) and use your team to break it. Actively seek out differences of opinion.
Ask why you’re wrong.
This is a build on asking questions, but when you make a choice or give an opinion, try asking people why you might be wrong. Or, ask them what you might be missing. It will both reduce ingratiation and enable you to use the people around you to help you question your own assumptions.
Specify uncertainties.
People tend to want clear, unequivocal views from their leaders, which is understandable. However, one of the problems this creates for leaders is that the more they speak in absolutist terms, the more they tend to think in this manner as well. The solution here is to be open and transparent about what you are uncertain about. So, where appropriate, state your confidence levels (e.g., “I’m about 80 percent sure that…“) and explain where the uncertainty comes from. This might sound unusual, but research suggests that reporting uncertainties can both prevent you from believing in your ability to be certain and increase people’s trust in your judgment (Moore, Don). A., & Bazerman, M. H. (2022).
So, the research is clear: overconfidence seems a creeping inevitability for most leaders to some degree. Even when we’re not more broadly confident in ourselves, we can be overconfident about specific things. It can undermine our judgment in subtle ways, so it’s almost impossible to identify for yourself where you are being overconfident. And the people who work for you aren’t likely to tell you, either. In the face of this, the best option for leaders is to assume overconfidence and take action to avoid it. Anything else feels a bit like gambling.
Resources
[1] Wojciszke, B. (2007). Power Influences Self-Esteem. Social Cognition, 25, 472–494. Power Influences Self-Esteem
[2] Schoemaker, J. E. R. and P. J. H. (1992, January 15). Managing Overconfidence. MIT Sloan Management Review. Managing Overconfidence
[3] See, K. E., Morrison, E. W., Rothman, N. B., & Soll, J. B. (2011). The detrimental effects of power on confidence, advice taking, and accuracy. Organizational Behavior and Human Decision Processes, 116(2), 272–285. The detrimental effects of power on confidence, advice taking, and accuracy
[4] Fast, N. J., Sivanathan, N., Mayer, N. D., & Galinsky, A. D. (2012). Power and overconfident decision-making. Organizational Behavior and Human Decision Processes, 117(2), 249–260. Power and overconfident decision-making
[5] Hofstede, G., Van Deusen, C. A., Mueller, C. B., Charles, T. A., & The Business Goals Network. (2002). What Goals Do Business Leaders Pursue? A Study in Fifteen Countries. Journal of International Business Studies, 33(4), 785–803. What Goals Do Business Leaders Pursue? A Study in Fifteen Countries
[6] Langer, E. J. (1975). The illusion of control. Journal of Personality and Social Psychology, 32(2), 311–328. The illusion of control.
[7] Jiang, F., Stone, G. R., Sun, J., & Zhang, M. (2011). Managerial hubris, firm expansion and firm performance: Evidence from China. The Social Science Journal, 48(3), 489–499. Managerial hubris, firm expansion and firm performance
[8] Dai, N., Ivanov, V., & Cole, R. A. (2017). Entrepreneurial optimism, credit availability, and cost of financing: Evidence from U.S. small businesses. Journal of Corporate Finance, 44, 289–307. Entrepreneurial optimism, credit availability, and cost of financing
[9] Malmendier, U., & Tate, G. (2008). Who makes acquisitions? CEO overconfidence and the market’s reaction. Journal of Financial Economics, 89(1), 20–43. Who makes acquisitions? CEO overconfidence and the market’s reaction
[10] Moore, Don. A., & Bazerman, M. H. (2022). Leadership & overconfidence. Behavioral Science & Policy, 8(2), 59–69. Leadership & overconfidence
