Why your top performers underestimate themselves—and your underperformers think they’re doing great.
Maybe you’ve heard of the Dunning–Kruger effect. It’s one of those psychological concepts that are both fascinating and frustrating, especially when you’re a leader conducting performance reviews.
David Dunning and Justin Kruger discovered in 1999 that individuals at both extremes of performance have a hidden blind spot.
- Low performers often overestimate their skills. They believe they are succeeding when they are actually falling behind.
- High performers often underestimate themselves. They compare their work to the best in the field and end up feeling like they’re falling short.
A fitting quote along these lines comes from famed management consultant Dr. Gunther Clauss: “The more I know, the more I realize what I don’t know.”
Consider this: Highly capable people recognize how much there is to learn, so they hold themselves to a very high standard. Meanwhile, less capable people often compare themselves only to their nearby peers, or not at all, and believe they are at the top.
Why This Matters in Reviews
If you’ve ever done self-assessments during your review, you’ve likely seen the Dunning–Kruger effect firsthand. Your top performer writes a modest self-review, listing a few “areas to improve.” You read it and think, They’re doing great. I need to promote them.
Then there’s the C-player who submits a glowing self-assessment worthy of a keynote speech at their retirement party. They “rate themselves off the charts” and see no room for improvement.
Those reviews are difficult. I’ve had employees, especially one in particular, who year after year claimed they were doing well when they were actually underperforming. The conversations were draining because the issue wasn’t just about performance but also about awareness, and closing that gap was almost impossible.
I’ll admit: I dreaded those reviews. There’s no situation where either of us ends up satisfied. If I push back, they see me as unfair. If I let it go, the performance issue stays.
How to Navigate the Gap
I wish I had a magic bullet for this, but here’s what experience has taught me:
- Identify bias. If you ignore the Dunning–Kruger effect, you might accept self-assessments without question. Don’t.
- Separate performance from perception. Evaluate the work objectively—metrics, results, observed behavior—not just the narrative the employee presents.
- Overcorrect for high performers. When your A-players reduce their impact, be sure to recognize what they’re doing. Elevate them. They’ve earned it.
- Address low performers promptly. Don’t wait until the annual review to have difficult conversations. The longer the gap between reality and self-perception goes unaddressed, the harder it becomes to close.
- Ask the deeper question. If someone consistently overestimates themselves, you need to decide: is this a coachable blind spot or a permanent trait? If it’s the latter, you might be holding onto the wrong person.
A Leadership Litmus Test
Here’s a question to consider before your next review cycle: Would I prefer a team of individuals who underestimate themselves but produce excellent work, or those who believe they’re great but aren’t?
For me, it’s simple: always choose the humble high performers. They keep learning, growing, and raising the bar. The overconfident underperformers? They drain energy and time. And no clever coaching framework I’ve tried has ever fully fixed that.
As a leader, you can’t avoid the Dunning–Kruger effect. But you can recognize it, plan for it, and ensure it doesn’t prevent you from rewarding the right people, nurturing those with potential, and moving beyond those who can’t—or won’t—see the truth.
