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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
Editor at Large

Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Do trainees overrate their compliance knowledge?

Ask employees who’ve been through compliance training how much they know, and you’re likely to hear good news: they’ll say they know a lot. But science — behavioral science, that is — warns against accepting self-assessments at face value. Most of us, it seems, are unreliable judges of our own knowledge.

The wrinkle here is called the Dunning-Kruger Effect. For reasons that aren’t entirely clear, people who lack knowledge in a specific area often overestimate their competence. There’s a flip side too, whereby those who easily master high-level skills think everyone can master the same skills with the same effort. So they underestimate their relative abilities.

It’s the underachievers who should worry compliance officers the most.

What’s the scope of the problem?

At a high-tech software company, 42 percent of employees assessed their performance as being in the mathematically impossible top five percent. Another study revealed that 80 percent of people rate themselves as “above-average drivers,” another mathematical impossibility. At the University of Nebraska, 68 percent of the professors rated themselves in the top 25 percent for teaching ability. Again, not possible.

In practical terms, then, more than a third of all compliance trainees probably overrate their competence. That means they may not seek needed compliance training and too often will rely on their own perceived knowledge. They can take wrong turns without realizing it.

The Dunning-Kruger Effect was first described by David Dunning and Justin Kruger in a 1999 paper called “Unskilled and unaware of it: how difficulties in recognizing one’s own incompetence lead to inflated self-assessments.”

One of the studies by co-author Dunning, a professor of psychology at the University of Michigan, found that those in the bottom 25 percent “grossly overestimated their test performance and ability.” What’s worse, Dunning and Kruger said, not only do laggards “reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the ability to realize it.”

If the slowest learners emerge from compliance training sessions thinking, “I’ve got this,” they can easily miss red flags or unknowingly do things that put compliance at risk.

And remember the flip side? Top achievers underestimate their knowledge and skill level because they think acquiring the skill is easy for everyone. Dunning and Kruger found that those in the top 25 percent consistently rank themselves in the middle third. That means they also overestimate the skill level of others.

Why is that a problem? Because the fastest learners wrongly assume colleagues have a relatively high skill level and therefore need less supervision, guidance, and training. Those wrong assumptions make the compliance program vulnerable.

None of this is exact science, and outcomes aren’t always fixed. People can become more self aware. When Professor Dunning pointed out to top performers how exceptionally they performed, most re-evaluated their (and their peers’) knowledge and skills and became more accurate in their assessments.

Can the same corrective process work with slower learners?

That’s more difficult. Only 39 percent of employees handle constructive criticism well. They “don’t freak out or fight the feedback; instead, they want to understand and correct the underlying issues,” as one writer put it.  But the other 61 percent react badly to constructive criticism and stay stuck in the ignorant bliss of the Dunning-Kruger Effect.

The Decision Lab bleakly describes the end result as the best of the best hanging back, while, “At center stage, all too often, can be people of below-average capabilities.”

All is not lost, however. There are things compliance leaders can do.

Letting trainees know about the Dunning-Kruger Effect may be the best way to avoid its negative impact. Awareness alone may open some people to honest feedback and help them avoid the chronic error of overrating their knowledge. It’s also important to nudge top performers out of the shadows and into active leadership roles.

Training — consistent, repeated, and even remedial — is a must-have.

And, of course, there’s no substitute for seriously effective internal controls.

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