Paradox of Confidence – Overconfidence and Under-Confidence explained

How overconfidence in leaders and under-confidence in employees kills growth

Rather than seek new knowledge, they bask in their own brilliance. Research shows that leaders rely on “obsolete knowledge they picked up in school, long-standing but never proven traditions, patterns gleaned from experience, methods they happen to be skilled in applying, and information from vendors.”

Paradox of Confidence

As a business leader, it’s important to have confidence to connect with your team and inspire them to reach their potential. But it’s also important to find a balance – too much confidence can lead to poor decision-making, while too little can prevent you from achieving success. The insight outlined below can be used to explore the complexities of confidence and provide practical strategies for finding the right level for success.

An excess of confidence at the top of an organization can create an imbalance, which can hurt the growth of the business and the morale of the employees. To ensure that your team is operating at the highest level, it’s essential to practice humility and recognize the value of different perspectives. Rather than seek new knowledge, they bask in their own brilliance. Research shows that leaders rely on “obsolete knowledge they picked up in school, long-standing but never proven traditions, patterns gleaned from experience, methods they happen to be skilled in applying, and information from vendors.” By recognizing these flaws, leaders can make better decisions and create a positive, collaborative atmosphere in the workplace.

Having worked with hundreds of leaders, I’ve noticed that the ones that create an environment of psychological safety perform best. By keeping their ego in check and cultivating the confidence of others, they enable their team to practice unparalleled levels of autonomy over their work. Research highlights the significance of autonomy in the workplace and how it can drive employee performance. Autonomy is the cornerstone of good work, increased satisfaction, and motivation.

Our work environment can affect our confidence, and our confidence can affect the quality of our work. . Simply put, if you want your employees to perform at their best, then employee confidence should be a key initiative for your business.

To further put things into perspective, confidence is an important heuristic used to determine a person’s competence. The person with low confidence might hesitate or stumble over their words, leading you to perceive their ideas or work as less well thought-out or less valuable. On the other hand, a person with high confidence might present their ideas with conviction and clarity, leading you to perceive their ideas as more rigorous and therefore more valuable. So our perception of someone’s quality of work depends, at least partly, on their confidence.

The icing on the cake? Leaders tend to penalize humble actors by deciding against them and choosing the more confident individuals. Modesty is regarded as hedging against possible failure, an attempt to take the wind out of critics’ sails. If the employee doesn’t trust in his or her abilities, how could anyone else?

Many fail to heed the dangers of having an excess of confidence as a leader while their employees lack in that aspect. However, there are strategies that you can use to address this imbalanced dynamic, several of which I will touch on below.

Definition of the Paradox of Confidence

Lower-level employees often struggle with low self-confidence and are risk averse while founders and executives often have an inflated ego. This is how you end up with employees who don’t perform as well, and leaders who are never satisfied and feel like they always have to do everything themselves.

How do we find a balance?

Too Much Confidence: The Negative Impact on Business

People at all levels of an organization should have a healthy sense of confidence in their abilities. This helps them to feel more capable and motivated to take on new challenges. However, if an employee lacks confidence, it can hold them back from speaking up and taking action. This can be especially detrimental if they have valuable ideas or perspectives that could contribute to the success of the team.

Ultimately, finding the right balance between confidence and humility is important for both leaders and team members. The ideal mindset is to be confident in your abilities and ideas, but also be open to learning from others and considering different perspectives.

Examples of Overconfidence in Founders and Executives

As an executive coach, I often work with leaders who are struggling to find the right balance of confidence. One such leader, let’s call him Jack, was a high-level executive at a major corporation. Jack was known for his overbearing confidence, which had helped him rise through the ranks and secure his current position. However, his confidence had started to become a liability – his employees were feeling demotivated and disengaged, and it was beginning to show in their work.

Jack would often be excessively critical or perfectionistic, which could lead his employees to feel that their work was never good enough and that they were constantly being micromanaged. He would ignore the input and ideas of his team, leading them to feel undervalued and unimportant, then complain that they never produced good work. I often found him overly focused on his own ideas and goals, to the exclusion of the needs and concerns of his team.

He was just too confident in his abilities and not open to learning from his team or hearing their perspectives, leading them to feel disconnected and uninvolved in decision-making. In my dealings with Jack and his team, I often found the team to be the experts at what they did, but they just didn’t have the safety to express themselves.

Outcomes of Overconfidence in Founders and Executives

Overconfidence can manifest itself in several ways in founders and executives. Here are a few examples:

  • Underestimating risks and challenges: A founder or executive may be overly optimistic about the success of a project and underestimate the risks and challenges that may come up.
  • Refusing to seek advice or consider alternative viewpoints: An overconfident founder or executive may believe that they have all the answers and refuse to seek advice from others or consider alternative viewpoints.
  • Making reckless decisions: Overconfidence can lead to a lack of caution and a tendency to make rash or reckless decisions.
  • Failing to delegate: An overconfident founder or executive may believe that they are the only ones capable of handling certain tasks, leading them to micromanage and fail to delegate effectively.
  • Alienating team members: Overconfidence can also manifest as arrogance and a lack of empathy, which can alienate team members and create a negative work environment.

Leaders who believe they alone are capable of handling certain tasks may undercompensate regarding delegation while overcompensating regarding corrections. This often leads to a lack of empathy and arrogance, which can contribute to a toxic work environment. We should be aware of these tendencies and strive for a balance in our confidence levels.

What the Research Says About the Dangers of Confidence in Founders, Executives, and Managers:

Studies that illustrate the issue of confidence in the workplace have suggested that a healthy level of confidence can improve decision-making and workplace morale. However, I want to emphasize that these benefits only apply when we look at leaders and employees that do not demonstrate overconfident or timid behavior.

Some more implications from studies to consider:

  • A study analyzed in the Harvard Business Review found that overconfidence was associated with a tendency to rely on less information when making decisions. The authors of the study suggest that this overreliance on limited information can lead to poor decision-making.
  • Research published in the Journal of Economic Perspectives found that overconfident investors were more likely to trade more frequently, leading to lower returns on their investments. This suggests that overconfidence can have negative consequences for financial decision-making.
  • A study published in the Review of Managerial Science found that overconfidence was associated with a tendency to ignore negative feedback and to persist in pursuing goals despite evidence of failure. This can lead to a refusal to change course or to adapt to new circumstances, which can ultimately hinder decision-making.

It’s worth noting that these studies focused on specific contexts and may not necessarily generalize to all situations. However, they do provide some insight into how overconfidence can affect decision-making in certain situations.

How Overconfidence Can Lead to Problems in Business

I worked at a very promising silicon valley series C startup. A few months into my tenure, we hired a VP of Engineering who was an extremely confident and charismatic leader. His colleagues often described him as a visionary, and he seemed to have an almost preternatural ability to predict the future of the tech industry.

When he argued that the company should pivot its focus to a new market, the executive team was quick to follow his lead. Despite warnings from other teams, including myself, that the company’s current product had serious flaws that needed to be addressed, the VP was convinced that entering a new market was the key to success.

At first, everything seemed to be going according to plan. The VP’s confidence was contagious, and the entire company was focused on making this new venture a success. But as time passed, it became clear that the VP had underestimated the challenges and risks involved. Customers who had been loyal to the company for years had become frustrated with the product’s shortcomings and began to look elsewhere for solutions. Despite the VP’s optimistic predictions, the company had missed its growth targets two years in a row.

In the end, it was clear that the VP’s overconfidence had led to reckless decision-making and a lack of caution that ultimately hurt the company. The executive team realized that they had put too much trust in one person’s vision, and they began to take a more measured approach to decision-making. They learned that it was important to consider all options and to listen to the concerns of all team members, not just the most confident and vocal ones. The company was able to recover and eventually achieved success, but it was a hard-won lesson that they would never forget.

A person with overconfidence may also refuse to seek advice or consider alternative viewpoints, as they assume they have all the answers, which is often contagious as the experience above demonstrates. It can lead to a lack of adaptability and flexibility.

Too Little Confidence: The Negative Impact on Business

While leaders often have too much confidence, their team often has too little. When the team lacks confidence, they may be less likely to take risks and try new things, which can limit the company’s growth and innovation.

It’s often assumed that a lack of confidence is the individual’s fault, but leaders play a key role in creating an environment of psychological safety that cultivates confident employees.

Additionally, external factors such as societal biases and discrimination can also impact an individual’s confidence. For example, someone who has experienced discrimination based on their gender, race, or sexual orientation may have lower confidence due to the negative impact of these experiences on their sense of self-worth.

These individuals may also hesitate to speak up and share their ideas, leading to a lack of diverse perspectives in decision-making. Individuals who lack confidence may also have difficulty asserting themselves and engaging in effective negotiations, resulting in missed opportunities. Businesses can suffer from a lack of confidence, so it’s important to build and strengthen confidence through practice and experience.

Examples of Underconfidence in Lower-Level Employees

Underconfidence can significantly hold employees back and prevent them from reaching their full potential. For Instance, a lack of confidence can make it difficult for lower-level employees to speak up and share their ideas, even if they have valuable insights to offer. It can also make it difficult for them to assert themselves and negotiate effectively, leading to missed opportunities.

I worked with a VP, let’s call him John, who was known for being demanding and having high expectations of his employees. However, he also tended to belittle and demean them when they didn’t meet his expectations.

One of his employees, Jane, was a hardworking and dedicated employee. She had a great work ethic and was always willing to go the extra mile to get a job done. However, John was almost always unsatisfied with the results of her work. In his mind, she was someone who couldn’t follow directions and needed a lot of micromanagement.

I remember one particular example when Jane conducted a client call differently than John would have liked. As an objective outsider, I thought the call went great. But in John’s mind, it was less than stellar because she did not follow his instructions. He critiqued her on her use of the word “I” rather than “we” when acknowledging the next steps and action items. He kept going through the transcripts and pointing to sections, saying things like,

“You should have said ‘we will take care of it’ instead of ‘I will take care of it’”.

This seemed extremely nitpicky and awful use of John’s time. But he had to make a point to himself and her. That she was not good enough. And he knew better. Even though, when I challenged him afterward, he was not able to provide any data or research backing up his claim.

I saw over the months I worked with them how Jane began to lose confidence in herself and her abilities. She stopped taking initiative and became less productive. She would often second-guess herself and was afraid to present her ideas to John for fear of being rejected or criticized. It was a depressing scene to see in real life.

John’s behavior towards Jane was not unique. A lot of us at the company also felt the same way. But we were afraid to speak up and share our ideas because they were worried about being criticized or rejected.

I saw in real time how the company’s productivity and morale began to suffer as a result. Employees were disengaged and unmotivated. They didn’t feel valued or appreciated, and they didn’t feel like they were making a difference in the company.

It was one of the pivotal experiences that encouraged me to pursue a path of educating myself in organizational psychology and pursue executive coaching.

Underconfidence can manifest itself in various ways in lower-level employees. Here are a few examples:

  • Difficulty speaking up and sharing ideas: A lack of confidence can make it harder for lower-level employees to share their thoughts and insight, which may keep them from offering valuable contributions to their team.
  • Struggle to assert themselves and negotiate effectively: A lack of confidence can make it difficult for lower-level employees to assert themselves and negotiate effectively, leading to missed opportunities.
  • Difficulty taking risks and trying new things: Underconfidence can hold lower-level employees back and prevent them from taking risks and trying new things, limiting their potential for growth and development.
  • Struggle to lead and take on additional responsibilities: Underconfidence can also make it difficult for lower-level employees to take on leadership roles or additional responsibilities, even if they are capable of doing so.

There are tangible long-term knock-on effects of destroying people’s confidence. Employees are less likely to advocate for themselves, creating a vicious cycle of low morale, underperformance, and overall lower productivity. Additionally, research has found that underconfidence can lead to a lack of assertiveness and difficulty negotiating effectively, resulting in missed opportunities for advancement or additional responsibilities.

Underconfidence presents an issue in the workplace in regards to not only integrating new perspectives into the company but also helping lower-level employees wanting to take on a leadership role make that transition. Recognizing the impact of this problem is the first step to take in building and strengthening employee confidence.

How Underconfidence Can Lead to Problems in Business

But why is it that leaders tend to view those with confidence as more competent? An explanation for this could be that we often tend to accept what is said to us, and then reinforce our beliefs by choosing to focus on information that supports them. This is known as confirmation bias. Therefore, if someone projects confidence, others may be inclined to believe that they are knowledgeable on the matter, and they may then interpret ambiguous information (such as how much luck could have aided or impeded them) to match their initial impression.

Hesitance from employees to speak up and address new ideas or current issues in the workplace can cost the company not only valuable insight but monetary gain from missed opportunities. The strongest teams are diverse ideas as well as individuals. New growth opportunities should be taken as soon as they arise, but with a lack of employees willing to speak up, these opportunities may not be taken, costing the team and the company a chance to benefit.

Innovation, which stems from taking risks and experimenting with new ideas, is essential for any business that wants to grow and expand. When employees don’t believe that they can speak their minds, it limits the potential for growth within their team.

Organizations need to allow their employees to advocate for themselves and their ideas to open the door to new growth within the team both as individuals and as a company.

Finding a Balance: The Importance of Healthy Confidence in Behavior and Decision-Making

Confidence is a complex and multifaceted trait that can impact our behavior and decision-making in both positive and negative ways. It’s important to find a balance in our confidence levels to avoid the negative consequences of overconfidence or underconfidence.

Tips for Building and Maintaining Confidence in Yourself as a Leader or as an Employee

Maintaining confidence in oneself as a leader or employee can be aided by staying current on industry trends and developments. By doing so, individuals can increase their feelings of competence and feel more confident in their abilities. It’s essential to continuously learn and grow to stay knowledgeable on relevant and effective methods of growth in the workplace.

Some things you can do:

  • Set achievable goals and work towards them: Setting and achieving goals can help boost confidence and increase feelings of competence, as well as increase motivation in the workplace.
  • Seek out new challenges and experiences: Taking on new challenges and trying new things can help build confidence and broaden your skills and expertise.
  • Practice self-affirmation: Engage in positive self-talk and remind yourself of your strengths and accomplishments.
  • Seek feedback and support: Receiving constructive feedback and support from others can help build confidence and identify areas for growth.
  • Maintain a healthy work-life balance: Taking care of yourself and managing stress can help improve mental health and prevent burnout.
  • Learn from mistakes: Rather than dwelling on mistakes, try to view them as opportunities for learning and growth.
  • Stay up to date on industry trends and developments: Keeping up with industry trends and developments can help boost confidence and increase feelings of competence.

The Role of Feedback, Goals, and Failure in Building Confidence

As we have discussed, confidence is most effective when demonstrated in moderation and can have a significant impact on employee growth and leadership. Feedback, whether positive or constructive, can provide valuable information and insights that can help build confidence.

[Farzad: Insert personal anecdote here]

Setting an working towards achievable goals can help employees feel as though they have a purpose and can make a difference. And while it’s natural to fear failure, learning from mistakes and viewing them as opportunities for self-development can also help improve reliability. Let’s delve deeper into these topics and consider how they can contribute to building and maintaining confidence.

Strategies for Boosting the Confidence of Employees as a Leader

As a leader, it’s important to recognize the impact that you can have on the success of your team, and strive to create an environment that fosters confidence in your employees.

This first begins with understanding some myths that set up for failure. I’ll cover them quickly below, but I highly recommend checking out the original HBR article The Feedback Fallacy.

Myth #1: Other people are better at identifying our weaknesses than we are, so they should tell us what we cannot see for ourselves.

Reality: People are unreliable at evaluating others, and we often have a better understanding of ourselves than others do.

Myth #2: The learning process is like filling an empty vessel, and we should rely on others to teach us the abilities we lack.

Reality: No one person is the perfect mentor for everyone, and simply acquiring knowledge does not automatically lead to wisdom about how, when, or why to use it.

Myth #3: Great performance is universal, can be easily analyzed and described, and can be transferred from one person to another regardless of individual differences.

Reality: Successful performance in one specific context does not necessarily translate to success in other contexts, as it depends on a unique set of biological, psychological, and sociological factors.

I wrote about this topic in my piece, Giving better feedback and also improving mental health? – Science and kindness can help. I discuss what heuristics and biases enable this kind of behavior, and suggest ways of hedging against it.

Here are a few strategies for boosting the confidence of your employees:

Provide constructive feedback and support:

Offering regular feedback and support to your employees can help boost their confidence and identify areas for growth. Make an effort to recognize and acknowledge the strengths and accomplishments of your team members while helping them grow in areas in need of improvement

Set clear goals and expectations:

Setting clear goals and expectations can help employees feel more confident in their abilities and provide a sense of direction.

Encourage learning and development:

Encourage your employees to take on new challenges and seek out learning and development opportunities. This can help broaden their skills and expertise.

Foster a positive work environment:

A positive work environment that is supportive and inclusive can help create a setting where employees feel that what they contribute is valuable.

Lead by example:

As a leader, it’s important to model the behaviors and attitudes that you want to see in your team. Demonstrating confidence and a positive attitude can help inspire your employees.

By implementing these strategies, you can help boost the confidence of your employees and create a positive and productive work setting.

Ways in Which Leaders Sabotage the Confidence of Their Employees

As a leader, it’s important to be aware of how your actions and attitudes can negatively affect the confidence of your employees.

Here are a few ways in which leaders can unintentionally sabotage the confidence of their team:

  • Providing feedback that is vague or contradictory: This can create confusion and uncertainty within your team.
  • Failing to set clear goals and expectations: Without a clear understanding of their roles and responsibilities, employees may start to doubt their abilities.
  • Neglecting to recognize and acknowledge the strengths and accomplishments of team members: Employees that don’t feel as though their effort is seen may start to contribute less as they feel less confident.
  • Creating a negative or toxic work environment: This can lead to a higher turnover rate and an overall lack of workplace morale.
  • Being overly critical or perfectionistic: This type of attitude can create an environment that lowers employee motivation and productivity.

As a leader, it’s vital to recognize these potential pitfalls and strive to create an environment that fosters confidence in your employees.

Last Thoughts

confidence is an intricate, heterogenous and multifaceted trait that can significantly impact our behavior and decision-making. On one hand, confidence can give us the courage and determination to take on new challenges and encourage decisiveness. On the other hand, overconfidence can lead to a lack of humility and a tendency to underestimate the risks and challenges that come our way. Similarly, underconfidence can hold us back and prevent us from taking risks and trying new things. It’s important to find a balance and be aware of how our confidence levels might impact our behavior and interactions with others.

It’s also a good idea to remember that confidence is not a fixed trait and can be developed and strengthened over time through practice and experience. Leaders must be able to recognize the impact that confidence can have on the success of their team and strive to create an environment that fosters diverse ideas and collaboration. By implementing strategies such as providing feedback and support, setting clear goals and expectations, encouraging learning and development, and fostering a positive work environment, you can help boost the confidence of your team.

In both our personal and professional lives, understanding the paradox of confidence and finding a healthy balance is crucial for improving our relationships and decision-making abilities. By recognizing the importance of confidence and actively working to build and maintain it, we can become more effective and successful in both our endeavors, both work-related and otherwise..

Further Reading

Confidence can be a valuable trait in a leader, but it can also have negative impacts if it is not balanced with other qualities such as empathy and humility. Here are a few articles that discuss how overconfident leaders can negatively impact employees:

“The Dark Side of Confidence” by Dr. Tomas Chamorro-Premuzic, published in Harvard Business Review:

This article discusses the detriments of overconfidence in leaders, including the tendency to underestimate risks and make poor decisions and the negative impact it can have on team morale and performance.

“Overconfidence Can Be Dangerous for Leaders” by Dr. Travis Bradberry, published in Forbes:

This article discusses the negative consequences of overconfidence in leaders, and how that results in alienation of team members, poor decision-making, and creates a toxic work environment, while also providing tips on how to maintain a healthy level of confidence and exhibit humility and self-awareness.

“The Negative Impact of an Overconfident Leader” by Dr. Paul White, published in Psychology Today:

This article discusses the impact of overbearing leaders, and how individuals with poor leadership skills can develop and demonstrate a sense of empathy to improve the workplace environment.

“Don’t Let Power Corrupt You” by Dacher Keltner, published in Harvard Business Review:

This article was published in the Harvard Business Review and discusses the dangers of power and how it can lead to corruption. The article suggests that power can lead to a lack of empathy, a sense of entitlement, and a tendency to prioritize one’s own interests over the interests of others. The article offers tips for avoiding the corrupting influence of power, including staying connected to others, cultivating humility, and using power for the benefit of others.

“Demystifying Overconfidence at Work” by Justin Mgbechi Odinioha Gabriel and Chinonye Chris Wobodo, published in Research Gate:

This is a research paper published on ResearchGate that explores the concept of overconfidence in the workplace. The paper discusses the consequences of overconfidence, including its potential impact on decision-making and risk-taking. It also considers the factors that contribute to overconfidence and offers strategies for addressing and mitigating its negative effects.

“Worker Overconfidence: Field Evidence and Implications for Employee Turnover and Firm Profits” by Mitchell Hoffman and Stephen V. Burks, published in the Journal of Econometric Society:

The paper explores the relationship between overconfidence and employee turnover, using data from a quasi-experiment to examine the effects of overconfidence on turnover intentions. The paper also considers the implications of these findings for firms, including the potential impact on profits.

I'm a 3x founder and my latest startup,, is addressing the existential risks to our information ecosystem. As an entrepreneur, coach, and mentor, my goal is simple: to help people question the narratives they tell themselves and ground their actions and beliefs in the principles of critical thinking. I've worked with hundreds of founders and executives as we tackle growth and emotional challenges through a holistic, critical lens that recognizes the complex, multivariate nature of problems.

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