https://youtubetranscript.com/?v=Q7GKmznaqsQ
Music This is the most practical of all the things that we’ve discussed so far. It’s really… You could consider it a component of industrial organizational psychology, but it’s a component that has a strong emphasis on individual differences. And so, you could consider it first, an exploration of the practical utility of psychological concepts in predicting real world phenomena, but you could also consider it a part of the validation of the psychometric models of personality that we’ve described, because one of the things that you want to do to determine whether or not a construct, so it’s a hypothetical psychological phenomena or entity whether or not that’s real, depends to some degree on what it’s good for. Part of the aim of science is prediction and control. And so, it’s useful to take a look at important life outcomes among human beings and to determine whether or not you can predict them, because that’s one way of testing whether or not the phenomena that you’ve derived say, from your statistical analysis, both in the case of fluid intelligence, or intelligence more broadly and in the case of the Big Five, actually has the capacity to manifest itself in a meaningful way in the world outside of, inside the lab, that’s one domain of potential validation, but then outside the lab as well. And so, what we’re going to do today is to look at the factors that determine performance in the real world and so you might think, well, what are some important real world outcomes on which performance might vary and we’re going to stick to those that are rather obvious today. We talked about creative achievement already, for example, but you could think of creative achievement, entrepreneurial achievement those actually clump together, they’re part of the same phenomena. You think about academic achievement and you could think about success in the workplace and then those can be subdivided because success in the workplace, for example, needs to be analyzed in terms of success, say, at simple jobs and success at complex jobs. You’re like, there’s different ways of fractionating a phenomena to increase your capacity to understand it and to measure it and then to predict it. But those are rough domains where there’s self-evident individual differences and where the capacity to predict performance would at least be of some utility. Performance in the workplace, this is an interesting one, performance in the workplace is a tricky measure, a tricky issue. I’ve been working on performance prediction tests for a long time because I was interested in, because I’m a clinical psychologist and because I have a practical side, I’m often interested in what the utility of psychological measurements might be outside the lab. It’s interesting to consider that from an ethical perspective too. So if you’re hiring people, you have two conundrums that lay themselves in front of you and one is the ethical necessity to give each person a fair chance and the other is the ethical necessity to place the proper person in the proper position. And you might say, well, you could do that randomly. And there are countries in Europe, for example, that have a quasi-random approach to the selection of university students. So Holland is like that. They have a pretty open admission policy. Now, what that means is that everyone has a chance to go to college, but the downside of it is that the failure rate in the first year, for example, is extraordinarily high. Now, you might say that’s a perfectly reasonable price to pay for the open admission and for the opportunity to give everyone a chance, but you could also say, well, that’s a hell of a waste of time for the people who go into the first year of college or university and fail. It’s not a pleasant experience for them. It’s very expensive in terms of time and resources and perhaps it would have been better for them and for broader society had they been able to determine beforehand whether they had the sets of qualities that were necessary to increase the probability of success. Because if I could tell you, well, you know, you have a 80% chance of success in this domain and only a 20% chance in this domain, you still might want to take the risk in the 20% success domain, but you might also think, well, I might as well go off and function where my particular combination of proclivities has the best opportunity to manifest itself and because why not position yourself for success rather than failure. Now, I’m not saying that the ethical conundrum between those two alternatives is something that’s easy to, what would you say, an easy thing to map your way through. It’s by no means an easy way to map your way through because there’s strong arguments to be had on both sides of the equation. So, but there’s still the scientific question that remains which is to what degree can you accurately predict people’s performance and to what degree does that reflect positively or negatively on your psychological concepts and then there’s the actual practical utility of potentially offering to schools, to universities and to workplaces in general the probability of selecting people with an above average chance of succeeding. It’s even more complicated, say, if you’re selecting not so much entry level employees in a company because maybe you tilt yourself there more towards the possibility of bringing more people in and letting them fail or succeed in the job, but let’s say you’re replacing a management team at a medium to large size corporation, you know, if you bring in managers that are incompetent, not only are they going to fail which is obviously not very good for them, and the failure rate among managers is very high. It exceeds 65, I think it’s 65% of managers I believe that’s correct, add zero or negative net value to the companies. It’s something like that. The failure rate in managerial positions is overwhelming and the problem with bringing someone into a managerial or an executive position, even worse, who isn’t competent to play that role is that they can wipe out the careers of everyone that they’re supervising and in the case of, say, large companies, they can bring the whole damn company down and so it’s not like the ethic of people deserve an equal chance, let’s say, to fail and succeed isn’t a very practical ethic when you’re putting someone in a high demand position where the consequences of failure can be overwhelming not only for that person but for all the people that they happen to be, whose destiny they happen to be involved in determining. And so then you might say, if you could come up with a selection process that would increase the probability of hiring an above average manager from 50-50 to 60-40 or 70-30 maybe you’re actually ethically compelled to use that. And in fact, by law, this is particularly the case in the United States, you’re required by law to use the most effective, valid, reliable, and non-discriminatory selection process that currently exists in order to select your employees. And one of the things that’s going to happen to employers in the next ten years is they’re going to get a very nasty shock for using interviews because the data on unstructured interviews indicates quite clearly that, A, that they’re discriminatory, partly because they, for example, if you’re tall and assertive and good-looking and charming then you’re much more likely to do well in an interview but that doesn’t necessarily have any bearing whatsoever on the probability that you’ll succeed in the position. And so, and not only that, the predictive validity of unstructured interviews is very low it’s about 0.12, it’s something like that, which means that if you just pick people randomly for success or failure, let’s say you’d have a 50-50 chance of predicting whether someone was going to be a success or a failure, it’s just a coin toss and then if you used an unstructured interview, you’d get that up to 56-44, which is slightly better, but it’s by no means, it’s not even close to the accuracy that you could get, for example, if you just used a standard test of conscientiousness which would give you a correlation of about 0.25 with, say, managerial productivity, and there’s this interesting, this is an interesting thing to know, it’s called the binomial effect size display Effect size is the magnitude of an effect, right, and it’s not an easy thing to get a handle on, although you really need to if you’re going to be a psychologist, because in any study there’s an effect size indicator, correlation often, or an R squared, which is the correlation squared, or a cones D, which is the effect size expressed in standard deviations, or something like that But you kind of have to understand that at a basic level to understand what statistics actually do, and there’s this phenomena called the binomial effect size display that can help you understand, like, in an embodied sense, what the magnitude of a correlation means So here’s how it works. Imagine that you have a predictor of 0.20, so the correlation is R equals 0.20 between phenomena 1, we’ll say conscientiousness, and phenomena 2, workplace performance, 0.20 correlation The question might be, well, how much would you improve your predictive capacity over chance levels if you applied that predictor? And the answer is that the R is the difference between the odds ratio, so let me explain that So 0.50, 0.50, if you subtract one from the other you get 0, so the predictive validity of selection by chance is 0, 0.50 minus 0.50 equals 0, that’s the predictive validity of chance If you have a predictor of 0.20, which is approximately, that’s sort of the low-end estimate for conscientiousness, then that would change your odds ratio from 0.50, 0.50, right, random, to 0.60, 0.40, because 0.60 minus 0.40 is 0.20 And so the correlation coefficient turns out to be the difference between the odds, and so it gives you a quick rule of thumb, so for example, if you have a 0.20 predictor, that gives you 60, 40, if you have a 0.30 predictor, that gives you 65, 35, because 0.65 minus 0.35 is 0.30 And if you have a 0.6 predictor, which is really up on the high-end, right, you’re really starting to push the limits of statistical prediction validity at that point, that gives you 0.80 minus 0.20, and so what you’ve done, if you use a predictor that has a correlation coefficient of 0.60, which you could get, for example, if you took conscientiousness and combined that with a good test of IQ for predicting complex jobs, you might be able to get up to 0.6 That moves your odds ratio of selecting an above average person for the position from 0.50 to 0.80, 0.20, so it cuts your failure rate by more than half, right, brings it down from 0.50 to 0.20, because 0.80 minus 0.20 is 0.60 So that’s a really good thing to know, that’s called the binomial effect size display, it’s a really good thing to have in your mind, it’s very simple, it’s just subtraction, and it gives you some sense of the power of statistical prediction Now, the question might be, well let’s say you had a predictor of 0.20, conscientiousness, you might say, well if you square the R, that gives you 4% of the variance, who the hell cares, 4% of the variance You’ve left 95% of the variability between people in terms of their performance unexplained, you might say, well why even bother, well the answer to that question is, how much difference in productive output is there between people Because if there’s a tremendous degree of difference in productive output between people, then increasing your ability to predict someone’s performance, even by some relatively small increment, might have massive economic utility You know, if let’s say the top 10% of your people are 50 times as productive as the bottom 10% of your people, then shifting your ability to predict up so that you have more of those extremely high performing people, or less of the extremely low performing people Might more than pay off, might more than pay for itself from an economic perspective, even though your prediction, your predictor doesn’t have that massive amount of power Well, and that actually happens to be the case. So back in 1968, there was a guy named Walter Michel, and he had reviewed, he’s a social psychologist, he reviewed the personality literature up to that point, and concluded that the typical personality measure only predicted the typical performance measure at about 0.2 And that’s actually remained relatively stable. I would say it’s a little higher than that, it’s probably 0.25, especially if you do things like correct for measurement error and so forth And what Michel said was, because it’s only 0.25, let’s say, you square that, that’s 5%, and the variance, you leave 95% of the phenomena unexplained, you might as well not even bother measuring personality And so that actually killed the field of personality from a psychometric perspective for about 25 years, really until about the early 1990s, when people woke up and thought, wait a minute, what are the typical effect sizes in other domains of prediction? And then they found out that, well, the 0.20 correlation that was typical of personality prediction was actually pretty damn good by social sciences or health sciences standards It doesn’t sound good when you just think about it as an absolute measure, because it leaves 95% of the phenomena unexplained, but when you compare it to other things that people consider of reasonable magnitude, then it turns out that personality psychologists are doing just fine And then also in the 1990s, and I’ll show you some of this, there were economic calculations done, so one of the calculations would be, well, imagine that you have, maybe you took 20 companies and you did a distribution of the productivity of their employees It’s a hard thing to do because you have to measure their productivity, it’s like, how the hell do you do that, right? With salespeople you can measure sales, that’s pretty straightforward With lawyers you can measure hours built, like there are some occupations where the performance measure is sort of built into the job, but if you’re a manager in the mid-level of a large corporation, how the hell can you tell how productive you are? So there’s a measurement problem on the productivity measurement end as well as the performance prediction end, and it’s a very intractable problem And the way that people often do that is by saying, well, let’s say you’re a manager in the mid-level of a corporation, how do we determine how productive you are? Well, we might ask you to compare your work productivity with your peers, maybe construct up a questionnaire asking about your efficient use of time and so forth And then we might get your peers to do the same thing to you, we might get your supervisors to do the same thing to you, and we might get your subordinates to do the same thing to you And then aggregate across all those measures and infer that that aggregate opinion actually constitutes a valid measure of productivity You actually don’t know, right, because that assumes that what you’re doing, that your peers and your supervisors and so forth are rating is actually related in some positive manner to the bottom line of the company And you actually can’t figure that out This is actually, I think, why large companies start to become unstable, is because if there’s enough layers between the operations of the people in the tiers of the corporation and the real outcome measure, which is basically profit, because that’s what we’ve got Then the relationship between your activity as a manager and the productivity of the company starts to become increasingly blurred And that might mean that you’re working as hard as you can on something that’s actually going to cost the company money So you’d actually be much more productive from a profit perspective if you just didn’t go to work at all And that happens a lot in large corporations, because you’d never know, especially if there’s a lot of steps that have to be undertaken in a process before you can test the product in the market You have no idea if you’re wasting time and resources, you just can’t tell So the performance measurement issue is a very, very complicated one We haven’t talked about it that much, but I’ll give you kind of a brief overview of it now What you really want to do is have multiple sources of information about performance and aggregate across them And if you can use real world measures that are tied to income generation, so much the better, because you have to use something as your gold standard, right? You have to say at some point, well, we’re going to define this as reality when it comes to performance And in a free market economy, roughly what you do there is you say that profit is the proxy for productivity And that isn’t the same thing as saying that profit is productivity That’s not the same thing. It’s saying that at some point you have to decide what you’re going to accept as a measure of productivity, because otherwise there’s no point in even talking about it And you can’t just not talk about productivity if you’re running an organization, because the organization doesn’t exist unless it produces something that will keep it going And generally that happens to be money So anyways, it’s very complicated, all of this. I was also curious, because I’m curious, I guess, is to find out what would happen if I took a measure that was derived in the lab And then tried to launch it out in the actual real world environment, tried to market and sell it And that was very informative, because I presume that we developed tests, which I’ll talk to you about, that were actually pretty good at predicting performance Managerial performance, for example, administrative performance We got ours of upwards of 0.6, which is really bloody impressive, so we could tell employers, look, if you use our tests, we can increase the probability that you’ll hire an above average employee from 50-50 to 80-20 And the economic benefit of that would be staggering, and I’ll show you the calculations that enable that sort of prediction to be made And you might think, well, and this is what you do think if you’re naive about producing something of value You might think, well, if you can produce something that’s of self-evident economic value, selling it will be a snap And that is so wrong, you just cannot believe it So one of the things we found, which was really mind-boggling to me, was that you could make a case that the probability that a company will use a test that predicts performance The probability that they will use the test is inversely related to the accuracy of the test, which basically means that the less accurate tests are easier to sell And you think, well, why the hell would that be? How in the world would it possibly be that corporations would rather buy tests that don’t work than tests that do work? And that is what they do, because really what they do buy is the Myers-Briggs, right? That sells about a million units a year And the Myers-Briggs has zero predictive utility with regards to performance prediction So why do people use it? Well, here’s one reason, it doesn’t hurt anybody’s feelings Everybody wins, right? And so then you think, well, do corporations really care whether or not everybody wins when they’re being tested? And the answer to that is yes, much more often than you would think So we hit all sorts of barriers, that was one The problem with tests that work is that most of the people who take them don’t do very well on them And then the other problem is that people aren’t good at statistical reasoning at all, they’re really, really bad at it And so, for example, they don’t know the difference between a percentage and a percentile So a percentage is, you know, if you get 40% on a test, it means you got 40% of the questions right If you are at the 40th percentile in the distribution of test scores, it means that you perform better than 40% of the people That’s actually not too bad, right? But you’ll think, no, that’s not 40% percentile, that’s 40%, and then you’ll think that you failed And so one of the things we found, for example, was that when we were marketing the tests to mid-level managers Who had some say, at least on whether or not they would be used, the first thing they would say is, well, I want to do the test And the thing you say about that is, no, you don’t, because this is derived statistically You can’t validate the test on the basis of your opinion about its applicability in your case But you can’t have that conversation, that isn’t going to go anywhere Because they say, well, I’d never give a test to my employees that I hadn’t taken myself It’s like, okay, so then you think, well, you’re a typical manager, you’re going to score at the 50th percentile You are not going to be happy about that, because you want to score at the 90th percentile Because you confuse percentiles and percentages, and also because you don’t notice that if you’re doing better than 50% of the managers That’s actually a pretty damn good question Can you talk about the 50th percentile in relation to what, is it just conscientiousness? And if so, like, you need to be conscientious, is there an optimal personality profile? That’s a good, I’ll answer that as I go through this, okay? Okay, so that was often a dead starter right there, and then the other thing we’d find, this was cool too Horrible, but cool So imagine a large corporation, and you go in and you try to make a sales pitch to someone, and maybe they’re in HR And you say to them, look, you could use these tests, if you use it for 100 people, we’ll increase your bottom line by 9 a test, it was like, no If you do this for each, and I’ll show you the mathematics in a bit Each person that you select with this test will bring 9 And then they say, well, wait a minute, we have a budget for testing that’s limited to 30,000 a year in revenue They say, well, that revenue goes to another branch of the company, and we won’t get any credit for it We’ll just get punished because we’ve exceeded our budget for selection I thought, oh yeah, never expected that to come up as an obstacle So we had very well-designed products They also took about 90 minutes, because we started with a full-scale neuropsychological assessment So we took tests of dorsolateral prefrontal cortical ability, which had before that been administered by neuropsychologists And we computerized them, we did that back in 1993, so it was among the first attempts to do this sort of thing And then we had a 90-minute test battery that also assessed the big five And then you could give that to employees, and you could produce this 80-20 differential that I described And then we found out, well, that test was too long It’s like, well, what do you mean? You’re going to gain 30 times Say maybe you have 50 applicants for the position, 75,000 employee And it increases their productivity by 30%, so we’ll say roughly 25,000 return on a 100,000 payoff for your 2,000 a week Or about 50,000 a year right now Maybe you should be making $150,000 in three years And they think, well, that couldn’t happen It’s like, not with that attitude That’s the first thing It’s like, no, that’s not going to happen If you don’t ask people for the damn money If you don’t look for a better job They’re going to come along and just shovel a boat full of money at you It’s like, no, that’s not going to happen But why is that impossible? Look at you people in here It’s like, what the hell is wrong with you? Nothing So you can probably have what you want If you could figure out what the hell it was And then, you know, you diligently pursued it So… and then maybe you wouldn’t whine about being alive That’d be good because people who whine about being alive Are dangerous to themselves and other people So you might think, I can have what I want But you better, well, figure out what it is And you can’t just wait for the, like, have what you want fairy To show up at your doorstep and grant it Because obviously that’s not going to happen So… so, okay, conscientiousness Well, we talked about how you could improve that Social networking That’s another big deal It’s one of the advantages that older people have over younger people And so, for example, now that I’m in my 50s Roughly speaking, I know a bunch of other people who are, you know, relatively well positioned in the dominance hierarchy And they know all sorts of people And so when I go to one of them and say, you know, can you do X or do you know X They say no, but I know someone who can And that’s a huge advantage So another thing that you want to think about as you move through life And this is… is that Use your ability to network properly And that doesn’t mean schmooze And it doesn’t mean go out and impress people That’s all just complete bloody rubbish It means you try to surround yourself with people who are competent in multiple different dimensions And you maintain your relationships with them And that’s a trading relationship too, right? It involves reciprocity But it’s a huge advantage A social network is a huge advantage And that’s something extroverted people can be really good at Because, you know, they have that sort of social ability And that goes along with the ability to sell So another place that you can pick up power And power for the good, for the right things Is to consciously develop and maintain your social networks And that also means Well, let’s talk about friendships for a minute Here’s how you know if someone’s your friend A. You can tell them bad news And they’ll listen They won’t tell you why, you know, you’re stupid And why that bad thing happened to you And how something worse happened to them once And, you know, derailed the whole conversation You can actually tell them bad news And they’ll listen So that’s a good thing And then, this is a weirder thing You can tell them good news And they’ll help you celebrate And that’s a really good way of deciding who you should have around you Because if you have someone around you You know, something good happens to you And you’re kind of afraid to even admit it Because, you know, God, something good happened to you It’s like, you let that be known And it’ll certainly be taken away So, you know, you come out and you sort of tell someone Halfheartedly that something good happened to you And they give you a whack And then talk about, you know The great thing that happened to them three years ago Or worse, the great thing that happened to someone that they knew three years ago You know, it’s like, go away from that person They’re not helpful to you And they’re not helpful to themselves either And so you want to surround yourself You’ve got to think about this You’ve got to surround yourself with people who want the best For the best part of you You can hang around with weasels and losers that are trying to pull you down To justify the fact that they’re spiraling downhill as well And, you know, the upside of that is you don’t have to have any responsibility And you can all whine about how wretched life is You know, so that’s pretty attractive But I would say it’s also a bad medium to long-term plan And so it’s acceptable and desirable To try to surround yourself with people who are facilitating your development You know, and you might say, well, I’ve got people around I know them well, you know They’re not doing that well And they don’t fit into that category It’s like, what’s your point? What are you going to do with them? Exactly If they’ll listen and cooperate with you And move towards a better future, great If they don’t pay any attention And they keep doing the same damn things over and over And they’re not going anywhere And it’s painful Then maybe the proper thing to do is say, you just have your misery I’ll go off and have my life And maybe you’ll wake up at some point in the future And think that’s a better way of being Because just putting up with it is, well, they call that enabling, right? You put up with that sort of behavior You’re providing tacit consent for it And even tacit approval It’s like, it’s a bad idea You have, I would say, both the right and the responsibility To surround yourself with people who are good for the best part of you And that’s not the same as, you know I don’t have to elaborate on that You can figure out what that means Skills, that’s another thing you can do If you want to increase your probability of success Every time you have an opportunity To take an opportunity That would provide you with a new skill Do it, right? Learn to program, learn to write, learn to read Read new things, learn to public speak Learn how to introduce yourself to people Learn how to social network Learn how to go talk to your boss in a manner This is the right way to go talk to someone who’s supervising you I see this problem And here’s a solution And so I’m coming to talk to you about the problem and the solution It’s like, that person is going to want to talk to you a lot Because the other people they’re talking to are going to come and say I’ve got a problem Can you do something about it? It’s like, they don’t want to do something about it They’ve only got 50 things to do, you know So if you’re the person who constantly brings forth a problem Even if they’re accurate problems Why are they going to want to have you around? It’s you’re just another problem Don’t be a problem for the people who want to give you money That’s a good rule of thumb, man You know, if someone wants to give you money Then help them do that And if they want to give you status and success Then help them do that, right? And you do that in part by bringing them solutions And partly you do that by developing your skills And so if things aren’t going very well for you This is also a good way of evaluating an opportunity Should you take an opportunity? Well, here’s the rule Take the opportunity if it will teach you something that you can use for other opportunities Because then even if it fails Which it probably will It doesn’t matter because you’ve accrued something of value That you can bring forward to the next situation So, you know, there’s this old Jungian idea that I told you about In the Chartre Cathedral, for example The cathedral is made in the form of a cross And the cross signifies the center of the world And the dome signifies the sky And so right below the dome at the center of the world And it’s a cross because the cross is a cross And it’s a cross because the cross is the place of suffering So that’s the center of the world Because that’s what you are, you’re the place of suffering You’re the place of conscious suffering That’s the center of the world And so inscribed on the floor is a maze It’s a big maze And it’s a mandala And there’s a kind of a flower-shaped resting place right in the center And what you’re doing is walking in the maze And you walk all four quadrants and you get to the middle Which is where you want to be Well how do you get there? You walk everywhere And what does that mean? It means every bloody time you’re offered an opportunity Take it And develop your skills And that’s better than wealth, by the way In fact, it actually constitutes wealth Because wealth constitutes what you have when someone takes all your money away Right? That’s real wealth And so the way that you build up that sort of wealth Is you turn yourself into someone who’s competent in multiple directions And you can be doing that all the time Right? Especially with the kind of technology that you people have access to I mean, you can learn anything you want whenever you want So what a good deal that is, man And so there’s easy fruit hanging that you can pick And I would recommend that you do that