At brunch today was talking with some folks about talent evaluation within larger companies. Started riffing on false positives vs false negatives.

False positives could generally be described as folks who are recognized and rewarded beyond their actual value. They might not be horrible failure, but generally they receive more accolades than they should.

Conversely false negatives would be talented employees who receive less kudos, responsibility, or compensation then they should.

While the best companies are thoughtful about both of these issues, it was pretty unanimous that false positives are way worse than false negatives. Why?

• Peter Principle – False positives will be elevated to areas of more strategic importance with greater impact to hurt the company, more opportunity cost
• Corrosive to culture – Other employees will start to model the behaviors of the false positives given that the company is signaling what matters to them
• Best employees will leave – Blocked and disgusted by false positives, good employees may leave, even if they are being fairly recognized themselves

Of course false negatives aren’t great either – you likely increase attrition of those people directly – but no where near as sad as false positives. Do folks agree or disagree?