What HR can learn from Brexit

There are disadvantages in trusting a large group of employees to produce a wise outcome, warns new research.

No matter what side of the argument you’re on, it’s clear that the UK’s decision to leave the European Union has produced some negative results so far.

For starters, Britain lost its final gold-plated AAA rating, after Standard & Poor’s decision to downgrade it by two notches to AA.

Further, the National Police Chiefs’ Council has revealed an increase of 57% in reported racist abuse since the vote.

The above are just two of the consequences which the public was warned about prior to the referendum.

What happens in the long term remains to be seen, but it does beg the question: Does giving many people a say in a matter generally result in a wise outcome?

As far as guessing the weight of an ox or the amount of marbles in a jar is concerned, larger groups have shown to be smarter than smaller ones.

These collective examples of intelligence are often called "the wisdom of crowds", but is there a limit to the number of people that makes a group wise?

New research has found that with qualitative decisions (such as which diagnosis fits the patient's symptoms) moderately-sized groups (around five to seven randomly selected members) are likely to outperform larger ones.

These moderately-sized groups include the likes of physician teams making medical diagnoses, bank officials forecasting unemployment and election forecasters predicting political wins.

The study was completed by Santa Fe Institute Professor Mirta Galesic and her colleagues from the Max Planck Institute for Human Development in Berlin.

"When we ask 'how many people should we have in this group?' the impulse might be to create as big a group as possible because everyone's heard of the wisdom of crowds," said Galesic.

“But in many real world situations, it's actually better to have a group of moderate size."

Previous research has mainly focused on collective intelligence concerning decisions of "how many" or "how much", however the current study applies to “this-or-that decisions under a majority vote”.

It involved the researchers mathematically modelling group accuracy under different group sizes and combinations of task difficulties.

They discovered that in situations similar to a real world expert panel (where group members encounter a combination of mostly easy tasks with a few more difficult ones) small groups were more accurate than larger ones.

This result is independent of other influences on group accuracy, such as following an opinion leader or having group discussions before voting.

"In the real world we often don't know whether a group will always encounter only easy or only difficult tasks," said Galesic.

"And in many real-world situations, an expert group will encounter a combination of mostly (for them) easy tasks and a few difficult tasks. In these circumstances, moderately-sized crowds will perform better than larger groups or individuals.

“Organisations might take this research to heart when designing groups to solve a series of problems."
Speaking about referendums generally, Galesic was adamant that this does not mean they a bad idea.

"These results, of course, do not mean that we should abandon large scale referendums like Brexit and national elections," said Galesic.

"Choices between different policies and candidates often do not have a 'right' and a 'wrong' answer: different people simply prefer different things, and the outcomes of these decisions are complex, with a spectrum of consequences.

“It is important to account for everyone's opinion about the general direction in which they want their country to go -- including underrepresented groups.

"But when it comes to decisions with a more clear 'right' and 'wrong' answer - where everyone can, at least after the fact, agree that one course of action was better than the other - then moderately sized groups of experts can often be better than larger groups or individuals.”

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