Wednesday, August 8, 2018

The interesting case of employee promotions

Tim Harford points the work of Alan Benson, Danielle Li, and Kelly Shue which appears to establish Peter's principle ("every employee rises to his level of incompetence") at work in modern organisations. They use data from 214 firms, more than 53000 sales employees, and more than 1500 promotions into managerial positions. 
The authors of the paper discovered that the best salespeople were more likely to be promoted, and that they were then terrible managers. The better they had been in sales, the worse their teams performed once they arrived in a managerial role. What’s more, people were not promoted for behaviour that might seem correlated with managerial ability — in particular, those who collaborated with others were not rewarded for doing so. What mattered were sales, pure and simple. In short, Professor Peter was right. Brilliant people are promoted until they become awful managers.
If this is true, then Alessandro Pluchino, Andrea Rapisarda and Cesare Garofalo have another suggestion,   
If performance at one level of a hierarchy is uncorrelated with performance at the next level up, the best strategy is simply to promote the very worst people. Nobody knows whether they will make good managers, but at least they will no longer be dreadful staff — or as Dogbert in the cartoon strip Dilbert put it back in 1995: “Leadership is nature’s way of removing morons from the productive flow.” There are two difficulties with this approach: first, it may be too extreme to assume that no skills at all carry over from one job to the next; second, if the reward for failure is promotion, then the likely response is an organisation full of people bent on sabotage. So Profs Pluchino, Rapisarda and Garofalo suggest a compromise: promote people at random.
Managerial capacity, while often taken for granted, does not come by default or naturally. It needs to be cultivated just as an other skill. And even when cultivated, it is a scarce resource not easily imbibed by everyone. 

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