Corporate Leadership Development

By Guy Higgins

I’ve posted about this topic in the past and was recently inspired to post again by an issue of QUARTZ Obsession (an email I get each day that explores some seemingly random topic). The email that inspired this post was titled, “The Peter Principle.” The email explained that the Peter Principle is the captured by the sound bite, “employees rise to the level of their incompetence” and discusses why that might be true.

The email made two salient points:

  • A survey of the sales organizations of 53,000 companies showed that outstanding salesmen were promoted 14% more frequently than their peers – but sales, under their leadership, fell 7.5%. Interestingly, sales rose under their less “outstanding” peers who had been promoted.
  • A National Bureau of Economic Research study proposed a solution to the Peter Principle – Identify the traits shared by good managers, and promote employees who possess them.

In previous posts, I have espoused providing leadership and management training to all employees rather than waiting until an employee is selected for promotion to management. I think that my approach is better than that proposed by the Bureau of Economic Research. Here, the Noble Reader can ask, “Why is your approach better than a huge bureau’s?” Okay, here’s why:

  • The solution proposed by the National Bureau of Economic Research basically said, “get better at picking leaders.” Okay, that’s a lot like telling a baseball player to hit the ball more often. The trick is in the “how.”
  • By providing leadership training to all employees and offering those employee informal leadership opportunities, an organization creates an arena in which it can actually observe and understand which employees do and do not possess leadership talents and how well those talents are developing.

The U.S. Navy, in which I “grew up,” does provide informal (for the most part) and formal leadership training to everyone. A nineteen-year-old seaman is expected to learn about and apply leadership if she wants to be promoted to petty officer third class. Sailors remain deeply involved in their technical specialty throughout their careers while gaining more and more formal leadership responsibility. At the level of a Master Chief Petty Officer, a sailor is expected to know about almost everything that goes on in her department, but she’s almost entirely focused on leading.

For the past forty plus years, the Navy has, by statute, adhered to an “up or out” philosophy under which a person must be promoted within some specified timeframe or they must leave the service. That seems likely to change in the near future – a change that I think is very much needed since it results in competent technical specialists with inadequate leadership skills leaving the service with a knowledge and experience gap to fill.

Non-military organizations don’t have this problem. They can easily establish a formal system under which people with proven leadership skills are promoted into leadership jobs while able technical specialists continue in their field of excellence. There is, however, a perceptual problem. Leaders/managers frequently operate on a completely different compensation scale than do technical specialists. Such a disparity between the compensation for people in management and those in production creates a pressure that causes people to want to move into management – even if they do not possess the skills and abilities. This is particularly powerful in light of the Dunning-Kruger effect (a cognitive bias wherein people with low ability view themselves as having superior ability). I think that there are a couple of things that organizations can do to address the pressure for people to pursue management jobs even when unqualified:

  • Evaluate each person’s technical skills and abilities relative to their peers and compensate them in proportion to their contribution to the company – this already happens in many companies, but very high performing technical specialists may be viewed as contributing more to the company than many people in leadership positions but are seldom compensated that way. That kind of disparity really needs to be changed – particularly as we move more and more into a “knowledge economy.”
  • Let the people suffering from the Dunning-Kruger effect leave. Attrition is part of workforce management, and allowing people to leave without any ill effects can help improve the workforce (there is also the possibility that a person who is underperforming in company A may excel at company B to everyone’s benefit).
  • Organizations can maintain two parallel career paths for employees – one for technical specialists and one for leaders. I think that CEOs (and even some of the army of other CXX folk) deserve to be highly paid (I don’t think most of them are actually worth what they get paid, but that’s another topic). In fact, I think that CEOs should get paid significantly more than anyone else in the company. That said, technical superstars need to be paid very highly too – this is where the HR folks need to develop a very good way to measure actual contribution and not rely merely on subjective assessments that are frequently based on outdated criteria.

I think that the Peter Principle is very real. I think that far too many people are promoted into leadership/management jobs who are absolutely unsuited for those jobs. I think that being a superb technical specialist is not a critical criterion for promotion to leadership.


Leave a Reply

Your email address will not be published. Required fields are marked *