One of the Most Important Decisions Companies Make

Gallup finds that companies fail to choose the right management candidate for the job 82% of the time. Management talent exists in every company and it’s often hiding in plain sight. Gallup has found that one of the most important decisions companies make is simply whom they name manager. Bad managers cost businesses billions of dollars each year, and having too many of them can bring down a company.

Managers account for at least 70% of the variance in employee engagement scores across business units, Gallup estimates. This variation is in turn responsible for severely low worldwide employee engagement.

Gallup finds that companies fail to choose the right management candidate for the job 82% of the time. Management talent exists in every company and it’s often hiding in plain sight. Gallup has found that one of the most important decisions companies make is simply whom they name manager. Bad managers cost businesses billions of dollars each year, and having too many of them can bring down a company.

Managers account for at least 70% of the variance in employee engagement scores across business units, Gallup estimates. This variation is in turn responsible for severely low worldwide employee engagement.

If great managers seem scarce, it’s because the talent required to be one is rare. Gallup’s research reveals that about one in 10, people possess the talent to manage. Often employees who are good at their jobs are promoted into management roles. Many times they have no interest or competencies to be good managers. Though many people are endowed with some of the necessary traits, few have the unique combination of talent needed to help a team achieve excellence in a way that significantly improves a company’s performance. This 10%, when put in manager roles, naturally engage team members and customers, retain top performers, and sustain a culture of high productivity. Only 33% of employees are engaged in their job, and about 53% are disengaged and do the basics and are there for a paycheck.

It’s important to note that another two in 10 people exhibit some characteristics of basic managerial talent and can function at a high level if their company invests in coaching and developmental plans for them. Nearly one in five (18%) of those currently in management roles demonstrate a high level of talent for managing others, while another two in 10 show a basic talent for it. Combined, they contribute about 48% higher profit to their companies than average managers do.
Conventional selection processes are a big contributor to inefficiency in management practices; they apply little science or research to find the right person for the managerial role. When Gallup asked U.S. managers why they believed they were hired for their current role, they commonly cited their success in a previous non-managerial role or their tenure in their company or field.

These reasons don’t take into account whether the candidate has the right talent to thrive in the role. Being a successful programmer, salesperson, or engineer, for example, is no guarantee that someone will be adept at managing others.

Most companies promote workers into managerial positions because they seemingly deserve it, rather than have the talent for it. This practice doesn’t work. Experience and skills are important, but people’s talents — the naturally recurring patterns in the ways they think, feel, and behave — predict where they’ll perform at their best. Talents are innate and are the building blocks of great performance. Knowledge, experience, and skills develop our talents, but unless we possess the right innate talents for our job, no amount of training or experience will matter.

The good news is that sufficient management talent exists in every company. It’s often hiding in plain sight. Leaders should maximize this potential by choosing the right person for the next management role and providing proper leadership skills training when necessary.

Authors – Randall J Beck and Jim Harter, Excerpts from Gallup Business Journal

For methodology used in this study

Watch the
Latest Episode of
HR Problem Solver

Taking a Look at Leadership Development

Subscribe to Our YouTube Channel Above
Schedule a Call
Small and medium-sized businesses may not have the time or expertise to implement the necessary people strategies for business success. The ideas above can be easily implemented by you to help improve the performance of your employees which leads to increased employee engagement and increasing the bottom line.

We are here to help you with the people side of your business: employee engagement, retention programs, performance management, vision, and strategic plans, leadership development, selection & onboarding, compensations programs, organizational design, employee handbooks, core values, and all things HR-related.