I mentioned the Peter Principle in my last post. Back in the 1970s Laurence Peter (Wikipedia) observed that people in a hierarchical organisations tend to rise to "a level of respective incompetence".
Why? This is where incentive systems (carrot & stick logic) play a role: If you do as you're told and achieve your goals, you will be promoted … and maybe get a bonus on top/along the way (especially in commercial functions, less often in others).
Take a great software developer: the best coder in the firm. Reliably delivering great results in record time. Great software, impeccable code, amazing knowledge and logic to bring things to life. She helps out team mates all along. Smiling faces all around. Brilliant!
Two years later, she asks for recognition and reward. Since you hang the carrots for promotion that's what she wants - and you give it. You promote her to become a team leader.
But that's a completely different ball game: it requires different skills & knowledge, empathy instead of logic, decisions affecting families not "just" some distant customers. It's nothing like the job before, and yet the promotion is based on that. (You can picture the same for a sales, marketing, production, finance... job)
And now you wonder, why are people so unhappy? They wonder why are there so many bad bosses?
You just lost your best coder. There is almost no way back, if she turns out a poor performing manager. The signal to the organisation would be terrible. And let's be real, very few leaders admit mistakes in hiring, let alone rectify them early on.
I speak from experience. And also have done that before. That's how these systems work.
In fact, Freakonomics Radio recites a study that showed that this exact logic, in case of sales functions, leads to worse performance of sales teams. Because the best sales person, more often than not, is not the best team lead.
Firms know this. And it is accepted. Because climbing the hierarchy is a key incentive for people to stay engaged ... (and engagement is paramount - see my last post).
There must be a better incentive system!
Starting with underlying assumptions: Most of us come motivated to the first day and want to give their best. It's the above incentive system that kills all passion and commitment (i.e. "you get some money now and the rest later, if you really do perform...which we can't be sure you will").
Just pay people for their work at market, plus what they are worth to your organisation. Add a participation in company profits or shares, if you prefer. Recognise great achievements, celebrate there and then. Don't wait for year end fiscal close to judge all. Money as an incentive doesn't go a long way anyway. (at least me, I have not a single fond memory of the bonus I got paid through the years)
On leaders:
How about you look for the right set of skills first.
Or, let your team suggest/vote/decide on their leaders.
Or, rotate that role.
... I know: 🤯
Pirates used to vote and elect their captains from within. They could also vote down a captain … scary thoughts for many C-levels, I imagine.
Maybe worth a thought.
But surely, it's time to throw over board the old convictions we embraced in the past century. The Peter Principle is still alive and it is destroying economic value.
Let that sink in. Shareholders. 😜
Why? This is where incentive systems (carrot & stick logic) play a role: If you do as you're told and achieve your goals, you will be promoted … and maybe get a bonus on top/along the way (especially in commercial functions, less often in others).
Take a great software developer: the best coder in the firm. Reliably delivering great results in record time. Great software, impeccable code, amazing knowledge and logic to bring things to life. She helps out team mates all along. Smiling faces all around. Brilliant!
Two years later, she asks for recognition and reward. Since you hang the carrots for promotion that's what she wants - and you give it. You promote her to become a team leader.
But that's a completely different ball game: it requires different skills & knowledge, empathy instead of logic, decisions affecting families not "just" some distant customers. It's nothing like the job before, and yet the promotion is based on that. (You can picture the same for a sales, marketing, production, finance... job)
And now you wonder, why are people so unhappy? They wonder why are there so many bad bosses?
You just lost your best coder. There is almost no way back, if she turns out a poor performing manager. The signal to the organisation would be terrible. And let's be real, very few leaders admit mistakes in hiring, let alone rectify them early on.
I speak from experience. And also have done that before. That's how these systems work.
In fact, Freakonomics Radio recites a study that showed that this exact logic, in case of sales functions, leads to worse performance of sales teams. Because the best sales person, more often than not, is not the best team lead.
Firms know this. And it is accepted. Because climbing the hierarchy is a key incentive for people to stay engaged ... (and engagement is paramount - see my last post).
There must be a better incentive system!
Starting with underlying assumptions: Most of us come motivated to the first day and want to give their best. It's the above incentive system that kills all passion and commitment (i.e. "you get some money now and the rest later, if you really do perform...which we can't be sure you will").
Just pay people for their work at market, plus what they are worth to your organisation. Add a participation in company profits or shares, if you prefer. Recognise great achievements, celebrate there and then. Don't wait for year end fiscal close to judge all. Money as an incentive doesn't go a long way anyway. (at least me, I have not a single fond memory of the bonus I got paid through the years)
On leaders:
How about you look for the right set of skills first.
Or, let your team suggest/vote/decide on their leaders.
Or, rotate that role.
... I know: 🤯
Pirates used to vote and elect their captains from within. They could also vote down a captain … scary thoughts for many C-levels, I imagine.
Maybe worth a thought.
But surely, it's time to throw over board the old convictions we embraced in the past century. The Peter Principle is still alive and it is destroying economic value.
Let that sink in. Shareholders. 😜
M·M