There have been two very interesting articles recently, one in the Harvard Business Review (HBR) and another in the Financial Times, about the quality of ‘management’, and how under-trained and under-valued managers are invariably behind poorly performing businesses.
Most of us, I am sure, are aware of the Peter Principle, as outlined in a book written almost 50 years ago by Dr. Laurence J. Peter. In it, he describes the following paradox: if organisations promote the best people at their current jobs, then they will inevitably promote people until they’re no longer good at their jobs. In other words, organisations manage careers so that everyone ‘rises to the level of their incompetence.’
Many of us, similarly, will have seen the Peter Principle in action, even if we were not necessarily aware that the phenomenon had a ‘name’. If we take my own industry, and the world of debt collection, the skills that make an individual the best collector on the collections floor, for example, do not necessarily translate into the skills that are required to make them the best collections manager. Promoting them to a level of incompetence only means you lose a top performing collector to gain a poor performing manager.
To give some idea of the size of the problem, it believes that as many as three million current managers are there by accident rather than design
This becomes a challenge, namely whether to reward a top performer with a promotion, or rather promote the worker that has the best skill sets for a managerial position. And sometimes, of course, that means recruiting from outside of the business, which can be incredibly de-motivating for those already there and with their eye on the top prize.
The article in the HBR makes this precise point: the best engineer doesn’t make the best engineering manager, and the best professor doesn’t make the best dean. The principle applies in any industry or sector but the outcome is always the same.
Businesses have long struggled with the Peter Principle and looked for alternative ways of rewarding staff, principally through enhanced pay. Studies have found that businesses with the strongest pay-for-performance also choose and promote the best managers, especially when it came to sales. Staff did not feel that their careers were in any way ‘blocked’ by ‘failing’ to reach a management level, neither did it impact their ability to earn more money.
Promotions, however, are not simply about pay. They satisfy a much broader desire to be recognised, and so the challenge is not so easily solved simply by throwing money at it. Another way of addressing the challenge is by providing future managers with the training and support needed to take the first steps onto the managerial ladder.
The Financial Times makes reference to a group known as ‘accidental managers’, a term coined by the UK’s Chartered Institute of Management. The CIM is concerned that too many employees are promoted to managerial roles with little or no preparation. To give some idea of the size of the problem, it believes that as many as three million current managers are there by accident rather than design, and are promoted simply because they are good at their existing job.
So what are we doing to prepare the next generation of manager, and in turn support a more qualified and professional workforce? Again, if I look at my own industry, our Association is addressing the challenge with dedicated leadership and management courses, starting with our Level 3 Award, Certificate and Diploma which has specific units focused around leading a team. Our Level 5 Diploma in Compliance Risk Management also provides a clear progression route for future managers in a specific area of competence and equips candidates with the management skills required to develop a compliance strategy and manage the compliance team accordingly. The CSA also sits on the Register of Apprenticeship Training Providers (RoATP) as a Main Provider and currently delivers a Level 3 Team Leader Supervisor apprenticeship in addition to a number of management qualifications through to Level 6.
We will not be alone in looking at this challenging issue. I am sure that all of us in our respective industries recognise the need to create training and development programmes that equip our people with the skills and the competences as managers to take them all the way to the top. My wish is that in the future, it will be no accident that the top performing businesses and most rewarding working environments will be led and created by a new generation of professionally supported and qualified manager.
