The Cost of a Poor Promotion

An article from called Promoting Wrong People Hurts Employee Retention and Productivity opens by stating “Managers are key to employee retention and productivity. But many companies don’t promote into management the people who would do the best job as managers.” 

A separate article from human resources consulting firm Insperity called You Promoted The Wrong Person, Now What? shared this list of potential consequences a business can face from a poor promotion:

  • Negative impacts to the employee’s team, including lower morale, productivity and damaged trust
  • Loss of clients, especially if they’re in a client-facing role
  • Exposure to legal liabilities
  • Time and financial resources lost for a role that you then must spend more time and money on to recruit, replace and train
  • Safety issues (in some cases, depending on the job)

And Job Monkey’s article called Why You Don’t Want to Promote the Wrong Person cited Jim Corter as saying “companies put the wrong people into management positions a whopping 82% of the time.”

To this point, we’ve outlined a host of things that can kill profitability in our organizations. It borders on terrifying to see how many of those things can become exponentially more costly just by working to fill an open leadership role!

Here’s what I’ve seen throughout my entire career… Since formally entering the workforce right after I turned fifteen years old, every company I worked for had some sort of process for internal promotions. For what it’s worth, I’ve always felt like this is an outstanding approach to reward our best team members for their hard work and loyalty. The challenge, however, generally comes from forcing the ole square peg into a round hole… For one reason or another, even the best of intentions in growing our team from within can rapidly turn into no good deed going unpunished!

A harsh reality that every business owner, executive, and high level manager needs to face is that the best do’ers don’t always end up being the best leaders. As we address this profitability killer, we’ll look at several reasons that can happen - without placing blame - and we’ll work through some very specific steps we can take to build a succession plan in our organization that can keep each of the pitfalls listed in those articles I referenced above at bay. But first, we should probably consider the price tag that comes from imposing our will on someone who’s perfectly happy right where they are…

Who Says It’s a Promotion?

One of the first people I remember meeting on an assembly line, when I finally made it to the shop floor after nine full days of orientation, was a fellow named Phil. He was the day shift lead on that line and had been for long enough to have earned a reputation that even a hard headed and strong willed nineteen year old would quickly admire. Truth be told, I had heard about how great Phil was to work for even before I started with the company!

For close to four decades - ten or so years before I started, the nearly twenty years I worked with him, and for close to a decade after - Phil served in a lead role for various assembly lines in the same area of that manufacturing facility. Not only did he make a great impression on me from the start, he and I maintained a solid working relationship in each role I took on moving forward. I can think of more than a few times where I poked and prodded him about throwing his name in the hat for a supervisor spot. I had seen several others make similar moves and he had earned far more respect than most of them. Each time though, he was quick to shut me down. Phil wanted no part of it! 

I could go on and on about Phil; how he turned down significantly more money with other companies, how he ended up being a tremendous mentor to my son years after he and I worked together, and so much more. My point here though is to emphasize that pushing him to accept a “promotion” into a supervisory or management role would have been a very logical step in the progression to most everyone watching from the outside; everyone except the folks who really knew him!

Phil enjoyed the majority of what he did and he was excellent at it! He had no interest whatsoever in climbing the corporate ladder or dealing with the politics that would have come with that. And while he never said so specifically, I believe he found fulfillment in helping the people around him produce high quality products. Had he been pressured to move into another role, I have no doubt that he could have been just as successful - but I also have no doubt that he would have been extremely frustrated and most likely would have left that organization.

On the opposite end of the spectrum, I’ve worked with folks who were just as technically sound in their respective trades as Phil was in his. I saw many of them moved into similar roles where they were responsible for training others and ensuring projects got done. In far too many of those cases, they floundered. Their ability to produce results on their own didn’t translate in any way to training the folks working with them. And the frustration that accompanied this usually pushed more inexperienced team members away than it kept! I can even remember a couple of situations where some of the most skilled workers, a few actually having been given titles that carried a bit of authority, absolutely refused to train the newest members of their team. One went so far as to say “if they can figure something out after I tell them once, I don’t want them on my crew.” 

Phil was leading from where he was on a daily basis. The ones who accepted the positions with more authority were doing no such thing. We’ll dig into a few of the ways those folks were killing profitability soon. For now, I want you to think about how much profitability would have been killed if I (or anyone else for that matter) would have forced Phil to accept a “promotion” he had no interest in…

As we looked at the impact turnover has as a profitability killer, I referenced a Gallup study saying that “It's generally estimated that replacing an employee costs a business one-half to five times that employee's annual salary.” If replacing a relatively new employee can cost half their annual salary, I have no doubt that replacing the value Phil brought to his role and the team he led would have definitely cost five times his annual salary. And I don’t think it would have stopped there! After knowing him for close to thirty years, I’m fairly sure that any supervisory or management role he would have accepted would have been short lived. Not because he wasn’t capable, but because he wouldn’t have been able to do the things that gave him fulfillment. That would have resulted in replacing him in yet another role - and losing all the knowledge and skill he had developed in the organization entirely!

Just because it seems like it’s the best next step for their career doesn’t mean it’s what they want. We’ll look at how we can allow someone like Phil flourish exactly where they are soon. First though, we need to consider the costs that come from promoting someone just because of their technical expertise…

Climbing the Ladder…

While some great team members have no interest whatsoever in climbing the company ladder, far more will jump at the chance whether it’s the right move for them or not! In some cases, their technical expertise and tenure give them an edge over every other candidate being considered. Don’t misunderstand my point here, I don’t think there’s anything wrong with that - as long as they’re willing to develop the completely different skill set that leading a team of what used to be their peers will require… In other cases, the person moving into a supervisory or management role might have far less experience within the organization but a flashy resume with all sorts of sparkling accolades. However, this can create just as many challenges if they’re more intent on climbing the ladder than they are on building relationships or earning influence with the teams they’re responsible for. Oh, and they’ll need to develop at least some level of competency in the processes they’ll be overseeing - which won’t be a simple task if they don’t make strong connections with their team almost immediately…

In considering the latter, and we’ll look at the former shortly, I learned years ago that the best managers and leaders do not need to be the most talented in their respective departments or companies. I remember hearing my friend Terry once say that every single engineer reporting to him was far better at what they did then he could ever hope to be, but that didn’t stop him from rolling his sleeves up to learn as much as he could about what each of them was engaged in. And just recently while with a friend who bought a business that had a long history in our area, someone said to him, “you must have really enjoyed that as a hobby to buy the business.” He was quick to point out that he went in with almost no understanding of the technical side of the business but he knew the company had good people in place who did know all that so he’s worked really hard at building relationships with them and learning as much as he could in the process. In both of those cases, the teams reporting to each of them delivered outstanding performance AND these teams loved the individuals leading them.

The opposite can be just as apparent, but it has a far different effect on each member of the team and the overall performance of the organization… I saw two different folks, both with what appeared to be outstanding experience, accept high level roles and start making immediate changes with the intent of improving the bottom line. In each case, there was no attempt to learn the history or the processes they were working to change or any time invested in developing relationships with the people who had been involved in those processes for decades. Both were incredibly intelligent, and neither was shy about saying so. But neither ever earned buy-in from the teams reporting to them and that made a huge impact on the results they achieved!

So how about the folks we promote internally, the ones who have been with us forever and have absolutely mastered their craft? In some cases, the allure of higher pay and a fancy title can draw those folks to take that next step. But sometimes we push them into those roles because we don’t have any other viable options. In either case, the results may not be what we had hoped for. Our best do’ers often get extremely frustrated when the team now reporting to them isn’t getting the same kind of results they did when they were executing the same tasks. And all too often, addressing that with another individual was not a skill they had developed along the way. Since this is an issue I’ve heard described by owners and executives in every industry we’ve worked with, I won’t bother listing examples; I have no doubt that you’re already thinking of several that you’ve seen personally! However, I will emphasize that this can play just as big a role in lowering employee engagement, increasing turnover, or exaggerating just about any other profitability killer we’ve worked through as bringing in someone with a great resume who never works to connect with the team.

In either case, this can seem like we’ve promoted the wrong person - and maybe we have - but there are steps we can take to equip the folks in each of these examples. They just need to be willing to develop a new set of skills. We’ll detail those soon. But before that, we’ll take a look at what we can do to make sure we have the best shot possible of moving the appropriate person into a leadership role.