Before You Promote Your Best Performer

A promotion is the most common way a company says thank you. It is also a hiring decision for a different job, and it is rarely examined the way a hire would be.

That gap has a name. In 1969, Laurence J. Peter and Raymond Hull proposed that people in a hierarchy are promoted on the strength of their current work until they land in a role they cannot do well, and there they stay.¹ The book was written as satire. Fifty years later, three economists tested it.

What the evidence shows

Alan Benson, Danielle Li and Kelly Shue studied 53,035 sales workers at 214 American firms between 2005 and 2011, including 1,531 who were promoted into management.² Sales is a useful place to look because both jobs can be measured: what a person sold before the promotion, and what their team sold after it.

Two findings matter here. The best salespeople were the most likely to be promoted. And the stronger a new manager's own sales record had been, the worse the team performed. Doubling a new manager's pre-promotion sales corresponded to a 7.5 percent decline in the sales of each person who reported to them.³

The authors did not conclude that these companies were careless. A promotion is a powerful incentive, and a company that stops promoting its top performers risks losing them. Many firms appear to accept weaker management as the price of keeping that incentive simple. The study put a size on the price: under a policy that promoted the people most likely to manage well, average managerial quality would have been 30 percent higher.⁴

One caution before going further. This is a study of sales teams, in one country, over one period. I would not carry the percentages into engineering or operations as though they were measured there. The pattern is the part that travels, and I have watched it play out on sales and technical teams.

So the useful question is how a company keeps its ability to reward great work without paying for it in management quality. The companies that do this well make five design decisions.

1. They treat a promotion as a hire

When a company hires a manager from outside, someone writes down what the job requires and looks for evidence the candidate can do it. When the same company promotes from inside, the evidence is usually a record in a different job.

The fix is plain. Before a management role is filled, write down what it asks for: coaching, delegating, handling conflict, giving credit, thinking past this quarter. Then look for evidence of those things in each candidate, wherever it shows up.

The research offers a pointer on where to look. Salespeople who had more experience working on deals with colleagues made better managers. Doubling that collaboration experience predicted a 15.8 percent improvement in the value a new manager added to the team.⁵ The person who makes the people around them better is often visible long before a title is involved, and is not always the person at the top of the ranking.

2. They build a second way up

If the only route to more pay, more status and a larger say is a management title, people who are brilliant at the work will take the title whether or not they want the job. The company then loses a great practitioner and gains a reluctant manager in a single decision.

A second track changes the choice. A senior specialist path, with its own titles, its own pay progression and a real voice in decisions, lets an expert keep growing while staying in the work. I wrote about the reasoning behind this in Two Rare Breeds.

The same study supports it. Firms with stronger pay for performance leaned less on sales results when deciding whom to promote.⁶ When excellent work can be rewarded directly, the promotion no longer has to carry the whole thank-you.

3. They let people try the job first

Most companies find out whether someone can manage after they have announced it. By then the old role is filled, the raise is in place, and stepping back feels like a public failure.

A trial costs far less. An acting role for a few months, a project to lead with two or three people, or responsibility for bringing a new hire up to speed will each show how someone handles the work of managing. It also gives the person a chance to learn whether they enjoy it. Some will discover they do not, and that is a good outcome for everyone.

4. They train before the title

In many organizations the first management course arrives a year after the first management job, if it arrives at all. The new manager spends that year working it out on a live team.

Companies that prevent this start earlier. They teach the core skills, such as running a one-on-one, giving feedback and delegating a task properly, while the candidate is still in the trial period, and they keep a more experienced manager close through the first year. None of this needs a formal academy. In a company of twenty people it can be the owner setting aside an hour every other week.

5. They make the way back ordinary

The original observation was only partly about people reaching the wrong role. The other half was that they stay there. A move that cannot be reversed without embarrassment will not be reversed.

So the last decision is to make a return possible and unremarkable. Say at the start that the role will be reviewed together at six months. Keep the specialist path open. Treat a move back as a sensible correction, with pay handled fairly. A company that can say "this was the wrong seat, and here is a better one" keeps a person it would otherwise lose slowly.

Where to begin

None of these five requires a large company or a human resources department. They require deciding, before the next promotion, what the new job is and how you will know someone can do it.

The same research found that firms were more careful when more was at stake. Where managers led larger teams, sales performance carried less weight in the promotion decision.⁷ That is a reasonable place for any leader to begin: start with the role where a weak manager would cost the most.

Think of the next person you plan to promote. Which of the two jobs have you actually seen them do?

If you would like a second view on how your own promotion path is built, here is how I work with leadership teams.