2019 Volume 22 Issue 1

The Real Costs of Bad Management-And What You Can Do About It

The Real Costs of Bad Management-And What You Can Do About It

FACULTY PERSPECTIVE

We have known for decades that the number one reason people leave organizations is their immediate supervisors. “People don’t leave organizations, they leave managers” has become a common refrain.

Whenever I’m in front of an executive audience I ask a simple question: “Do you have bad managers in your organization?”

So far, 100 percent of the people I’ve asked this question have responded that yes, they do have bad managers.

Why? Why is it so common to have bad managers?

It seems ridiculous to me that virtually 100 percent of organizations knowingly employ people in an important role who are not good at performing this vital function. To highlight how silly this is, after hospital employees tell me they have bad managers, I ask, “Do you have bad surgeons?” Of course not. A couple of years ago I did some work with an airline. After admitting they had bad managers, I asked if they employed bad pilots. They assured me it was a silly question.

We know why it is foolish to employ bad surgeons or bad pilots. Such practices would obviously be bad for business and could result in deaths. But isn’t it bad for business to employ bad managers? And there is a growing body of evidence that bad managers can actually result in deaths (more on that in a bit…).

So let’s get back to the original question: Why do you have bad managers? (When I use the word “managers” I am referring to people who manage people, not just to people who might have the word “manager” in their title. And when people say they have bad managers, we are referring to individuals who are not especially adept at the people management part of their job).

We know why most organizations have bad managers. It has become common practice to promote top contributors to supervisory roles, regardless of whether they have the competencies to perform that role. It is clearly folly to do this, but at least we have an explanation for how this happens.

So now a better question is: Why do you still have bad managers? It’s one thing to put someone unqualified into the role. But once you have done so and are admitting that they are bad at it, why do you keep them in a role they are obviously unsuited for? This is just compounding the mistake. I ask the hospital and airline employees if they by some chance did have a bad surgeon or pilot, what would they do about it? They are adamant the person would be removed from the role with all due haste. But we not only put bad managers into the role, we knowingly keep them there.

The Human Resource professionals that I speak with tell me that they are not the ones repeatedly transforming great contributors into bad managers. But if they let the practice continue and knowingly sit back and watch bad managers continue in the role without saying anything, aren’t they complicit? Aren’t we all a bit complicit?

Let’s take a look at the consequences of bad managers. We have known for decades that the number one reason people leave organizations is their immediate supervisors. “People don’t leave organizations, they leave managers” has become a common refrain. Another oft-heard truism is “People are our most valuable asset.” So why are we allowing these bad managers to drive away our most valuable asset? A good rule of thumb is that the loss of a talented employee costs the organization one and a half times the employee’s annual salary in replacement costs and lost productivity. If managers recklessly squander the financial resources of our companies, they are fired with good cause. But if they squander our human resources, they are allowed to continue to do so indefinitely.

Another vital issue in our organizations is engagement. I can’t tell you how many people have told me over the past few years how essential it is in their organization to focus on having their employees be engaged. But sadly they never finish the sentence. I don’t think they mean they want them to be engaged to be married. So what do they want them to be engaged with?

Obviously they want their employees to be engaged with the company. But you also want them to be engaged with their own work (lack of engagement with your work means boredom and boredom means likely departure). And you want them to be engaged with their colleagues—remember, Gallup tells us that people who admit to having a best friend at work are less likely to leave than those who don’t. Finally, you want them to be engaged with their manager—15 of the top 20 drivers of an individual’s engagement relate directly to his or her immediate supervisor.

It’s a bit of a mistake to focus on engagement as a goal. Yes we want our employees to be engaged, but it’s because of what engaged employees will do and won’t do. Engaged employees will be more productive and won’t leave. So the goals are productivity and retention. Engagement is the means to those ends.

There is some simple cause and effect at play here. Bad managers lead to low engagement. Low engagement leads to declining productivity and higher turnover.

If decreased productivity and increased turnover aren’t reasons enough to stop the practice of having bad managers, consider this: bad managers lead to increased stress, major health issues, and even death.

That’s right—death. A recent article (available here: http://www.bbc.com/capital/story/20180502-how-your-workplace-is-killing-you) explains the problem. Harmful workplace practices are one of the leading causes of stress in the workplace and this results in $190 billion in healthcare costs in the U.S. each year. More importantly, workplace stress leads to 120,000 annual deaths, more than kidney disease or Alzheimer’s. In the article, the CEO of Barry-Wehmiller is quoted: “According to the Mayo Clinic, your supervisor is more important to your health than your family doctor.”

What astounds me is that organizations still blindly accept the premise that having bad managers is a routine and inevitable cost of doing business. I wonder if this would be as acceptable if our executives knew the true costs: lost productivity, turnover of high performing employees, $190 billion in healthcare costs, and 120,000 annual deaths.

So what can we do about this problem, a problem which can now accurately be called an epidemic?

As is so often the case, the first step is admitting you have a problem. You need to accept (and convince your executives) that you have bad managers and that there is a real cost to having bad managers. Then you need to take action.

The solution is simple: treat the manager role the same as you would every other role in your organization. Would you ever hire an accountant who had no education, experience, or aptitude for accounting? No. Would you ever hire an engineer who had no education, experience, or aptitude for engineering? Of course not. Would you ever hire a manager who had no education, experience, or aptitude for management? We do it all the time.

So step one is to select people for the role who have the competencies for the role, just as we do for literally every other position. People managers are among the most important positions in a company (after all, they oversee the organization’s most valuable asset), yet the role has become the one position in which we totally ignore competencies in the hiring process.

Do we know the competencies of a people manager? Absolutely. We’ve basically known for decades what skills good managers have and what good managers do. They have good people skills. They are good communicators. They focus on delivering results while also focusing on people. Google did an extensive study a few years ago. The outcome of this research, known as Project Oxygen, is a list of the eight competencies of good managers. The most surprising outcome of this 18-month research project was that there were no surprises on the list.

Once you know the competencies of a good manager, the rest is simple. You train prospective managers (your “high potentials”) on these competencies. You select based on these competencies. Once people are in the role, you evaluate them based on these competencies.

And there is one other important selection criterion: aspiration. It turns out that you have many people managers who don’t want to be managing people. They accepted the role because you offered them more money (and in many organizations turning down a promotion gives you various labels such as “not a team player”). How about asking people in advance if they want to manage people? Those who say yes can be developed for the role.

What about those who say no? Let’s develop them to be even better in their contributor role. Remember, turning them into bad managers is only half the problem. We are also asking them to spend less time doing what they do best. So the most important piece in this puzzle requires that we figure out how to compensate top contributors without forcing them to accept people management roles as the only path to more money. Professional sports gets this right. Top performing athletes make much more than their bosses—and rightfully so as they contribute more to success.

I believe that the greatest source of dysfunction in our organizations is the abundance of bad managers. They cost us productivity and drive away our talent. But this is also our greatest area of opportunity.

So the most important question is no longer whether you have bad managers. It is What are YOU going to do about it?

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Author of the article
Mark Allen, PhD
Mark Allen, PhD
Mark Allen, PhD, is practitioner faculty of Management and Organizations at Pepperdine Graziadio Business School and Academic Director of the Master of Science in Human Resources program. He is the author of The Corporate University Handbook (2002), The Next Generation of Corporate Universities (2007), and Aha Moments in Talent Management (2014). In 2017 Allen was named one of the Top 100 Influencers in Human Resources.
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