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Press Release: 60% of New Managers Fail Within the First Year

ICC March 17, 2016 0 Comments

WORKPLACE STATS: 60% of New Managers Fail Within the First Year
How to know who’s really ready for promotion into management

Media Contact: Meredith Masse, Senior Vice President
Toll-free 855-865-4400
[email protected]

“I like Bob. He has great numbers and he’s a nice guy.” Leaders all too often rely on current performance and “gut feelings” when making critical decisions about who is ready for promotion into management positions. In fact, commonly cited stats estimate that about 60% of newly promoted managers fail within the first year (Ashkenas, 2015), pointing to a critical miscalculation in the decision process for selecting who is ready for “next level” management . Given these odds, decision-makers could simply flip a coin – heads, she gets a promotion; tails, she doesn’t get a promotion – and achieve a higher success rate (50%) as well as save hundreds of thousands of dollars in the time spent in ineffective talent review meetings.

In fact, a single bad leader can cost a company over $1 million per year in net losses (The Ken Blanchard Companies, 2009). So the question remains: why do organizational leaders continue to promote employees based primarily on their high performance in current roles? “I know my talent,” most executives believe. Truth is, they only know what they see – how those employees perform in the current (and past) roles they hold. Based on the potential of $1 million per year net losses, clearly bad promotion decisions can result in bad business outcomes.

Simply put, when considering which employees are ready for management positions, high performance in one role is no guarantee of high performance in the next, especially if the skills required and responsibilities and outcomes needed are vastly different. Consider, for example, a field worker in the oil and gas industry and his responsibilities versus those of his supervisor. The front-line worker has technical knowledge for running the rig. The supervisor might also have the same knowledge and skills and now also must be an expert in managing, influencing, planning, organizing, etc., the work of others. The same applies in other roles: IT technician versus an IT manager; a sales professional versus her sales director; an engineer versus a team lead.

This promotion problem is known as the Peter Principle – organizations continue promoting high performers upwards until they reach positions for which they no longer possess the skills or abilities to succeed (Parrish, 2015). When they fail, we stop promoting them (hopefully!). For example, promoting a top-performing engineer into a managerial role might seem like a good idea at first; after all, she could develop more junior engineers on her team. But being a great engineer doesn’t necessarily equate to being a great manager, just like being a great manager doesn’t necessarily equate to being a great engineer.

Fortunately, there are objective ways to assess employees’ readiness for a promotion. These scientifically validated simulation assessments let you see the person in action in the target leadership role. After all, potential is best assessed in the context of your business strategy (which you can read more about here) – so what better way to see if someone is ready to be a manager or an executive than to observe them doing the job? Imagine a live virtual simulation – today, you are the new executive in a $2 billion global company that is on the verge of bankruptcy. What’s your strategy to turn the business around? How can you keep your talent engaged? Brinng….brinng…. and there is your key VP (actual live human actor) in a webcam chat threatening to leave the company. Can you influence him to stay? Such live simulation assessments function as a “test drive”, placing potential leaders or managers in the hot seat to show what they can do beforeactually being promoted into the new role.

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