Choosing the right manager is one of the most important decisions a company can make. The right manager can raise employee engagement and increase business performance indicators. And yet, according to a recent study by Gallup, a vast majority of companies fail to choose the most qualified manager 82 percent of the time. In turn, that can cost those companies billions of dollars each year.
Managers account for at least 70 percent of variance in employee engagement scores across business units, according to the Gallup study, and that variation is responsible for severely low worldwide employee engagement. It was also reported that in two large-scale studies in 2012, only 30 percent of U.S. employees are engaged at work, and a mere 13 percent worldwide are engaged. Worse, over the past 12 years, those numbers have barely managed to improve, meaning that the vast majority of employees worldwide are failing to develop and contribute at work, all thanks to their managers.
Gallup looked at hundreds of organizations of different sizes within several different industries in different cities, and measured the engagement of 27 million employees and more than 2.5 million work units over the past two decades. What it found was performance metrics fluctuate widely and unnecessarily in most companies, in no small part from the lack of consistency in how people are managed. This “noise” frustrates leaders, because unpredictability causes great inefficiencies in execution.
How are great managers more rare than they seem? Gallup’s research reveals that about one in 10 people possess the talent to manage, and though many people have some of the necessary traits, few have the unique combination of talent needed to help a team achieve excellence in a way that significantly improves a company’s performance. These 10 percent, when put in manager roles, naturally engage team members and clients, retain top performers and sustain a culture of high productivity.
It’s important to note that another two in 10 people exhibit some characteristics of basic managerial talent and can function at a high level if their company invests in coaching and developmental plans for them; nearly one in five of those currently in management roles demonstrate a high level of talent for managing others, while another two in 10 show a basic talent for it. Combined, they contribute about 48 percent higher profit to their companies than average managers do.
Still, companies miss the mark on high managerial talent in 82 percent of their hiring decisions. Most companies promote workers into managerial positions because they seemingly deserve it, rather than have the talent for it. That practice doesn’t work. Experience and skills are important, but people’s talents – the naturally recurring patterns in the ways they think, feel and behave – predict where they’ll perform at their best. Talents are innate and are the building blocks of great performance. Knowledge, experience and skills develop our talents, but unless we possess the right innate talents for our job, no amount of training or experience will matter.
Finding great managers doesn’t depend on market conditions or the current labor force. Large companies have approximately one manager for every 10 employees, and Gallup finds that one in 10 people possess the inherent talent to manage. With that math, it’s likely that someone on each team has the talent to lead, but chances are, it’s not the manager. More than likely, it’s an employee with high managerial potential waiting to be discovered.
The good news is that sufficient management talent exists in every company. It’s often hiding in plain sight. Leaders should maximize this potential by choosing the right person for the next management role using predictive analytics to guide their identification of talent.