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3 Rules for Promoting the Right People

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December 2014
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Bill Gross, a renowned fund manager, stunned the financial world in September by resigning as the Chief Investment Officer of the Pacific Investment Management Company’s (Pimco) flagship mutual fund, the Total Return Fund, a bond fund worth $202 billion. On the day of Mr. Gross’s resignation from the firm, investors withdrew $23.5 billion from the fund, the largest daily outflow on record for the fund.

The media buzzed with possible reasons as to why one of the most powerful men in finance would leave the world’s largest fund to take a new job at a far smaller firm managing just $12.9 million. In an interview with Barron’s shortly after his departure, Gross identified a significant reason why he left: “I was always an investment guy, and the other stuff — hiring, paying people, planning, and so on — became a problem for me. I am uniquely exuberant about clearing all that stuff off my dish,” said Gross. Gross felt that his management responsibilities were holding him back from doing what he does best — making money for investors.

Gross’ situation rings true for many executives: as you are promoted for excellent performance, you may not want to become a manager or have the innate natural talent to be one. Gross elaborated further, saying “I like to get up at 5:30 in the morning and make money for clients and compete against other money managers. That’s something that doesn’t go away.” Put simply, he is naturally “wired” to deliver value to investors, not to manage the organization and its staff.

When an executive faces a promotion, it seems logical to have them manage a team as well. However, it is important to assess whether assigning these leaders management duties will hinder their growth. As human resources professionals consider how to manage a star employee’s career path or fill a vital leadership role, they should evaluate whether management responsibilities would distract the employee from doing what they do best every day, and thus hold him or her back from achieving positive results for the organization.

Here are three rules to follow to promote the right leaders into the right roles:

  1. Determine Career Paths Based on Talent: As Gallup has found, companies repeatedly put people in manager roles because they were successful in previous non-managerial roles or because they have been with the company for a long time. This is a flawed strategy with serious consequences for an organization’s engagement, financial performance and long-term sustainability. A great front-line employee is not necessarily going to be a great manager, and a great manager is not necessarily going to be a great executive for your organization. Each of these roles require a different set of talents. Organizations should honor the differences between these roles and develop career paths for employees based on talent rather than title.
  2. Assess Innate Manager Talent: Gallup’s research reveals that about one in 10 people possess the innate talent to manage. Use talent focused screening assessments to understand if the chosen candidate will be a good fit for managing people, in addition to having what it takes to handle the demands of the role they are being considered for.
  3. Complement a Leader With a Great Manager: If an executive doesn’t have the innate talent to manage that doesn’t mean you should discount them from the role, or not put a star performer in a decision-making position that can benefit the organization. Consider if they need a complementary partner — a person with innate management talent who can manage the more technical aspects of the team while leaving the executive free to set high-level direction and achieve success.

As in the extreme case of Gross and Pimco, giving managerial duties to leaders who don’t want them or don’t have the innate talent to succeed at them could have serious financial repercussions.

The biggest strategic change organizations need to make is to realize that not all leaders should be managing people. If they are not “wired” to manage, it is a disservice to the employee, the team working underneath them, and the entire organization.

Learn how to successfully make your most important decision: whom you name manager.

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