4 Reasons Your Company Consistently Produces Ineffective Leaders

That’s quite an assumption, isn’t it?

That your company produces ineffective leaders...?

But the numbers are in my favor, so let me explain.

Employee engagement is a critical workplace issue. For workplace leaders, it is extremely important: If you lead a team or own a company, extensive research validates that employee engagement directly impacts the metrics you care about — productivity, profitability, turnover, safety and customer satisfaction.

Currently, the percentage of employees who are ‘engaged’ (“enthusiastic about and committed to their work”) hovers around 31 percent. Which means, of course, that roughly 2-out-of-3 employees are either ‘not engaged’ or ‘actively disengaged.’

The staggering news is that 17.5 percent of employees are ACTIVELY DISENGAGED. That is roughly 1-in-6 employees in the workforce who are bitter, toxic, and destructive to your corporate culture.

That can’t be good.

Millennials are the least engaged of all employees, sliding all the way down to 28.9 percent in 2014.

Now, back to my assertion that companies produce ineffective leaders.

We know that leaders are the key component of employee engagement. In fact, according to the research, upwards of 70% of employee engagement is determined directly by the employee’s immediate manager or supervisor.

By definition, if leaders are responsible for employee disengagement, and less than one-in-three employees is engaged, then those leaders are ineffective.

In fact, according to research released by Gallup, companies “pick the wrong manager 82% of the time.”

Why We Get it Wrong

8-out-of-10 times?

That’s hard to imagine. You would think companies would be at least be as good as a coin flip, right?

But they’re not. And here’s why:

1.  Companies promote individuals for their technical competence without any assessment of their ability to lead a team.

Doing is not leading. It is absolutely critical to understand that. An individual can be great at getting things done and still be a terrible leader of people. That’s because leading is a totally different set of skills: it’s training, and coaching, and mentoring, and encouraging, and teaching, and setting expectations.

It’s dealing with conflict and change, and creating a productive culture and MUCH, much more.

But organizations that need to fill a management position almost always look first to knowledge, skill, or performance as the primary requisites for the position. And, although a level of technical competence is important in that role, it is just one of a number of critical skills necessary to lead a team.

The world of sports provides a crystal clear example of this problem. Consider this: How many Hall-of-Fame players have become managers? In Major League Baseball? In the NFL? In the NBA?

How many were successful??

The answer is very, very, VERY few. [Read this article for some insight into the challenges of making the transition from player to coach.]

Great performers often lack the patience to coach and teach. Certain skills come easily to them and they simply can’t understand why others don’t get it like they do. In many cases, they struggle to communicate critical ideas effectively.

That’s the primary finding of the Gallup research: we choose the wrong people for management because we use the wrong criteria.

2. Companies rarely intentionally train and develop leaders.

According to Great Place to Work, the 100 best companies to work for in America:

“…make a considerable investment in training programs, offering 66.5 hours of training annually for salaried employees and 53 hours of training for hourly employees.  Of those hours, almost 70% is devoted to employees’ current roles, and nearly 40% is focused on growth and development.”

Clearly, skills training is a good thing and is a common practice among the best companies to work for. And we know that leadership is a set of skills that can be learned. [Read this article for more information.]

But most companies swing and miss completely on leadership development. Most companies take their best performers and essentially train them with only two words:  “Good luck.”  <<TWEET THIS

This mistake is huge when you realize that leadership is a set of skills that can be learned.

In a Forbes article entitled “Are Leaders Born or Made?” we learn that:

“…one study from The Leadership Quarterly on heritability (that is, the innate skills you bring to the table) and human development (what you learn along the way) estimated that leadership is 24 percent genetic and 76 percent learned.

So, some natural ability is needed to become an effective leader, but don’t lose sight of the fact that leadership is a set of skills that can be acquired over time.

However, as Mike Myatt so eloquently observes: “You don’t train leaders, you develop them.” A subtle distinction perhaps, but training is typically perceived as occurring in a classroom, while development happens once you learn something and then practice it until you become proficient. [Don’t miss Myatt’s article, “10 Reasons Your Top Talent Will Leave You.”]

So, whether it’s called training or development, if companies don’t equip managers with the skills that make for great leaders, on what basis could they believe that those individuals could be successful in that role?

3. Companies compensate managers for results; not for developing talent.

Managers are typically paid to produce results. On the surface at least, that would seem to make a lot of sense.

However, a problem arises when companies see performance results and talent development as two mutually exclusive ideas. As a result, they compensate for results and then tolerate the cultural problems, the employee turnover, and the lack of talent development.

Which is a bit silly.

It should be self-evident that great talent creates those results. And strong performance cannot last if people disengage or fail to develop their potential. Not to mention that turnover is extremely costly to the company.

But, it is the very rare organization that includes people development as a component of compensation. In fact, it is difficult to find a company that has more than just a superficial approach to intentionally developing the talent of its employees, much less including it into compensation.

Clearly, this is a systemic problem. The “system” is one that is designed to pay leaders for results rather than paying them to develop the people who create those results. Worse, paying for results encourages decisions that reward short-term behavior while ignoring the long-term consequences.

It’s a bit like killing the golden goose.

4. Performance reviews are (mostly) ineffective, and performance management is rarely designed to identify and nurture potential leaders.

Intuitively, most managers and employees seem to understand that annual performance reviews — as currently practiced in the vast majority of companies — are grossly ineffective, and often detrimental to both performance and career development.

If you’re on the fence about annual reviews, you might read this article, or look at UCLA professor Sam Culbert’s work, or check out this article at Psychology Today.

What is clear is that most companies don’t develop and properly utilize the tools and systems that identify and develop organizational leaders. As Scott Edinger and Laurie Sain observe in their new book The Hidden Leader:

“[Leaders] can be defined, identified, nurtured, and encouraged to help an organization develop a competitive edge…we believe it is important to know how to spot and encourage hidden leaders and bring their abilities to bear on the toughest challenges in an organization. We also believe focusing on the skills and characteristics of hidden leaders can make all your employees more productive and satisfied.”

In most companies, leadership capacity is not assessed [HERE is an example of an assessment that might be used], and is almost never one of the “competencies” that is intentionally nurtured in an employee.

Annual performance reviews are typically one-time (once-a-year) events. Rather than serving as a guide to develop the full potential of an employee — while minimizing or managing weaknesses — it is typically a tool that focuses on “weaknesses” and is used mostly to determine what this year’s raise and/or bonus will be.

As if you could develop a leader with a once-a-year review.

So, organizations start the day without a plan to develop leaders. They promote the wrong people to leadership positions. They reward the wrong management behaviors.

But, hey, don’t be too harsh.

They do performance reviews once a year.

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? 2015 Kelly Riggs, Business LockerRoom, Inc.

Kelly is uniquely qualified to help businesses improve performance. He is a former two-time national Salesperson of the Year, a successful entrepreneur, and a highly acclaimed teacher and business coach. He is the author of "1-on-1 Management: What Every Great Manager Knows That You Don't" and "Quit Whining and Start SELLING: A Step-by-Step Guide to a Hall of Fame Career in Sales."

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