The wrong managers are the main cause of business challenges

Research by Gallup suggests that 82% of management hires are a mistake. This is based on insights into just how few people are cut out to be good managers. If we assume that the typical business has a span of control of 1:10 and you have 100 team members, 8 of your 10 managers are ill-suited to the job. The consequences are dire with deficits in skills, people development and value-add. So, why do people hire these managers in the first place? What is the true cost? How do we achieve our targets and prepare for the future with only 2 ‘real’ managers? Read on as we discuss why the wrong managers are the main cause of business challenges.

Business challenges

Most businesses are riddled with problems. On the surface, they often appear like the proverbial swan, gliding gracefully across the surface of the water. Underneath, however, many organisations are anything but graceful and effortless. Given the complexity of business operations today, across people, processes, systems, partners and geographies, it is little wonder.?The interconnectedness of operations, back-office teams and suppliers makes even an ecommerce transaction a complex undertaking. Most businesses are quick to seek ways to optimise their lead-to-cash journey. This makes sense since cash in the bank enables other business investments and expansion. However, a non-routine order can quickly unravel from the ‘happy path’ of most orders.

Additionally, many businesses either overlook or seek to minimise the trouble-to-resolve part of the equation. This means that any interaction, query, problem, return, complaint, claim or cancellation is handled by a small team or at minimum cost to serve. It isn’t unusual for larger organisations to create centres of excellence to co-locate customer service and routine back-office tasks. These may be onshore, nearshore or offshore in a shared service centre. As most customers of one organisation or another can attest, this isn’t always frictionless or helpful. So, who do we make responsible to ensure optimum performance of our complex business operations? Enter the 2 in 10 managers who are equipped with the skills or can be coached and developed into improving business performance.

The wrong managers

Like it or not, not everyone becomes a manager based on their potential or their skills. In fact, some recruiters suggest that around 40% of hires are not a good fit once they start a role. Add to this the 82% of management hires rated as a mistake and it seems that our hiring strategy is about as accurate as spinning a roulette wheel. We won’t go into detail on bias in this article but interviewers have to process a vast array of audio-visual cues when trying to make a rational decision. Furthermore, our beliefs and our biases have already played a part in judging the ‘fit’ of a candidate before we meet them. There is also the spectre of nepotism, with a recent Economist study highlighting increasing inequality as it blights high-earning positions. In both cases, poor fit may be used as an excuse to discriminate and decrease opportunities.

But what does hiring the wrong manager mean? How can someone be a bad manager? Surely, some feedback and coaching will make them a good manager? No, not so. In fact, studies suggest that as few as 2 in 10 prospective managers can be coached and developed into being a good manager. Yes, that means that 80% of those who could be managers may never be great at it. A good manager extracts the best from their team, supports high performance and improves the organisation. A bad manager fails to develop their people, faces low productivity in their team and makes little to no impact on the organisation. In summary, a bad manager perhaps passively supervises the team and concentrates on the tasks that they know how to do. Other poor management behaviours might include micro-management, absent management, undermining, gaslighting and bullying. So, what is the cost to business?

The cost of hiring the wrong managers

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Estimates vary but as a rule-of-thumb, hiring the wrong person can cost up to 30% of their first-year salary. An alternative approach is to consider the recruitment cost, which may average around ￡20,000 for a typical UK manager. Financially at least, the cost is recruitment fees, a salary, benefits and taxes and the tools to do the job. This assumes that we realise that we have a bad manager and also that we do something about it. Unfortunately, we know that 53% of people admit that they changed job because of their manager. We also know that ‘quiet firing’ does happen and that many managers fail to understand our intrinsic motivations at work. Therefore, this is an area that we cannot overlook.

Indirectly, we know that few firms invest in the management coaching and development necessary to bring the 2 in 10 with the potential to be good managers up to standard. A consultancy organisation found that less than 1% of manager or supervisor time was spent on L&D. Yes, that means about 20 minutes per week, if we believe the self-reported claims of managers. Since the manager is a key source of staff turnover and we know that it takes 6-12 months for a typical employee to become fully productive, the indirect cost is enormous. So, what do we do to improve management?

How to improve management

Aside from the coaching and development already mentioned, focus must be placed on selection. When we say ‘selection’, we mean both the hiring process externally and talent development internally. External hiring processes have to reduce bias and opportunity for irrational choices. Decisions based on ‘gut’ may be more biased than you realise, with some recent psychology studies associating high intelligence with larger bias blind sports.

Internally, know that future management talent is within your business awaiting discovery. There is an age-old idiom in sport that you can’t predict talent, but when you see it, you know it’s there. Similar to the nature vs nurture debate in psychology, there is a debate between talent identification and talent development. Are the best sportspeople ‘spotted’ or can we develop them into the best? In management, it seems that you can do both. Some are imbued with the skills, traits and knowledge to be good managers and some are ‘trainable’ to be good managers. What many organisations lack is the support system for talent identification and talent development. Where it exists, it should be assured for fairness and developed for longevity.

Finally, bad management is one of the reasons that the management consulting industry exists. Statistically, good managers are in the minority. These are the people who engage and develop teams, improve performance and add value beyond their immediate team. One of the benefits of external management consultants is supporting the development of good management practices. They are also quickly available to help with specific skills, expertise and techniques to improve business outcomes.

Supporting management best practice

Think Beyond exists to help senior leaders to achieve their targets. We support you to accelerate performance and deliver business outcomes. Not only do we offer management skills training but we also give you confidence over internal processes and procedures. Furthermore, we support clients with cost challenges and building a culture of continuous improvement.

If you would like a free initial consultation, why not request a call back online. Alternatively, drop us a short email with your question or connect with us on LinkedIn.

Finally, why not take 4 minutes to read about a better future for businesses.