A financial bad management metric

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“American managers are stupid,” my correspondent offered, by way of explaining why so many ignore his perspectives.

I decided not to ask whether he meant that (1) all Americans are stupid and, by the laws of object inheritance and the transitive law of algebra, American managers, being Americans, are stupid; (2) American managers are stupider than the average American; or (3) it’s Sturgeon’s Law in action: 90% of everyone are stupid and that includes American managers.

To the best of my knowledge nobody has ever surveyed American managerial IQs to determine whether the mean is less than, greater than, or equal to 100 — IQ’s definitional IQ average. Also, IQ is a badly flawed metric.

Meanwhile, the American managers I’ve personally worked with have in general been a brighter than average lot. While employee dissatisfaction with management is both widespread and deserved, I’m pretty sure it isn’t because they are, as a class, dopes.

Which somehow or other brings us to this week’s topic.

Many companies conduct employee satisfaction surveys. Some are better than others, but I’ve yet to see any that move beyond warm fuzzies to the only metrics that matter in a market economy.

The KJR alternative: ask employees to express their satisfaction or dissatisfaction financially.

It will take only four questions:

Question #1: What percentage of your total compensation would you be willing to give up in exchange for a better manager?

Question #2: What is it about your manager that led to your answer to Question #1?

Question #3: What percentage of your total compensation would you be willing to give up in exchange for working in a better company?

Question #4: What is it about this company that led to your answer to Question #3?

Yes, yes, I know. The answers to questions 2 and 4 couldn’t be automatically tabulated, at least, not the first time you administer the survey. But which is more important — automated tabulation or useful information?

Even if you only ask questions #1 and #3, just knowing how much money employees would be willing to give up in exchange for a better work environment would give business leaders at all levels a lot to chew on.

Starting with this question: Does it matter?

It ought to matter a lot. It’s widely recognized that the best employees are at least twice as effective as average ones, and the gap is probably much wider than that.

The best employees are also the most mobile. Add to this another general-purpose factoid: Replacing a good employee costs the equivalent of about a year of compensation, counting recruiting costs, the costs of bringing new employees up to speed on their responsibilities, and the overall loss of team effectiveness as teams adjust to changes in their membership.

Do the math and it should be clear that losing your best employees is an expensive proposition.

And yet, I often run into companies whose employees privately tell me are utter meat grinders — horrible places to work. They have high employee turnover, as we’d predict, and yet they make so much money so quickly they have a hard time figuring out what to do with it all, and have over spans of decades.

How is this possible? The short answer is, beats me. The longer answer is nothing but speculation: The same management characteristics that make these companies bad places to work somehow make them resilient in the face of high employee turnover rates.

Take, for example, micromanagement. I’ve yet to hear anyone say they like being micromanaged. But whatever their flaws, micromanagers do know how to do the work they’re micromanaging. If they didn’t they couldn’t micromanage. And because they’re able to do the work, micromanagers can pick up the slack when an employee leaves.

Of course, picking up the slack adds pressure and workload, making the micromanager even less pleasant to work for.

Let the process play out for a few cycles and what you’ll get, I think, is a department staffed by mediocrities who can’t easily find better employment, run by managers for whom micromanagement is integral to how their department’s work gets done.

It’s a stable configuration. As long as the company does something else well enough to make it competitive in its marketplace, there are no forces in play to drive change and plenty in play to keep it as it is.

My guess is that similar dynamics govern other forms of stable, bad management.

If you’re one of the offending managers, please don’t take this as an endorsement of your management style. Explanation doesn’t equal approval.

And in any event, I’m just speculating. Maybe one of KJR’s more enlightened constituents has a better theory?

Comments (17)

  • Your description of highly skilled micromanagers trapping themselves into being unable to leave less capable employees alone has a ring of truth, but it is hardly a universal situation.
    I am currently being micromanaged by a client who doesn’t understand as much as I do, but thinks knows more. And I have seen one ignoramus micromanage all sorts of people with far greater expertise than he has. Both of these people are unsuccessful entrepreneurs, but I think there are probably examples in more successful organizations.

    • Franklin Pluck touches on the question I had: What do you call it when the micromanager does NOT know how to do the work they’re micromanaging? I guess I don’t give micromanagers as much credit as Mr. Lewis does. And sorry, I don’t have a better theory.

      • I can absolutely refute that micromanagers know more. I work for a government state agency in IT. I used to have a micromanager who is idiotic. She’d tell us to go do something and how to do it… we’d do the task but all 35-40 (spread across 6 sites) of us would do it the right way.

        This person is also relevant to how much money I would forego to work someplace else. If I had a choice, 10-20%. Over 100k, 25-30%.

        I told my local site supervisor after 1 week on the job that I had a new name for her, “She who must not be named” (from Harry Potter). His response? “We already have that one”

  • I would not give up money to get a better manager or to get a better company. A better question might be what is the minimum bump that you would require in order to leave your current organization for a comparable job at some unknown company, just on the chance that the fire is better than the frying pan.

  • Who has ever taken a course on being a good manager? Where is this kind of study offered? Most “managers” are elevated to that job as a reward for being a good/productive employee. But being a great programmer (for example) does not qualify you to be a good manager of programmers. We are forced to learn “management” on our own. I learned by reading lots of books. So if you were offered a promotion to Manager – where would you look for training on being a good manager? Don’t look at Harvard or MIT. I don’t have an answer. Does anyone?

    • Some companies do have a formal process to train and mentor managers.

      For those that do not, it is an aspect of the continuing education we do to keep up with our skill-set. There are some great books on managing (“The One Minute Manager” is a great place to start). There are formal peer groups. Or ask a successful manager if they would meet for coffee once a month.

  • Most people move into management as a result of being among the best at what they did as a producer in their chosen field. A combination of intuition and training is needed to convert them from their former successful self into a competent manager. In my experience, most of the less than desirable managers get that way because they don’t make the conversion. Many times it’s because of inadequate training. It is a completely different from what they were doing before and the less intuitive it is for them the more training they need. If it turns out they don’t have the knack for it, there is usually no graceful way for them to move back into the ranks in the same organization without leaving, so they become stuck in a situation that is bad for them, and as a result, bad for their subordinates.
    When your job is to manage, your main goal should be to have a cohesive team of competent people that can accomplish the mission of your organization without you. Your on-going job as a manager is the constant upkeep needed to keep that team effective by providing the vision (big picture) to keep them moving in the right direction, providing the training and tools they need to get their job done, and getting out of their way. Getting out of their way often includes protecting them from impediments created by your own upper management and from peer organizations.
    Other tasks as a manager are to maintain the team with recruitment, employee development, and retention of the best employees. It is great if you are still and expert in the work done by your team, but once you become a manager, your job is to help them to do it, successfully.

  • I like the idea of the financial survey. However, one saying they would give up X and actually doing it is quite difficult. Or even worse, a company exploiting that fact. I’ve worked at a company where they employed “golden handcuffs” in some divisions i.e. paying their staff in the 95th percentile of the industry wage but having quite a toxic, micromanagement environment.

    The initial allure of the money drew people in but after a while when the work/culture starts grating, most (even some of the good ones) found it difficult to find an equivalent salary elsewhere and as their lifestyle had adjusted to the higher income, they found it difficult to take a cut in salary in order to leave.

    The company believed overall they saved by not having to go through the whole recruitment/training/brain-drain cycle. And through their micromanagement style they got work out and profits up.

  • At the core is our US obsession on short term, quarterly profit.
    Add to that our normal, human interactions in large groups and, well,
    the strip “Dilbert” accurately documents the symptoms consistently.
    We form tribes. People often like their boss and this seems congruent
    with that data that people like their congressperson but loath congress.
    Each work group silo fails to communicate beyond “those they know.”
    It is a rare employee that can and will gain trust and foster connections
    more widely and even more rare for their importance to be recognized.

  • You mention that replacement costs are about the equivalent of a year’s compensation; my guess is that figure was determined by some sort of survey of all organizations. The ones with high employee turnover might have reduced that cost. For example, fast food restaurants know to expect high turnover, so they streamline the hire/training process. How do you do that for a high-skilled position? I don’t know, but likely these high-turnover places have figured it out, by necessity if for no other reason.

    ‘Back in the day’ (the ’90’s? Early this century?) it seemed to me that people held IS positions in any one place about 2 years before they moved on. Maybe that was even a statistic that got thrown around. That seems like high turnover to me, but most companies kept thriving regardless.

    How does it work out financially? I’m not sure – some outfits that are awash in cash these days aren’t actually turning a profit. So their ‘success’ despite employee turnover might be an illusion. Or maybe the meat grinders get a lot of value out of their employees before spitting them out and bringing new ones on. Maybe the new ones bring in new useful skills/ideas that the meat grinders eat up before letting them go and getting other bright sparks in.

  • Regarding your parsing of “American managers are stupid”, you left out “(4) Managers in some other country(ies) are ‘smarter’ (aka better at management) than managers in America are.” This was my initial interpretation. Some other commenters have pointed out that promotion into management generally has little to do with management ability (in the US is my assumption, also based on my experience). Perhaps in another country(ies) there’s generally some systematic way of making sure that managers have management ability? Education, training, mentoring, etc. I have no idea.

    I once suggested in a casual conversation that management might be its own ‘track’. This was in regards to the dilemma at the time that technical skills were highly valued and paid well, but paying a manager even more would then waste those highly valued skills on a non-technical job. So I proposed that the manager might not be paid more than all their direct reports, but would have management skills rather than the highly-valued tech skills. My co-workers were all highly contemptuous of this idea. Who would respect a manager who was paid less than they were; who would go into management if it didn’t pay more, etc.

    Of course, my suggestion assumed that management skills are more widely available and easier to obtain than whatever tech skills are currently in demand. This might not be the case, but it still seems unlikely that the typical American process of promoting one of your most respected techies into management is a better solution.

  • Setting up a “learning environment” is the answer, in my opinion. This will be different for managers and staff, but includes communication training and how to get regular feedback on both success and failures. Look closely at creative solutions, and one will find innovative ways to obtain and utilize feedback!

  • I like the questions, but ff you’re trying to figure out how management works, then maybe look at the other side:

    what is good stable management?

    I’m thinking you’d have to look at the NFL or the Marines where you are getting new folks thru all the time.

  • Why good people stick around in bad environments? I suspect it has something to do with our psychology or our cognitive bias. The conformity and learned helplessness bias probably have contributed on many occasions. We all like to think we are rational and logical for the most part. The truth probably is that we are easily influenced by whatever stories we tell ourselves. Perhaps that is OK because our internal stories keep us sane.

  • Contained herein is an incredibly important question: “which is more important — automated tabulation or useful information?” I have a willingness to respond to web-based questionnaires. If I don’t give them feedback, I’ve got no right to complain. But the surveys, to Bob’s point, are designed for automated tabulation. Without those “tell us about it” text boxes, a survey misses the opportunity to capture detailed feedback that might actually be helpful or even actionable. Surveys are extremely difficult to design for maximizing feedback. In including text-based inquiries leads to failed surveys.

  • The last sentence should read “Not including…”

  • I think sometimes managers try to avoid the risk inherent with delegating authority or pushing decisions to a lower part of the organization. They would still be accountable for the results, but their teams would be making decisions and implementing without the manager having direct control. I think that feeds the micromanagement need in some managers.

    I think this is not optimal and that properly trained and motivated teams striving for excellence will give you a much larger amount of brain-power focused on building good things. That should give you much better results as a manager. But, it’s certainly more stressful when your team does things differently than you would do them.

    All things considered though, I prefer my teams being able to act properly when I’m not around. They get to grow in their capability and leadership, and I get to go find ever more interesting and larger things to do.

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