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The Harvard Business Review reports: "Gallup finds that companies fail to choose the candidate with the right talent for the job 82% of the time."

by
Stephen Green

Bio

March 21, 2014 - 9:00 am

Randall Beck and James Harter for Harvard Business Review:

Gallup has found that one of the most important decisions companies make is simply whom they name manager. Yet our analysis suggests that they usually get it wrong. In fact, Gallup finds that companies fail to choose the candidate with the right talent for the job 82% of the time.

Bad managers cost businesses billions of dollars each year, and having too many of them can bring down a company. The only defense against this massive problem is a good offense, because when companies get these decisions wrong, nothing fixes it. Businesses that get it right, however, and hire managers based on talent will thrive and gain a significant competitive advantage.

Managers account for at least 70% of variance in employee engagement scores across business units, Gallup estimates. This variation is in turn responsible for severely low worldwide employee engagement. Gallup reported in two large-scale studies in 2012 that only 30% of U.S. employees are engaged at work, and a staggeringly low 13% worldwide are engaged.

I remember years ago Dad trying to tell me that economic growth proved that the Peter Principle was BS. That was in the ’80s. Today I’m pretty sure that the Peter Principle was overly optimistic — at least in government.

If private industry can manage to pick the right manager only 18% of the time, how often does the right person get picked in a federal bureaucracy? And business die, to be replaced by smarter and more nimble competitors — who in turn pick bad managers who kill off the new company.

The Federal Leviathan lumbers on, getting stupider and more badly managed year after year.

 ALEXANDER_TERRIBLE_HORRIBLE

****

Cross-posted from Vodkapundit

Stephen Green began blogging at VodkaPundit.com in early 2002, and has served as PJMedia's Denver editor since 2008. He's one of the hosts on PJTV, and one-third of PJTV's Trifecta team with Scott Ott and Bill Whittle. Steve lives with his wife and sons in the hills and woods of Monument, Colorado, where he enjoys the occasional lovely adult beverage.

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Top Rated Comments   
I read an article in the WSJ editorial section a while back from an Italian national. He said that in Italy, the choicest jobs were in government. And you didn't want to lose your job by being shown up at the workplace. So you would hire people less intelligent and motivated to work than you were. This has been going on now for a couple of generations, resulting in the stupidest, laziest people being in government.
Ahhhh, the future looks bright.
27 weeks ago
27 weeks ago Link To Comment
To avoid all sorts of costly legal hassles and publicity that could lead to market share loss or business collapse, most US corporations have become as PC as any university. Finding, retaining and promoting the correct people is almost impossible under those circumstances.
27 weeks ago
27 weeks ago Link To Comment
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All Comments   (20)
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As far as I can see, a major criteria for hiring now is rain-making. It's probably always been fairly high up on the list, but the big boys making the really good money are the ones who go out and sell the company and bring back the new projects. I don't understand how Gallup can say that 82% of managers who are hired to be rain-makers aren't the right people for the job. Either they bring back the new projects, which is easily countable, or they don't ... and then they are disappeared, often due to a need to take some time off due to stress.

How the rain-makers do at supervising the people under them is just not important. That's what we have HR departments for -- to deal with those sorts of issues. 20 years ago I used to see fairly blatant sexual harassment frequently -- not any more. I have worked with alcoholics and drug abusers -- if I work with them now they are *extremely* well-hidden. No one swears at work, no one tells off-color jokes, no one has temper tantrums and throws things.

Maybe I work in an unusual environment but I just don't think that a Mad Men scenario such as that painted by the so-called statistics Gallup is citing is accurate, especially given the economy for the past 6 to 7 years, which has afforded wonderful opportunities to get rid of all sorts of trouble-making deadwood.
27 weeks ago
27 weeks ago Link To Comment
I find the 82% claim to be very suspicious and I don't believe it.

I'm curious how Gallup determined that companies fail to choose the candidate with the right talent for the job 82% of the time. For them to claim that a choice was wrong, there had to be at least one right choice. So it begs the question: What talents were important for a candidate to be considered the "right" choice? How does Gallup know that the candidates they considered to be the "right" choice would actually be successful if given the opportunity?

In order to convince me that companies make the wrong choice 82% of the time, Gallup would need to demonstrate that the choices that were made were detrimental to companies in the long run versus what would have happened had they made the Gallup approved "right" choice. In order to do that the Gallup pool of "right" choices would need to be proven to be superior through some kind of tracking where they were shown to have a greater positive impact either at some other company, or when finally given a chance within their own company, a greater positive impact than the person that was chosen over them.
27 weeks ago
27 weeks ago Link To Comment
Due to the federal personnel regulations, it's extremely difficult (by design, I think) to get rid of even obviously incompetent people at any level. It takes a staggering amount of documentation; so much, that most managers don't even try.

I have seen it done, though. As a minimum, you call the miscreant into your office Monday morning and lay out that week's work, in writing, and you both sign the memo. Then on Friday, you take Monday's memo and note what didn't get done, or got done wrong, put all that down in another memo, which you both sign (and if the miscreant won't sign, you append that note to the memo and sign it anyway). Repeat each week for a minimum of 2 years. That usually (but not always) creates enough cumulative documentation that you can start the removal process, which can take another year to run through all the reviews, which are stacked in favor of the miscreant. It takes a lot of personal attention by that manager; the 80/20 rule definitely applies.

About the best you can hope for is a RIF, then offer up the miscreant's position.
27 weeks ago
27 weeks ago Link To Comment
The other IDIOTIC thing companies waste money on is hiring outside consultants to tell them how to better serve their customers, instead of saving all that money & just ASKING their customers what they want & rewarding CSR's for taking the initiative to PROVIDE it...DUH!! I worked for a company who hired a consultant to "uncover hidden talent" & when the consultant interviewed me he liked my ideas & recommended me for a LONG OVERDUE promotion & raise. The CEO's response was to FIRE the consultant & IGNORE his advice, so clearly the CEO was merely looking for VALIDATION of his own choices that had NOTHING to do with the quest to "uncover hidden talent"!!
27 weeks ago
27 weeks ago Link To Comment
I agree that it's a waste of money to hire an outside consultant for an open ended task like surveying the overall company. However, I caution that relying on what the customers says is not always a good idea. I'm in construction where the customer is supposed to be a "sophisticated" user. The people who do respond to these surveys are usually the ones who hit forward to complete most of their tasks and are looking for more ways to fob off their work onto others. I suspect that this is true in many business-to-business settings. Instead, pay attention to what the customer is willing to pay for.
27 weeks ago
27 weeks ago Link To Comment
My company is working with some of the insurance companies, trying to figure out what, exactly, Obamacare's rules and regulatiions are. Since the Obamacare rules vary from day to day and state to state, it seems to me this is a very good job indeed to hire a consultant to do. Presumably, ordinary employees are doing their daily medical insurance stuff, and you don't want to hire on a whole new permanent staff just to implement or deal with what *should* be a temporary issue.

See also the city of Detroit's bankruptcy. The people running that are not Detroit employees, you can bet. They are consultants.
27 weeks ago
27 weeks ago Link To Comment
The Peter Principle is the best case scenario.
27 weeks ago
27 weeks ago Link To Comment
".....how often does the right person get picked in a federal bureaucracy?"

Starts at the top. The American people picked their CiC TWICE!
27 weeks ago
27 weeks ago Link To Comment
Once a business is built up and running, advancement criteria switches from knowledge and effectiveness to politics. An old friend used to propose a "lions and jackals" theory. On the plains, after a lion makes a kill, it is easily chased away by packs of jackals who then proceed to fight over the corpse. I have never observed business situation where this did not apply at least to some degree. In most large corporation, thousands of jackals swarm over the machinery created by long gone "lions" and essentially running automatically on its own inertia and market entrenchment secured long ago. Sometimes in the private sector, leaders come along and re-invigorate the company through genuine leadership and talent - but this is rare.

As for government, I have to bore you with another parable. An Indian philosopher who claimed that the Earth was held in place on the back of the turtle was challenged to explain what held the turtle in place. "Another turtle" he said, "and before you ask . . it's turtles all the way down". Well in government, it's jackals . . all the way down.
27 weeks ago
27 weeks ago Link To Comment
You never hire your replacement. Ever.

Along with the HR strategy, most companies enshrine their culture of insulation from risk to managers by the production of policies that stifle innovation and independent actions by the great unwashed horde that actually makes the company profit.

Throw PC speak and diversity into the mix, and you narrow the selection of management types to a population indistinguishable from career Democrat politicians.

Business Management has devolved into the same sordid mess as journalism.
27 weeks ago
27 weeks ago Link To Comment
Pick managers who are non-threatening to their immediate bosses and who kiss up to them.

A woman rose meteorically up the ranks. She kissed up to her immediate boss and called him her "work husband". She got all the help she needed to move another notch up. She disbanded her work husband's department. She became VP to see thru a product rollout. She had no ideas how that was done. She goofed, clients raised hell. Her boss was fired, she was advised to "quit".
27 weeks ago
27 weeks ago Link To Comment
"Managers account for at least 70% of variance in employee engagement scores across business units"

And how much do unofficial quota requirements and diversity hires account for suboptimal management selection? The dysfunction was institutionalized long ago.
27 weeks ago
27 weeks ago Link To Comment
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