Should Managers be Paid Based on How They Develop and Retain Their People?
Trends are an interesting thing. Some are good – like eating healthy foods, exercising, or improving your golf swing (this one eludes me) – and some are objectively bad. I’ve observed one long-standing, bad trend since I launched my first consulting practice in 1997 – putting the wrong people in management positions.
Regardless of why this happens, it stands to reason that if a ‘bad manager’ is the number one cause for a person leaving a job, and turnover is expensive and interrupts momentum for a company, we should stop this 30+ year trend of placing people who are unprepared or ill-suited for management in those positions!
So why does this obviously ineffective choice keep trending? I’ve noticed two primary reasons:
Failure to inquire if management is something a person even wants to pursue.
Insufficient career-pathing for individual contributors so management doesn’t become the only way to progress in an organization.
Including these steps in your Talent Optimization strategy will lay the groundwork for ensuring your managers are excited about this component of their job, and those they manage will truly feel the difference.
Additionally, I advise organizations reconsider how they compensate managers. Traditionally, managers are paid based on their success directing a team and the work product of that team. This is measured by performance and output indicators compared against specific goals.
While measuring outcomes in this way certainly makes sense, I propose that you broaden your method for manager compensation to include additional variables less focused on immediate financial outcomes. I suggest adding engagement and retention of team members into the managerial compensation formula. These are easily measurable indicators, and they ensure that you’re measuring, and rewarding, the full complexity of the manager’s role.
If we are to break with the bad trend of placing the wrong people in management, we must change the way we select managers and pay them. At Real Good Ventures, we help organizations refine how they operate, especially at the management level. You can find more tips via our RGV Blog and The Bosshole Chronicles podcast.
