Why finding great leaders is still hard

Top individual contributors often don't make great leaders. So why do we still promote them at the expense of others?

Quick summary:

• December is “quick hitter” month - condensed editions on a range of topics

• The most common issue I’ve been asked to speak about in 2022 is talent

• Despite inflation, layoffs, and fears of recession, finding leaders remains a priority

• The problem starts at the beginning: identifying leadership potential

• In the absence of better methods, firms keep defaulting to selecting top individual contributors

• We need to find better ways to evaluate leadership potential early on & nurture it

Why superstars are rarely the best coaches

If you are a sports fan, the end of the year has a lot to offer. Many domestic leagues are in full swing, and the World Cup is down to the final eight teams. As a lifelong fan of several different team sports, I’ve learned that there is a common theme: the best superstar players often do not make great coaches. There are many theories on why this is often the case, but the most common is that superstars find it challenging to relate to all of the players and the ability to bring them together to achieve a goal. More commonly, top coaches were marginal professional players in their sport or may not have even made it to the highest levels. Top coaches often struggled and bounced around from team to team - crucially, they were exposed to various coaches, players, and organizational cultures. They weren’t catered to like a superstar player: they had to earn respect and find a role within the team structure to be successful. This experience helps top coaches as they make the transition from player to coach; it also ensures that they have to spend time working their way up the ladder in various roles as assistant coaches rather than being handed the top job right away.

High-profile professional sports teams go beyond hiring top superstars as coaches and instead evaluate potential coaches based on leadership qualities such as vision, communication, and interpersonal skills. Why do other industries struggle with the same idea when hiring leaders? It’s not a secret that hiring and retaining top talent is a business imperative; it’s the most common question I received from companies this year, even though I am not a recruiter or HR specialist. Yet most organizations continue to hire top individual contributors (their “superstars”) into entry-level management positions, with full knowledge that employees leave a company first and foremost because of bad frontline managers. Why does this cycle keep repeating itself with no end in sight?

The process is broken, but we can’t seem to fix it

The leading reason firms keep hiring superstars instead of top coaches is the way they evaluate performance and abilities. How do you decide if someone is worthy of a promotion to a leadership role? First and foremost, firms look at how well they perform in their current job. When evaluating job performance, they are usually objective criteria (“metrics”) and subjective criteria (“soft skills”). Superstars not only meet the goals set for them in terms of metrics, they far exceed them. There is little debate about their achievement; the numbers are what they are. (As an aside, there is room for debate about whether firms are using the right metrics to evaluate performance, but the point is that every job usually has some measurable criteria by which employee performance is judged.) By contrast, the “soft skills” are subjective: rank ordering is more challenging.

When assembling a candidate pool to be considered for a leadership position, organizations first look at objective performance and then evaluate subjective criteria. Put another way, firms initially develop a pool of candidates based on top performance based on metrics, then conduct interviews and otherwise seek to assess soft skills and leadership potential from that group of candidates. Here is the problem: the “fringe players” who do not have the objective metrics of the “superstars” but possess outstanding leadership skills never make it in the consideration set. I often think back a decade ago to my first leadership role overseeing a team of underwriters at USAA. One of my employees, Caroline, was an outstanding communicator who often took the lead at our team huddles. Her leadership qualities were evident to anyone who spent a moderate amount of time around the group. The problem? She could never hit her weekly productivity goal as an underwriter. I had many conversations with Caroline in our 1:1s that if she could find ways to meet her productivity goals (not even exceed them), I could strongly advocate for promotions and leadership opportunities on her behalf. Unfortunately for the organization, she was never able to. Caroline eventually left the company, taking her nascent leadership skills with her.

Rethinking ways to identify leadership potential

It would be ideal if there were a standardized way to quantify leadership skills so that we can measure other aspects of job performance. Unfortunately, despite the research and assessments developed over the years, it remains a challenge for organizations to identify top coaches within their walls or to bring them in from outside. Sports teams don’t always get it right: we read stories about a coach getting fired practically every week. Franchises have a lot at stake in terms of multi-million dollar athletes working in multi-billion dollar leagues, yet they continue to churn through leaders and coaches in many cases. The one realization that sports teams have made over time, however, is that coaching and leadership require a specific set of skills and abilities; it does not matter how many goals or points the coach scored or even whether they played professionally at the highest level; what matters are leadership qualities, defined as a unique mix of abilities that may be hard to quantify but valuable in its own right.

As we rapidly move into the new year and beyond, it is worth pausing and considering how your organization identifies candidates for leadership positions, the hiring process, and how leaders are evaluated individually and collectively within your firm. As inflation continues to rise, so do wages and labor costs; as a result, the price of picking poor leaders has never been higher. Re-evaluating your entire approach to talent has never been more urgent, and that begins with hiring and retaining the right coaches to support your people.