The tried-and-true ways to have huge organizational mistakes, and how to avoid them.
Not publicly rewarding competence is a big organizational mistake
It’s extremely easy for any person to feel that the company is being unfair to them. There’s a whole bunch of feelings/thoughts that are likely to go through someone’s head when they see someone else get promoted:
- Why did this person get promoted but not me?
- Why does this person deserve to get promoted?
- I was hired here much before this person, and now they’re getting promoted before me?
- Is this person making more money than me now? Why?
The goal of a leader should be to ease these concerns by publicly sharing why someone got promoted and why they deserve it. It’s very important to get a pulse on what other people think of this individual first and why. Because a string of promotions to people who are perceived to “not deserve it” is cancerous for an organizational’s morale. It potentially sends the signal that people get promoted for bad reasons, like politics, because they had leverage, or for no reason at all.
If you over-promote, you’re making a big organizational mistake
Don’t promote to even the playing field
A common organizational mistake is to promote someone due to fears of one abusing the power over another. For instance, you just hired a sales director for the first time (previously only having managers on the team). You may be immediately worried about your sales director abusing their power to the finance team by forcing deals that shouldn’t go through, trying to get extra commission, etc.
So it’s often very tempting to take that finance manager and promote them to director. Don’t do this unless the majority of the leadership team believes this individual is a director, and this individual has a great reputation. Similar to the point above about rewarding competence, you’re sending a separate signal that this person got promoted even though they didn’t deserve it, which is really bad for company morale.
Don’t anchor early hires on high job titles
It’s common, especially with early stage companies, to build an organizational structure from the top down. Meaning you start with your c-suite executive team, then build out the vice presidents, directors, etc.
People typically don’t scale well with as organizations grow
Meaning the vice president of engineering you hired who hacked your product together has no idea on how to scale an application to millions of users. And your president has never built operations for a large organization or managed a huge team. It doesn’t mean it’s not possible for them to scale the whole way, but it doesn’t often happen in practice.
Then you’re put into a very difficult situation where you need to move this person out of their role.
If they’re not going to be the president of a 100 person company, you need to act, typically fast. And unfortunately, people’s ego’s don’t usually allow for them to move into a lower role. How does someone feel if they were once the president, but now they’re a manager that roles up to a director. And how does that make you look? Why would someone place their faith in you in the future to make good decisions about your career?
Instead, be conservative with job title choices
You don’t want title-chasers anyways, so pick a title suitable for the role that allows for a lot of career progression and title growth. This applies more for people who have less experience. For someone with 20+ years of experience and having been a vice president in the past, it might be too insulting or inappropiate for them to become a manager. So sometime picking the same title is better.
Be very Careful about designing incentives and performance management
How you measure performance and create incentives is a huge determinent of your organization’s success, since it explains and predicts a lot of behaviour. Read this post to learn about how key performance indicators drive behavior.