I must confess that articles like this one are exactly why I subscribe to The Economist!
This outstanding piece by Bartleby not only provided insights on a specific topic but also introduced me to other relevant sources, including an academic paper, enabling me to explore the subject further on my own.
So, what makes a good manager?
According to a recent academic paper by Ben Weidmann and co-authors at the Harvard Kennedy School, the researchers delved into this subject and arrived at some surprising—or perhaps unsurprising—conclusions:
1-A competent manager can have up to twice the impact of a competent worker.
2- Those who are highly eager to manage others, often driven by self-promotion, don't necessarily make good managers. In fact, this tendency can be counterproductive.
3- Key competencies that predict managerial effectiveness include:
a) Strong Economic IQ – The ability to identify patterns and match them to problems that need solving. You can assess your own skills here: https://www.skillslab.dev/assignment-game (I'll be trying it today!).
b) Fluid Intelligence – The capacity to solve new problems and adapt quickly to new information.
5-Management skills should be identified, codified, and incorporated into selection processes. Otherwise, you may fall victim to one of my favorite management principles, the Peter Principle (by Dr. Laurence J. Peter). This principle suggests that individuals are promoted to their level of incompetence. For a quick overview, check out this [YouTube link on the Peter Principle].
I highly recommend reading the article, taking the test, and diving into the 34-page academic paper.
Peter’s Principle Explained - https://youtu.be/39wzku9KIEM?si=N5wp4AxtfIXHdFd1
Ben Weidmann & co-authors’ paper -https://www.nber.org/papers/w32699
Chat-GPT Op-ed on the paper:
Op-Ed: Finding the Right Managers – Why Skills Trump Self-Promotion
In a fast-evolving labor market, effective management is often the key to success. The recently published paper "How Do You Find a Good Manager?" sheds light on what qualities make a good manager and how the selection process can make or break team productivity. Conducted through a novel experiment, the researchers discovered that managers with strong economic decision-making skills and fluid intelligence—essentially the ability to adapt and solve novel problems—deliver the best outcomes.
However, the study also reveals a troubling issue: individuals who eagerly nominate themselves for managerial roles tend to perform worse than those selected at random. This finding runs counter to common workplace practices, where self-promotion often translates to leadership. The reason is clear: self-promoters frequently overestimate their abilities, particularly their social skills, leading to worse team outcomes.
In contrast, managers selected based on their measurable skills rather than their self-confidence can substantially boost productivity. The study demonstrates that selecting managers for their decision-making abilities rather than letting them self-promote can improve team performance by a full standard deviation—a huge jump that businesses would be wise to leverage.
This study is a call to action for organizations to reevaluate how they pick leaders. Companies often rely on personality traits or leadership ambition as selection criteria, but focusing on tangible skills like decision-making can drive much higher returns. By doing so, organizations can unlock the true potential of their teams and avoid the trap of overconfidence that so often accompanies self-promotion.
Pluses (With Examples)
1-Clear Methodology for Assessing Managerial Impact: The study introduces a novel method of measuring managerial contributions through random assignment of managers to multiple teams. This approach ensures a robust analysis of how managers truly influence team performance. For instance, managers who improved team performance by one standard deviation were found to boost team output by 0.23 standard deviations, which is almost double the effect of a high-performing worker(ssrn-4905203). This highlights the outsized impact a good manager can have.
2-Skill-Based Selection Outperforms Self-Promotion: The paper highlights the benefits of selecting managers based on specific skills, such as economic decision-making and fluid intelligence. In fact, selecting managers based on these traits improved performance by 0.7 standard deviations compared to letting individuals self-promote(ssrn-4905203). This is a compelling argument for organizations to adopt a more merit-based approach to leadership selection.
3-Real-World Applications: The experimental design closely mimics real-world managerial tasks, like monitoring workers and reallocating tasks based on team strengths. For instance, managers who scored higher in fluid intelligence were better at reducing wasted effort and ensuring the right person was assigned to the appropriate task(ssrn-4905203). This practical approach makes the findings directly applicable to improving workplace dynamics.
Minuses (With Examples)
1-Overconfidence of Self-Promoted Managers: A major downside uncovered in the study is that individuals who self-promote into managerial roles often perform poorly due to overconfidence. For example, managers who were self-promoted led teams that performed 0.1 standard deviations lower than teams with randomly assigned managers(ssrn-4905203). This overconfidence, particularly in their social skills, not only affects the manager’s performance but also drags down the team's efficiency.
2-Limited Focus on Organizational Dynamics: While the experiment isolates individual managerial contributions, it may not capture the full range of real-world organizational factors. For instance, companies often have hierarchical or political dynamics that influence managerial success, which were not addressed in the experimental setup. As a result, the study's findings may not entirely account for external influences that affect managerial performance outside of controlled lab conditions.
3-Bias in Skill Evaluation: Though the paper advocates for skills-based selection, there is an inherent risk of over-relying on measurable skills like decision-making or fluid intelligence. This could potentially overlook other important managerial traits like empathy or long-term strategic thinking, which were less emphasized in the study. A more holistic approach might yield better results in complex organizational environments where soft skills play a crucial role.
Conclusion
The study "How Do You Find a Good Manager?" offers a refreshing perspective on managerial selection by advocating for a shift away from traditional self-promotion and personality-based selection methods. The evidence clearly shows that choosing managers based on measurable skills like economic decision-making and fluid intelligence can dramatically enhance team performance. Organizations that prioritize these attributes over self-confidence or demographics stand to see significant gains in productivity and efficiency.
However, the study also highlights a critical weakness in relying too heavily on self-promoted leaders, whose overconfidence—particularly in social skills—can impair team success. This underscores the need for companies to adopt more objective, skill-based criteria when selecting their managers. While the findings are robust, they may not fully capture the complexities of real-world organizational dynamics, which could further shape managerial effectiveness.
In conclusion, firms looking to maximize team performance should seriously consider overhauling their manager selection processes. By focusing on hard skills and avoiding the pitfalls of self-promotion, organizations can cultivate a leadership structure that genuinely drives better outcomes.
What makes a good manager? https://www.economist.com/business/2024/10/03/what-makes-a-good-manager from The Economist
- Pedro
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