Do the following words describe someone you might know?
I’ve known a few guys who thought they were pretty smart
But you’ve got being right down to an art
You think you’re a genius-you drive me up the wall
You’re a regular original, a know-it-all
The person in question – which, in the interest of fairness, we should point out could equally be a woman – would appear to be statistically likely to be a manager rather than Brad Pitt or a rocket scientist. (Although I’m sure rocket scientists have layers of management too.) And the person rolling their eyes in mock-admiration isn’t just Shania Twain if CIPD were right in their Employee Outlook: Spring 2012 report (download as a PDF):
Eight out of ten managers say they think their staff are satisfied or very satisfied with them as a manager whereas just 58% of employees report this is the case. This ‘reality gap’ matters as the survey finds a very clear link between employees who say they are satisfied or very satisfied with their manager and those that are engaged – i.e. willing to go the extra mile for their employer.”
CIPD are, of course, an impeccably polite organisation. At no point does their press release say anything about the toxic impact of vanity. (We talked about its findings in relation to staff and managers recollections of meetings earlier this year, where we were – as ever – more prepared to point at the transparency of the Emperor’s Spring Wardrobe.) They don’t even take a leaf out of Shania’s book and mention extra-hold hair gel or Brad Pitt. (If you want to wound a man’s dignity, compare him to Brad Pitt. Your suggestions for female equivalents to the usual email address please …) But they are not alone in their empirical findings about managerial over-optimism.
The following chart comes from the World Management Survey 2011 Report for the UK:
As you can see, UK managers – although we can rule out collaboration or conspiracy – collectively display a lack of grounding in basic statistics. Defying the rules of both mathematics and credulity, the vast majority of them are above average. (The same trend is, you may wish to note if you’re feeling singled out at this point, reflected worldwide. If you’re tiring of England’s green and pleasant lands, the most optimistic nations would appear to be Mexico, Brazil, Chile, Argentina, Canada, Greece and Portugal. Which, given relative economic performance in recent years, is certainly an interesting list. While you’re in the travel agents, you should presumably insist on receiving impartial advice from someone below managerial level.)
WMS are presumably not alone in hoping the managers’ self-view becomes a self-fulfilling prophecy: by their unattributed calculation, a 1 per cent improvement in the management score corresponds to a 2.8 percentage point increase in Return on Capital Employed (ROCE), 6% higher productivity, 71% higher market share growth, 26% higher market cap and 2.3 percentage point increase in sales growth. (Interesting how market share growth seems to be unrelated to the other figures there …)
In an extract from another Management Matters report – this time focusing on Australia – some observations were offered as to the lack of self-awareness that surrounds self-assessment of managerial capability:
Findings suggest that managers’ self-assessed scores were not well correlated with the firm’s assessed management scores.
This is testimony to the fact that the majority of the manufacturing firms are oblivious to the actual current state of management, may not be making attempts to benchmark their own management against with [sic] best practices or even with other firms in their own sector, and are in the dark about the areas where they can improve their own performance. This lack of self-awareness among Australian managers is not very different from the outcome of the previous research in other countries which led the LSE researchers to conclude that “many organizations are probably missing out on an opportunity for significant improvement because they simply do not recognize that their own management practices are so poor” . A missed opportunity is lost business.”
I could make the obvious and predictable remarks about the benefits of working with an external agency with global experience across all major sectors and the benefits that doing so brings through their breadth of acquired knowledge. But another empirical survey suggests a more tailored course of treatment.
Where there are genuine strengths, they tend not to be even across the different aspects of organisational life on which management has an impact. As the chart above shows, many G20 countries would stand to benefit from investing more heavily in areas such as talent management. Looking at the People Management attributes that were measured, one country heads the chart in all bar one:
|Instilling a talent mindset||US|
|Rewarding top performance||US|
|Addressing poor performance||US|
|Promoting high performers||US|
|Attracting high performers||Japan|
|Retaining high performers||US|
(Of the fifteen countries rated for performance management, the UK finished sixth, behind the US, Canada, Germany, Japan and Poland. The UK was rated 8th for operational management and 10th for performance management, but the “Relatively better at ‘operational’ management” is based on absolute scores rather than rankings.)
At which point we can suggest three alternative courses of action;
- Use the World Management Survey to benchmark your organisation and gain some helpful self-awareness as to priority areas for development
- Invest in talent management strategy and implementation
- Consider an interesting approach from Volume 32, Issue 2 of Economics Bulletin, which we have summarised below:
In this paper we focus on the incentive contracts for overoptimistic managers, making the assumption that overoptimistic managers have a greater tendency to misinterpret prevailing conditions and overinvest resources and effort. Although this misinterpretation may result in investment misallocation and lower total social surplus, an overoptimistic manager is willing to accept a lower fixed wage in the hope of receiving a higher expected payoff from the incentive part of his compensation. As a result, a part of this investment inefficiency is absorbed by the manager and not by the shareholders. Assuming that any project that needs to be implemented requires both financial investment from the shareholders and effort from the manager, the manager will bear a larger portion of investment misallocation costs when the production process is labor-intensive. Indeed, if the manager of a labor-intensive firm incorrectly interprets a bad project as a good one and invests both effort and resources into a project that generates mediocre revenues, shareholders will bear only a small portion of the cost. As a result, labor-intensive firms will prefer to hire overoptimistic managers.”
This may contain over-optimism in terms of shareholder value, but it might not be popular …
You could, of course, always try another take on operational vs people, which comes for the final of RealclearPolitic’s 21 Reasons for Obama’s Victory and Romney’s Defeat:
This shouldn’t have been a surprise. Romney’s critics on both the right and the left often accused him of lacking “a core,” but those who are close him believe this misses the essence of the man utterly. “Core” values to Romney are his church and family, and to them he is a consistently devoted servant.
Mark McKinnon, a confidant of George W. Bush, describes Romney as a good man whose values run deep, but whose politics are “transactional.” That’s hardly a sin, given that the two party’s politics are transactional as well. Democratic officeholders recently opposed to gay marriage now favor it. Not coincidentally, so do a plurality of the voters. In 2002, Romneycare was considered a conservative market-based solution to coerce Americans into purchasing private health insurance. By 2012, Obamacare is a socialist scheme designed as the first step of a government takeover of the nation’s health care system.
To liberal writer Ezra Klein, Romney’s problem — in terms of how he’s perceived — is that what he most values is empirical data, which he thinks complement his natural management skills.
“A lifetime of data has proven to him that he’s extraordinarily, even uniquely, good at managing and leading organizations, projects and people,” Klein writes. “It’s those skills, rather than specific policy ideas, that he sees as his unique contribution. That has been the case everywhere else he has worked, and he assumes it will be the case in the White House, too.”
But he won’t get the chance to prove that theory now. The American people, albeit by the narrowest of margins, didn’t choose a manager. For better or worse, they chose a leader, and it’s a measure of Romney’s core that when he said he’d be praying for him to succeed, the people who know him best believe him.”