The Cost of Promoting the Wrong People
The writing on a mug I saw recently had a profound statement - “When you promote the wrong people, you begin to lose your best people”.
The cost of promoting the wrong people has a significant impact on human capital, poisons the culture, and drains the organization financially. Here are some key areas that suffer the impact:
Financial Costs
Recruitment and onboarding - When a promoted individual doesn't work out, you face the cost of finding a replacement, including recruitment fees, training, and onboarding expenses. According to an article from SHRM (Society for Human Resource Management), this can be three times the promoted person's salary, especially for senior positions.
Decreased productivity - Ineffective leaders or employees in the wrong roles can lead to missed deadlines, poor decision-making, and subpar work, impacting overall productivity and efficiency. This translates to lost revenue and profits.
Increased turnover - When talented employees feel undervalued or see incompetent leaders being promoted, they are more likely to leave the organization. This leads to additional costs associated with replacing departing employees.
Intangible Costs
Low morale and engagement - Seeing deserving colleagues overlooked can be demoralizing for high-performing employees, leading to decreased engagement, motivation, and overall job satisfaction.
Loss of innovation and creativity - Incompetent leaders can stifle creativity and innovation, hindering the organization's ability to adapt and grow.
Negative work environment - An incompetent leader can create a toxic work environment with poor communication, micromanagement, and conflict, impacting team dynamics and overall well-being.
Relational damage - Insecure leaders can create bottlenecks and hinder effectiveness by prioritizing their egos over collaboration.
Reputational damage - If the consequences of promoting the wrong person become public, it can damage the organization's reputation and make it harder to attract and retain talent and customers.
The severity of these costs can vary depending on several factors:
The level of the promotion - The higher the position, the greater the potential impact of a poor choice.
The size of the organization - Smaller organizations are more vulnerable to the negative effects of promoting the wrong person.
The industry - Some industries are more competitive and have higher turnover rates, making the cost of losing talent even greater.
To avoid the cost of promoting the wrong people, organizations should:
Implement rigorous and objective promotion processes - Focus on skills, experience, and performance rather than personal relationships or favoritism.
Invest in leadership development programs - Train and mentor potential leaders to ensure they have the necessary skills and knowledge to succeed in their new roles.
Seek feedback from employees - Get input from employees on the character, strengths, and weaknesses of potential candidates.
Ask tough questions - Create a safe space for honest feedback, and prioritize truth-seeking over comfort. When in doubt, solicit help from experts.
Promoting the right people to lead isn’t just about avoiding costs. It's about building a vibrant ecosystem where people bring their best selves to innovate, strive for top-quality service, and adapt to changes with ease. Choose wisely today. Your organization’s future depends on it.
