Business Growth: Strive for Competence

Dan Arens is an Indiana-based business growth advisor. Dan Arens is an Indiana-based business growth advisor.

Los Angeles Lakers standout LeBron James could easily be deemed a success, in every sense of the word. He has fame and he certainly made a fortune in his seventeen years as a superstar in the National Basketball Association. Yet, there is still one thing that has eluded him for his entire career.

Sportswriters and basketball historians alike, feel Mr. James is still striving to be the captain of a team that is considered a dynasty. According to Sam Walker of The Wall Street Journal, "He’s won three NBA titles, but only two of them came in consecutive seasons." Walker wonders if James has gone as far as he is able, having reached his "level of incompetence," as Laurence Peter would say. Certainly, Walker is not questioning James’ status as a super athlete, but he does seem to be questioning his being a successful leader of an epic team.

James is continuing to challenge many years of management theory in his quest. As the captain of the Lakers, his leadership role will, hopefully, take his team to dynasty status, like the Chicago Bulls under Michael Jordan. Only time and another season will tell.

Historically, the theory proposed by Peter entitled, appropriately enough, The Peter Principle, is still applicable. Even though it was written in 1969, the conclusions reached then, are relevant today in the business world and other areas like sports. “The Peter Principle states that a person who is competent at their job will earn promotion to a more senior position which requires different skills. If the promoted person lacks the skills required for their new role, then they will be incompetent at their new level, and so they will not be promoted again. But if they are competent at their new role, then they will be promoted again, and they will continue to be promoted until they eventually reach a level at which they are incompetent.”

To further support the theory of the Peter Principle, a recent study of over 50,000 sales people confirmed that those who had doubled their own sales figures were the ones most likely to be promoted, according to the Journal. But, as those lead sales people took over their supervisory role, the teams they oversaw had sales decline by an average of 7.5%.

As Peter pointed out in his book, many people who are standouts in one area, are unable to convert their skill sets when it comes to motivating or leading others. What came easy as a salesperson results in frustration when it doesn’t come easy to their subordinates. Many times, newly minted sales managers set unrealistic goals and immediately go about micro-managing their subordinates when they don’t make their quotas. Unfortunately, many salespeople in those positions end up being  completely deflated by their boss and quit.

In the growth of your business, avoiding this type of situation is of paramount importance. Recognizing the problem could exist in the first place is helpful. One thing for you to consider is increasing the pay of your top performers instead of promoting them. Remember, some of the best people at sales do not want to be promoted, they want to stay selling. A recent article in the Harvard Business Review pointed out that Microsoft has “avoided tying promotions to changes in responsibility by using dual career ladders, for instance, by promoting excellent programmers up a technical track and excellent leaders up a managerial track, with similar job levels in each equating to similar pay and prestige. These ladders allow people to progress in their career, drawing on their existing passions and talents rather than requiring them to shift job duties.”

Another solution to the dilemma is to identify the leaders of your organization regardless of their area of specialty, and promote them to a management role. This approach requires the separation of managerial responsibilities from individual contributions in a particular area of specialization, however. In other words, give the managers a chance to manage and have the team members with their respective gift sets do their part. This kind of approach is gaining some recent favor with companies. It allows those who score high on managerial talent the potential to continue to perform, irrespective of their earlier, non-management related performance.

While many of these approaches might work in the functional areas of a company, a lot of companies, particularly in the area of sales, continue to promote from within the sales division, with mixed results, in order to achieve growth.

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