When it comes to promoting from within, the right individual might well get the job. But what about the demoralized managers who did not get the job and still others who, seeing no immediate opportunity to move up, decide to move on and out. This author suggests another way to promote, a way that will leave just about everyone feeling good.
Managers frequently face the task of selecting an employee for promotion to a supervisory or managerial position. This task often becomes time-consuming and stressful, especially when there are many candidates. The right choice can raise employee morale and benefit the company for years. A wrong choice may do lasting damage to company productivity and employee attitudes. The process is stressful for the candidates as well, some of whom may have waited years for a promotion opportunity and may leave the company on learning that they will not be promoted.
This article offers an innovative approach to making the promotion decision. The traditional promotion process is top-down, with superiors the principal decision-makers. The approach suggested here is bottom-up, mimicking the way that cream rises to the top. It challenges the candidates to demonstrate that they have the qualities required for promotion – initiative, creativity, perseverance, the ability to obtain co-operation from others and to produce measurable results that benefit the company. I refer to this as the ICR Approach (Initiative, Creativity, Results).
The article has three sections. Using an example from General Electric, the first section discusses the conventional promotion process, its associated problems and why they occurred. Having noticed these difficulties in a company I was consulting with, I researched whether any managers had used a promotion process involving elements of the ICR approach. In the second section I describe such examples of managers at 3M, Citigroup, IBM and a Canadian company that successfully promoted subordinates for their initiative, creativity and the results their ideas generated. The third section describes how the ICR approach could be implemented for the benefit of a company and its employees.
1. The traditional promotion process and its problems
A good description of the traditional promotion process can be found in the best-selling autobiography of Jack Welch, the former CEO of General Electric (Jack: Straight from the Gut, Warner Business Books, 2001). Welch describes how he began his succession planning in 1993, almost a decade before he was to retire in 2001. He told the senior VP for human resources that “our biggest job was to select the next CEO for the company.” Welch directed the VP for executive development to “put together a list of the stuff ‘an ideal CEO’ should have.” Welch soon grew frustrated with the exercise, saying that the list “wasn’t very helpful. When you got down to it, Christ couldn’t have filled the job we described.”
The selection process started with 23 candidates. Four years later the list was reduced to eight and then to three finalists who were closely watched for another year. They made formal presentations before board members and met them at social events. Eventually a candidate was promoted to succeed Welch. The other two candidates resigned, as anticipated, and the company was then faced with replacing them.
Welch describes the promotion process as “most difficult and agonizing” and adds “It damn near drove me crazy, causing many sleepless nights.” Having spent nearly a decade on the process, Welch’s frustration is palpable in his concluding remark: “Despite our best-laid plans, looking at the results today is sobering. Only nine of the 23 people on that first list are with GE today.”
This example illustrates some key features of the traditional promotion process:
- Superiors are vested with the primary responsibility for finding the best candidate.
- They start by specifying the qualities a successful candidate should possess, although this attempt may turn out to be not very useful.
- The process is stressful and time-consuming for superiors and candidates.
- Many good managers are lost to the company as a result of the process.
Welch is not alone in feeling dissatisfied with how promotion decisions are made. Many other executives have expressed similar feelings. Claudio Araoz, a partner in the well-known global executive management search firm, Egon Zehnder International, writes of his 20 years of experience in recruiting and assessing senior executives: “I am convinced that the problem of poor appointments is serious, pervasive and highly dangerous.” (“Getting the Right People at the Top”, MIT Sloan Management Review, Summer 2005).
In addition to being time-consuming and stressful, the promotion process creates many other problems:
Studies reveal employee dissatisfaction with the process. In a 2005 Hay Group survey, most employees complained that they had few opportunities for promotion, and were not told what was required to be promoted.
Unsuccessful employees often challenge promotion decisions. Wal-Mart is facing a multi-billion dollar sex discrimination suit regarding promotion decisions affecting up to 1.6 million female employees. Similarly, an arbitrator recently ruled that the US Internal Revenue Service used ‘an inappropriate criterion’ in its promotion decisions.
Employees who do well in their current positions sometimes fall short of expectations when promoted to higher positions, reaching what the ‘Peter Principle’ refers to as their ‘Level of Incompetence’. A familiar example is the highly effective salesperson that is found to lack managerial skills when promoted to sales manager.
Members of a team who are competing for a promotion are sometimes tempted to manage their activities so as to make themselves look good and others bad, damaging the team’s cohesion. James Baron and David Kreps’ Strategic Human Resources: Frameworks for General Managers (Wiley, 1999 and 2007) reviews research on this phenomenon
The traditional promotion process thus creates problems for the candidates, the teams that they work in, and ultimately the company itself. In the end, this is an example of a lose-lose-lose outcome.
Understanding the causes of the problems
When executives like Jack Welch express frustration with the traditional process, Araoz and other consultants recommend better training for managers and improved testing of candidates. I believe, however, that the problems are not caused by poor training or inadequate testing methods. Rather they are the predictable result of the underlying nature of the conventional process itself.
By giving responsibility for selecting a person for promotion to the superior(s), the conventional process sets in motion four factors which act together to sabotage its success:
The difficulty of setting job standards in a dynamic environment: Superiors know that their decision may be challenged. They thus attempt to document that their decision was based on measurable performance standards that were objective and fair for all candidates. Establishing such standards was somewhat easy when most jobs involved producing fairly simple goods and did not change much over time. However, many companies now operate in an environment of rapid change, with teams working together to produce complex intangible services. These substantial changes in the nature of work make it difficult to create measurable performance standards for individuals. When created, these standards go out of date quickly.
Soft skills: The task of developing objective standards becomes even more difficult for higher-level management positions, since these require interpersonal and leadership skills in addition to technical competence. Araoz notes that such soft skills are notoriously difficult to measure objectively.
Supervisory resistance: The need to use objective standards which are difficult or impossible to develop puts supervisors in a difficult situation. It’s no wonder, as shown in numerous studies, that they resist making appraisals whenever possible, and tend to give almost everyone an above-average rating. Douglas McGregor (“An Uneasy Look at Performance Appraisal”, Harvard Business Review, 1957 and 1972) referred to this as a supervisor’s unwillingness to “play God.”
Narrow Mindset: Being measured against established performance standards discourages risk-taking and creativity, and creates a “hired-hand” mindset among employees. As W. Edwards Deming pointed out (Out of the crisis, MIT Press, 2000), it also causes senior management to focus on individual performance rather than on system-level causes of problems, further fueling rivalry among team members.
Given this complex set of undermining factors, it is not surprising that the conventional promotion process is stressful and time-consuming, subject to challenges, and frequently fails to identify the right candidate. No wonder that managers sometimes wish for the proverbial Wisdom of Solomon when making promotion decisions.
2. Discovering stars: Designing an alternative process
In view of the shortcomings of the conventional process, is it possible to develop an alternative? In my research I discovered some managers who, over the decades, successfully used an approach similar to ICR, albeit informally. They based their promotion decisions on an intuitive understanding that companies growing rapidly, or needing to innovate, have to reward employees who show initiative and creativity.
One pioneer who articulated such an understanding is William McKnight, who led 3M Company, well-known for its innovations, for almost 40 years. “It’s essential that we have many people with initiative if we are to continue to grow”. (www.3M.com).
In 1948 he set out his ‘Principles’:
“As our business grows, it becomes increasingly necessary to delegate responsibility and to encourage men and women to exercise their initiative. This requires considerable tolerance. …Mistakes will be made. But if a person is essentially right, the mistakes he or she makes are not as serious in the long run as the mistakes management will make if it undertakes to tell those in authority exactly how they must do their jobs”.
3M today says of these principles: “Our heritage dates back more than 100 years, and McKnight’s principles continue to accompany us in the 21st century.” Google is another company following in McKnight’s footsteps. It encourages its engineers to spend 20 per cent of their time working on their own creative ideas.
Although the importance of rewarding employee initiative is obvious in principle, putting it into practice is not easy. McKnight himself faced this difficulty in the early part of his career. In the early 1920s he assigned Richard Drew, a young lab assistant, the task of improving 3M’s sandpaper, which was damaging paintwork on cars. While testing sandpaper samples, Drew noticed a different problem, that painters were having trouble covering areas not to be painted.
While this problem was outside of his assignment, Drew took the initiative to discuss it with his boss. McKnight did not much care for Drew’s idea and told him to return to his assigned work. Drew persevered, working on his own time to develop a new tape. He persuaded auto body painters to test his new product and eventually obtained several orders for it.
McKnight finally realized his mistake and authorized Drew to continue work on his project. The new product, which we now know as masking tape, sold very well and was the beginning of 3M’s Scotch™ product line. McKnight acknowledged Drew’s contribution by giving him his first promotion. Over the next 40 years, Drew continued to use his initiative, developing several other products such as cellophane. He was ultimately promoted to become 3M’s chief science officer.
Drew exemplifies the qualities a subordinate should display to earn a promotion:
- He identified an important problem without guidance from superiors.
- He took the initiative and proposed a project related to the problem, working on it independently.
- He was able to enlist others, both inside and outside the company, to assist him in implementing the project. He did this as what we now call ‘skunk works’, without formal authority or additional company resources.
- He persevered in the face of initial failures and produced measurable results that benefited the company.
These are the qualities that characterize a successful leader. Managers in some other companies, in different decades and circumstances, also promoted their subordinates for displaying similar qualities:
In the 1960s Lewis Ranieri, a part time mail clerk for Salomon Brothers (now a unit of Citigroup) showed his supervisor how to significantly reduce postage costs. Impressed, the supervisor offered him a full-time job. Ranieri was later promoted to a broker’s position. Here he developed the idea of packaging individual mortgages and selling the packages to institutional investors. By the late 1980s, Ranieri’s idea had led to a new market in mortgage-backed securities in which Salomon Brothers held a dominant and highly profitable position. (Michael Lewis, Liar’s Poker, W.W. Norton, 1990).
By the early 1990s Dennie Welsh saw the need for IBM to move into global networks, although his colleagues couldn’t quite see his vision. Welsh persisted in pushing his idea, eventually finding an interested listener in Louis Gerstner, the newly appointed CEO. Gerstner agreed to establish a team under Welsh’s leadership to build a network. IBM eventually sold it to AT&T for $5 billion. (Louis Gerstner, Who Says Elephants Can’t Dance? HarperCollins, 2002).
In 2003 a manager in one of my classes put the ICR philosophy into practice. Working in a Canadian shipping company, he noticed an opportunity to reduce supply times and costs. He proposed a project to authorize ship captains to make purchasing decisions without going through headquarters. His superiors gave his project the go-ahead. The project increased efficiency and reduced costs by about $1 million a year. It also led to higher staff morale and a boost to his career: a win-win-win outcome.
Introducing the ICR Approach to employees.
These successful examples suggest the features that should be included in designing an alternative promotion process. Management of a fictional company called Innovco might describe the ICR approach to their employees as follows:
- If you are happy in your present job and do not wish to be promoted, we value your contributions, and respect your decision.
- If you wish to be considered for future promotion, you will have the opportunity to show your leadership qualities by taking the following steps:
Identify a problem (or an opportunity) facing Innovco, and design a project to address it, outlining the expected company benefits, how they will be measured, and a likely timetable for project completion. The benefits may take various forms such as increased sales, improved quality, lower costs, reduction in customer complaints, or other creative possibilities.
You should discuss your project with your supervisor. He/she will approve your project if there is no serious concern that it may cause a problem for the company. On receiving approval, you become your project’s ‘champion’.
Your project will be in the nature of ‘skunk works’, (a term coined by Lockheed Martin Corporation), without additional authority or company resources. You will be expected to continue with your normal responsibilities while working on the project.
To successfully implement your project you will very likely need to enlist others’ assistance, in your department, in another department, or outside Innovco such as our clients or suppliers.
We recognize that not all projects will be successful. If your project fails despite your best efforts, you will not be penalized. Your project may create benefits later.
On project completion, you should present a report to the management team, describing your project, its measurable results, and acknowledging others who helped you to bring the project to fruition. Your report will become part of the company’s knowledge database.
Successful completion of one or more such projects will be the primary prerequisite for receiving a promotion.
The ICR approach utilizes a key insight underlying the story about Solomon’s Wisdom. Faced with two women both claiming to be the mother of a baby, Solomon did not presume to identify the true mother by himself. Instead, he used his understanding of the qualities of a mother to devise a situation such that the true mother would identify herself. Similarly, in ICR the superiors use their understanding of leadership qualities to devise a situation so that people truly deserving promotion come forward.
3. Implementing the ICR Approach
The ICR approach is based on a very different philosophy compared to the conventional approach. As a result, managers would need considerable initial support from top management to implement it. This is not surprising – even McKnight had difficulty initially supporting his subordinate’s project. Managers would need to become familiar with examples such as the projects cited here. As a company gains experience, it could start using examples from its own employee projects.
Companies would also need to be aware that projects may often require several months to be proven successful, resulting in a time lag between project completions and promotion availability. Thus the company would need to engage in advance promotion planning.
Would the ICR approach work in all companies? Probably not. It would work best in companies where the culture encourages employees to show initiative and supervisors to support such initiative. Top management would need to make a sustained effort to develop such a culture if it does not already exist.
How can managers develop such a culture? If employees are not used to showing initiative, they may begin to do so with encouragement from their supervisors. What if it is the supervisors who squelch employee initiative? Top management would then need to make it known that the supervisors’ own promotion prospects would depend, in part, on how well their subordinates complete creative and worthwhile projects.
A company with many employees focused on innovation, on the other hand, will be in the happy position of having to design higher challenges to qualify for a promotion. For example, it may require that after completing a successful project in one department, the employee is expected to seek a lateral transfer to another department, and eventually design and complete a project there. There is a lot of room for companies to creatively adapt the basic ICR approach to suit their own requirements.
The initial time and effort needed to plan and implement the ICR system should be considered a good investment. It would produce ample dividends since the ICR system satisfies numerous desirable criteria for a promotion system. In particular:
It creates opportunities for potential ‘stars’ to shine by engaging in the tasks of leadership and producing results – the exact skills wanted in candidates for promotion.
It shows employees that the process is fair and based on objective evidence; they can see the projects’ measurable benefits.
It allows employees who do not wish to be promoted to so indicate without embarrassment, simply by not proposing a project. This is as it should be – as long as their current contributions are recognized as being valuable. Not everyone wishes to be a leader, nor can everyone be promoted. This also prevents complaints about bias and discrimination – those who do not offer to carry out a project have no grounds to complain about not getting a promotion.
It is much easier for the superiors to administer. Since the onus is on the candidates to prove their merit, the superior’s responsibility is primarily to screen the proposed projects and to offer encouragement in their implementation. When employees of certain superiors produce successful projects and are promoted, it also provides a basis for top management to acknowledge these superiors as showing good leadership.
It fosters team cohesion as candidates acknowledge co-workers who supported their project and the nature of their contribution.
The ICR approach thus reduces or limits most of the problems inherent in the traditional approach to promotion decisions. It also creates a culture in which subordinates are seen as self-starting and imaginative contributors rather than as passive individuals. Moreover, with creative employees identifying and solving problems, even before they have become obvious, the ICR promotion system automatically gives the company a competitive advantage. It thus benefits the candidates, the teams that they work in, and the company as a whole: a Win-Win-Win strategy.
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