Who is the best manager?
The selection of management talent is one of the most critical tasks in a company.
When it comes to choosing the best managers for a company, the stakes are high. A poor choice can lead to underperformance across teams and divisions, while a talented manager can dramatically improve productivity and profits. To determine the most effective selection criterion, researchers at the London School of Economics, led by Ben Weidmann, conducted a lab experiment involving 555 participants.
They measured key traits like personality, intelligence, and emotional intelligence, then formed teams of 12 to 18 people, promoting one member to manager in each group.
In half of the cases, the manager was randomly selected through a lottery, while in the other half, the individual who expressed eagerness and confidence in their managerial abilities was promoted (self-selection). The results showed that the randomly chosen managers outperformed those who self-selected as managers. This suggests that objective selection criteria are more effective than relying on self-promotion or emotional intelligence.
The chart provided illustrates the impact of various selection criteria on team performance. The green bars represent the effect of randomly chosen managers, which yielded the best average performance improvement. The grey and orange bars show the impact of managers selected based on emotional intelligence and the Peter Principle, respectively. The Peter Principle, coined by Laurence Peter in 1968, states that individuals are often promoted until they reach a level of incompetence, leading to suboptimal team performance.
However, the experiment also revealed that selecting managers based on economic decision-making abilities – the purple line in the chart – resulted in even better performance. This type of manager focuses on efficiently allocating resources, delegating tasks to the most competent individuals. While this may not mean prioritizing commercial gains or profits, it emphasizes the ability to optimize resource allocation, ultimately leading to higher-performing teams.
Despite these findings, many workplaces still rely on less effective selection criteria when promoting individuals to managerial positions. The chart suggests that companies should focus on identifying candidates with strong economic decision-making abilities to create the most successful and productive management teams.
Written by urgent.news from Klement on Investing's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
