Evidence tells us that good management enhances organisational performance, while ineffective management costs organisations dearly.
As an example, the cost of derailment for a senior manager/executive is estimated to be between $750,000 and $1,500,000 (De Vries & Kaiser, 2003), and even as high as $2.7 million (Smart, 1999).
This raises the question as to why rigorous, evidence based selection processes aren't used more frequently for such critical business roles.
The base rate of management failures is estimated to range from 30-67% – with an average of 50%. This suggests up to two-thirds of managers will fail to shine in their roles, and at least half will eventually be fired or moved (cited in Hogan, 2009).
From this evidence, we can safely conclude that there is some scope to improve the effectiveness of managerial/senior executive assessment techniques.
This is even more significant given research relating to the attributes of bad managers. These attributes include a lack of interpersonal skills, a lack of strategic awareness, a failure to deal with conflict, the avoidance of making tough decisions, and low self-awareness.
These aspects of personality disrupt the interpersonal relationships needed to build a team, and distort the judgement needed to guide its performance.
Insight into these attributes is very difficult to obtain from standard interview proceedings, and as we can see from the above, missing them can cause the whole organisation to suffer.
One way of improving this situation is to use robust personality instruments in order to assess factors linked to managerial/leadership effectiveness and derailment (i.e. instruments with strong reliability and validity).
There are numerous instruments available for this purpose, but many of these have little objective evidence to back up their claims. It is worth paying a little bit extra for instruments that have hard evidence behind them.
The Bottom Line
The bottom line is that bad management costs money, and poor selection decisions lie at the root of many of these failures.
Gaining insight into an individual’s behavioural preferences can help avoid poor management hiring decisions. The current situation can be greatly improved through the use of well-designed selection strategies that assess competency in critical work processes.
Given the high cost of failure highlighted above – and the fact effective performers are generally 40-70% more effective than average performers – can we afford not to stack the odds in our favour?
