The Manager Skill that Matters Most
Economic Decision-Making.
That’s the skill researchers found was most predictive of managerial performance.
In a recent study, researchers at Harvard set out to identify what set good managers apart from the rest.
They predicted that empathy, feedback, and overall personality might be the most influential factors for managerial success. These turned out to be important. But not as important as the skill of Economic Decision-Making. In fact, it was the most reliable predictor of who would be a good manager.
So what is it and why aren’t we talking more about it?
What is Economic-Decision Making?
Simply, economic decision-making is the ability to allocate resources. In the case of managers, the ability to quickly analyze a series of inputs, allocate team members to tasks that maximize their strengths, and in turn, maximize output of the team.
It’s long been known that good decision-making is a key facet of leadership. Good leaders tend to make more right decisions than their counterparts. But it’s a hard skill to teach. We often rely on other leaders to share their stories, then are left to reverse engineer them to assemble our own models. But context matters in decision-making and the same decision at two points in time likely won’t have the same impact.
As modern knowledge work reaches peak vagueness and the product we’re making is abstracted to the point of illusion, it gets harder for managers to wrestle with concepts like output and weighing the relevance of one task over another.
So in the face of task and output ambiguity, we’ve settled on choosing managers by focusing on other broad signals. We often look at current functional performance and individual ambitions to determine future managers. And according to this study, that’s exactly what we shouldn’t do.
The researchers found that anyone who expressed ambition to lead a team, on average, performed worse than those randomly selected. The reason?
Hubris.
The Job of a Manager
My favorite definition of a manager comes from Andy Grove, former CEO of Intel and author of the pragmatic manager book “High Output Management.”
The job of a manager is to maximize the output of others. That includes their team, their peers, and leaders.
What economic decision-making says is that the best leaders are able to:
Analyze the tasks that need to be done and prioritize which will have the greatest impact.
Identify which team members are best suited for which tasks.
Coach and motivate each team member to perform the tasks to the peak of their capabilities.
It’s that simple, and that difficult.
How to Choose Future Managers
Future managers need to be immersed in experiences where they are responsible for the output of a group of people, long before they’re officially responsible for caring for a team.
In a perfect developmental program, each potential manager would:
Get assigned to lead a high-profile project with a team, stakeholders, and support of leaders. The project should be no longer than 3-6 months long.
The potential manager would get evaluated on their skills through an assessment of their economic decision-making along with 360 feedback on core manager capabilities: empathy, communication, feedback, ability to motivate. This would happen at the start, middle, and end of the project.
Throughout the project managers can get support, coaching, and training on the core manager skills.
At the end of the project, a cross-functional team of leaders should independently evaluate the business impact and output of each project.
The team leaders with the best assessments, 360s and team feedback, and outputs are added to the promo list.
Those that didn’t perform as well can choose to get another chance at the program or identify career alternatives for the near-term.
New insights are pointing us back to the basics. At a time when managers are under pressure and organizations are concerned about their performance, it’s an exciting opportunity to rethink how we select and grow our leaders.