When you look at any large company from the inside, it’s easy to see that they usually have at least some people in leadership positions for which they are quite simply unqualified.  Why does this happen?  Why is it so consistent?

I’m glad you asked… I’ve been thinking about this issue for a long time.  There are a few reasons behind this phenomenon that all tie together to make it almost inevitable once a company reaches a certain size.

1. Promotion Based On Skill In Current Job

   I’m really not sure how this one got started, but there is a very strong, almost universal, tendency to promote someone who is very good at their current job to a different job, without regards to the different skill set that is needed.  The best salesman that a company has is likely to be promoted to sales manager, should that position come open, for example.  This in spite of the fact that a manager needs an entirely different skill set AND the fact that you’re taking the best salesman away from directly selling.

   That’s not to say that the person who is the best at their current job is NOT the best qualified for the promotion… they may very well be the best.  But whether they are the best choice for a promotion has nothing to do with their skill at their current job… only with the qualities they have that apply to the new job.

2. Promotion Based On Longevity

   This is even stronger than #1.  This tendency is almost universal, and it most likely derives from the valued trait of loyalty… they have given the most time to your company, so you reward their loyalty with a promotion.  This tendency at least has an advantage over #1, in that it doesn’t automatically take the best person away from the job where they excel, but it is just as random about finding good leaders.  The person who has been there longest is no more or less likely to be the best choice for the promotion purely based on longevity.

3. Stigma Attached To Being Passed Over For Promotion

   And that leads us to number 3… if you would be up for promotion based on either of the two tendencies above, and someone else is promoted that is NOT based on one of those tendencies, it carries a strong social stigma.  So strong, in fact, that it can often lead to someone quitting an otherwise satisfying, well-paying job.  If you get passed over, and other people know it (and they will), it makes them think lower of you because they think there must be something wrong with you that caused you to be passed over… even if it’s only slightly, it’s still noticeable, and unpleasant.

4. No Demotions

   Another major reason why leadership tends to grow progressively worse is that people are never demoted.  If you are promoted to a new job, and you can’t do it, you should be demoted back to where you were before.  Unfortunately, that basically never happens… the stigma attached to demotion is so strong that demoting someone not merely tarnishes their reputation, it tarnishes the reputation of the one who demotes them, as well.  Nobody wants to work for someone who demotes people… even though if you’re good at your job, working for someone who does that is actually GOOD for you.  It also basically guarantees that the person who is demoted will leave the company.

5. Strong Stigma Attached To Not Accepting Promotion

   There is also a stigma attached to not accepting a promotion.  While this one is not as strong as the previous two, it still certainly exists.  Anyone who knows you turned down a promotion will assume that there is something wrong… and if they can’t find out what it is, they will start speculating, potentially leading to new and potentially harmful rumors.  Nobody wants that, so they feel strong pressure to accept any promotion that is offered, even if they don’t really want it.

All of those factors combine to cause people to be promoted until they hit a point where they can’t do the job they have reached.  Then the higher-ups don’t want to cause problems by demoting the person back to a previous job where he was more qualified, and if they did, that person would feel obligated to leave the company… even if he liked the old job better AND made more money!  The social stigma is that strong.

Since that leaves people promoted past their level of expertise, and often times even past their level of competency, it causes the leadership at the company to deteriorate, and that leads to even worse choices for leaders, as having someone who is not a good leader pick the leaders under them is not a good idea.  This extremely strong tendency toward lowering standards of leadership as a company grows and ages is one of the primary reasons why new companies CAN come in and compete and become the new big companies…  their execution of ideas and strategies is generally better, due to less of the above causes having had a chance to set in, thereby balancing the leverage of existing companies due to strong branding and established presence.

PS – This article was inspired by John McKenna in his leadership challenge.