How To Find a Good Manager: Gut Feeling vs. Fluid Intelligence
New research proves most companies promote the wrong people to management. Learn the three key behaviors of effective managers and why your promotion system is sabotaging team performance.
Hello, and welcome to another thought-provoking episode of Tech Trendsetters! I'm thrilled to share with you today yet another episode in our Business Insights series. For those new to our discussions, this is where I explore the intersection of technology, organizational behavior, and leadership to reveal practical, science-backed insights for our professional lives. And today we will start by formulating the problem first.
The tech industry has a management problem. Not a shortage of managers – we have plenty of those wearing Patagonia vests and dropping buzzwords in meetings. I'm talking about the shortage of genuinely effective managers. If you've spent any time in any organizations, you've witnessed the pattern: a top salesperson gets promoted to lead a department based solely on their sales numbers and immediately becomes a bottleneck. Or a charismatic, confident person talks their way into management only to drive productivity into the ground.
This problem extends far beyond business and tech. Look at politics, where the same flawed selection mechanisms are simply obvious. Candidates who excel at campaigning and self-promotion often make terrible legislators or executives. School systems, non-profits, government agencies – any organizational structure that relies on hierarchy falls victim to this fundamental error in how we choose leaders.
This isn't just my opinion. It's backed by fascinating new research that confirms what many of us have suspected all along: the way we select managers is fundamentally broken. A team of economists developed a novel method to identify the causal impact of managers on team performance, and what they discovered should make every leader rethink their promotion practices. I'll walk you through what actually makes someone a good manager:
cutting through the personality cult that dominates leadership discussions;
and outline a better approach to selecting managers that could transform your organization's performance.
Why Cognitive Abilities > Charisma
Let's start with the most counterintuitive finding: The best predictor of managerial performance isn't charisma, confidence, age or even prior experience. It's cognitive ability – specifically, fluid intelligence and economic decision-making skills.
A short wiki note:
The concepts of fluid intelligence and crystallized intelligence were introduced in 1943 by the psychologist Raymond Cattell. According to Cattell's psychometrically-based theory, general intelligence is subdivided into fluid and crystallized. Fluid intelligence is the ability to solve novel reasoning problems and is correlated with a number of important skills such as comprehension, problem-solving, and learning. Crystallized intelligence, on the other hand, involves the ability to deduce secondary relational abstractions by applying previously learned primary relational abstractions.
The researchers found that managers who scored higher on tests of fluid intelligence and economic decision-making consistently caused their teams to perform better, regardless of the team's composition. A manager who is one standard deviation above average, improves team performance nearly twice as much as a similarly skilled worker.
This demolishes how most tech companies promote people. We typically look for the loudest voice in the room, the person who "seems like a leader," or the star individual contributor who deserves a reward. The data shows this approach is completely backwards.
What's even more interesting is what didn't predict management performance. Gender, age, ethnicity – none of these factors correlated with a manager's ability to improve team outcomes. Neither did extraversion or other personality traits we often associate with leadership. The strongest predictors were cognitive skills that enabled managers to process complex information and make good allocation decisions.
This makes perfect sense when you think about what managers actually do. They coordinate resources, monitor performance, and make difficult trade-off decisions with incomplete information. These are fundamentally cognitive tasks, not personality showcases.
How Self-Promotion Creates Poor Managers
Here's where things get really damning for how most organizations select managers. The researchers varied how managers were selected in their experiment. In half the cases, people who expressed the strongest desire to be managers got the role. In the other half, managers were randomly assigned.
The result? Self-promoted managers performed significantly worse than those who were randomly selected. This was the moment even I got surprised. Teams with self-promoted managers scored about 0.1 standard deviations lower than teams with randomly assigned managers – roughly equivalent to having a manager with fluid intelligence one standard deviation lower.
Let that sink in. Randomly selecting managers outperformed letting people self-nominate.
In reality, the problem isn't difficult to understand: self-promotion correlates strongly with overconfidence. People who most want to be in charge tend to overestimate their own abilities, particularly their social skills. The researchers found a negative relationship between self-reported people skills and actual managerial performance among self-promoted managers.
This is devastating fact for most of companies, especially in tech, where the path to management often requires active self-promotion. The people most likely to raise their hands, campaign for promotion, and declare themselves ready for leadership might actually be the worst choices for the job.
Many tech organizations think they're being meritocratic (fair) by promoting people who show initiative and confidence. But the data suggests they're systematically selecting for overconfidence rather than competence.
Designing Selection Systems That Work
So what's the solution? Should we just pull names out of a hat when selecting managers? Not quite – though that might actually improve outcomes at some companies.
The researchers simulated different selection approaches and found that choosing managers based on economic decision-making skills improved team performance by 0.7 standard deviations compared to self-promotion. That's equivalent to replacing an average worker with one in the 99th percentile of productivity.
Here's what an effective manager selection process might look like:
Test candidates on their economic decision-making skills and fluid intelligence using validated assessments;
Avoid overweighting self-assessments or confidence in interviews;
Run small team exercises where candidates need to allocate resources and coordinate others;
Look for evidence of monitoring skills and the ability to identify comparative advantage;
The key insight is that management skill can be measured objectively – it's not just a matter of opinion or personality fit. And the skills that matter are largely cognitive, not social or personality-based.
This approach would dramatically change who gets promoted in most organizations. And that in a turn, reshape our workplaces, create more meritocratic organizations, and even could transform how our society operates.
How Good Managers Actually Do Their Job
What do good managers actually do differently? The researchers identified three key behaviors that distinguished high-performing managers:
First, effective monitoring. Good managers were much less likely to have team members wasting effort on tasks that wouldn't contribute to the team's overall success. Teams led by above-average managers wasted half as much effort as other teams (8% vs. 16%);
Second, optimal task allocation. Good managers were significantly better at assigning team members to tasks where they had a comparative advantage. Teams whose managers consistently made optimal assignments scored 0.52 standard deviations higher than teams with managers who never made optimal assignments.
Third, motivation. The performance gap between teams with good versus average managers was largest in the final stages of the task, suggesting that good managers were better at keeping their teams engaged when energy naturally flags.
The essence of this is that a good manager enables the whole to accomplish more than the sum of its individual parts.
And these behaviors aren't mysterious – they're practical skills that can be:
identified,
and developed.
But they require cognitive capabilities that aren't necessarily correlated with the traits we typically associate with leadership.
In tech teams where specialization runs deep and coordination is complex, having managers who excel at these specific behaviors could dramatically improve productivity. The problem is we've been selecting for the wrong traits all along.
Looking ahead, I really want to see how these findings might be implemented in different types of organizations. But of course you and I know that's not what's going to happen tomorrow. Most companies will keep promoting based on their arbitrary criteria, or simply whoever their executives "feel good about" – while wondering why their management layers create more problems than they solve.
Yet I remain optimistic. As more research confirms what we've long suspected, forward-thinking organizations will start to take notice. Some already are. Just remember that cognitive ability overthrows charisma every time when it comes to effective management.
Be smart, be fluid, be effective and always explore new possibilities with Tech Trendsetters. See you next time!
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