The Hidden Cost of Promoting Your Best Employee Into a Leadership Role

Written by Stalin Encarnación, Workforce Development Specialist, Purdue MEP

One of the most common practices in manufacturing organizations is to promote high-performing employees into supervisory or management positions. The logic seems reasonable. When an employee consistently exceeds expectations, demonstrates strong technical knowledge, and delivers outstanding results, the organization naturally sees that person as an excellent candidate for advancement. But there is an important question we must ask ourselves: What happens when we reward technical excellence with a job that requires an entirely different set of skills?

Research conducted by Benson, Li, and Shue (2019), using employee performance data from 131 firms, found evidence that organizations frequently prioritize an employee's performance in their current role when making promotion decisions, even when other characteristics may better predict managerial success [1]. This phenomenon is associated with what is commonly known as the Peter Principle, the idea that employees may be promoted based on their success in previous positions until they reach a role for which they are not adequately prepared.

Why Technical Expertise Doesn't Equal Leadership Readiness

In manufacturing, the consequences can be particularly significant. Consider an experienced machine operator who consistently exceeds production targets, maintains excellent quality standards, and possesses exceptional troubleshooting skills. Recognizing these accomplishments, management decides to promote this employee to production supervisor. Suddenly, the individual who was responsible for operating equipment and solving technical problems becomes responsible for motivating employees, resolving interpersonal conflicts, delegating responsibilities, providing constructive feedback, and developing an entire team.

The technical capabilities that made this employee successful have not disappeared. The problem is that the new position demands additional competencies that may never have been developed.

An article published by the Society for Human Resource Management (SHRM) identifies several challenges faced by first-time managers, including transitioning from individual contributor to leader, managing former coworkers, and developing the interpersonal skills needed to lead effectively [2]. These observations highlight an important distinction: being excellent at performing a task is fundamentally different from being effective at leading the people responsible for performing that task.

The impact of this distinction extends far beyond the newly promoted employee. Research published by Gallup indicates that managers account for at least 70 percent of the variance in employee engagement scores across business units [3]. This finding illustrates how significantly the quality of supervision can influence the daily experiences of employees and, consequently, organizational performance.

The Impact of an Unprepared Supervisor

Now consider the potential consequences of placing an unprepared supervisor in charge of a manufacturing team. Employees may receive unclear expectations, experience inconsistent communication, or struggle to obtain the support needed to perform their jobs. Meanwhile, the newly promoted supervisor may experience frustration, stress, and declining confidence while attempting to meet expectations for which adequate preparation was never provided.

Here is the irony: The organization may end up losing an excellent technical performer without gaining an effective leader.

Does this mean organizations should stop promoting their best employees? Certainly not. High-performing employees often possess valuable characteristics that can contribute to leadership success, including discipline, commitment, problem-solving abilities, and a strong understanding of organizational processes. However, technical performance should be considered one indicator of leadership potential, not conclusive evidence of leadership readiness.

And here is the solution: The key is recognizing that leadership development should start before an employee receives a supervisory title. Organizations can identify potential leaders and provide opportunities to develop essential skills through structured training, mentoring, coaching, and supervised leadership responsibilities. Training in effective communication, emotional intelligence, delegation, conflict resolution, and employee development can help prepare individuals for the challenges they will encounter.

Equally important, organizations must establish clear expectations regarding what successful leadership looks like. A supervisor's effectiveness should not be measured exclusively by production output, quality, or efficiency. It should also be evaluated through the supervisor's ability to develop employees, build trust, strengthen accountability, and create an environment where people can perform at their best.

Develop Leaders Before They Become Supervisors

Manufacturing organizations invest significant resources in maintaining equipment, improving processes, and implementing new technologies. Yet the people responsible for leading those operations also require deliberate investment. Providing an employee with a supervisory title without developing the necessary leadership capabilities is comparable to introducing sophisticated equipment without preparing the operators who will use it.

Ultimately, promoting employees should represent more than recognition for past accomplishments. A promotion recognizes what an individual has accomplished, but its success depends on what that individual is prepared to accomplish in the future. Recognition looks at the past. Leadership development prepares people for the future. When organizations approach promotions from this perspective, they create better opportunities for success, not only for the individuals being promoted but also for the teams they will lead.

Two Questions to Ask Before Promoting an Employee

Before making the next promotion decision, manufacturing leaders should ask themselves two important questions.

First: Are we promoting this employee because of exceptional performance in the current position, or because we have objectively identified and developed the competencies needed for the next one?

Second: Once those competencies have been identified and developed, have we provided this individual with the training, tools, responsibility, and authority necessary to succeed as a leader?

This second question reflects an important principle discussed by Joseph McMurry in a Purdue MEP article on employee performance: leaders must ensure that employees receive the necessary training, tools, responsibility, and authority to perform their jobs effectively [4]. The same principle applies when preparing employees for leadership positions. Assigning responsibility without providing the corresponding authority and resources can undermine even the most promising new supervisor.

The answers to these questions may determine whether the organization gains an effective leader or unintentionally places one of its best employees in a position where success becomes unnecessarily difficult.

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LIST OF REFERENCES

[1] Benson, A., Li, D., & Shue, K. (2019). Promotions and the Peter Principle. The Quarterly Journal of Economics, 134(4), 2085–2134. https://doi.org/10.1093/qje/qjz022

[2] Gallo, S. (2020, June 18). 3 challenges new managers face and how training can help. Society for Human Resource Management.

[3] Beck, R., & Harter, J. (2015, April 21). Managers account for 70% of variance in employee engagement. Gallup.

[4] McMurry, J. (2017, May 22). 4 questions to ask when addressing an employee performance issue. Purdue Manufacturing Extension Partnership.

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Writer: Stalin Encarnación, 765-494-4661, sencarna@purdue.edu