Why do Great Managers Matter? A Statistical Lesson

Why do Great Managers Matter? A Statistical Lesson

My Bachelor degree is in statistics. Actually “Quantitative Business Analysis,” which is fancy for statistics. I loved the idea of using math to “predict” outcomes and prove hypotheses. My senior paper attempted to use a variety of statistical methods to predict the outcome of football games. I’m still not retired, so you can judge how well that analysis worked. Got an “A” on the paper – but that was more about using the appropriate tools vs. being able to actually predict outcomes. Statistics is a lot like prayer. Sometimes the answer is no. 

Long intro to this concept. Averages – and why they lead you astray.

We love averages. How many times have you said “… on average…” and then filled in some average statistic.

Average is average. Average is also much less representative than you think. We believe that averages describe a situation well. But they really don’t. They simply describe the situation the data you’re pulling from represents. 

Why does that distinction matter?

It matters because we make decisions on average. We make hiring decisions based on averages. We make pay decisions base on averages. We make raise decisions based on averages. 

I work with a lot of companies helping them figure out how to increase performance in their sales organizations or channels. And almost every one of those companies wants to reward their top performers. Or they want to design some program that will ONLY reward their top performers. What that strategy doesn’t address is the average performer. My clients believe if they can get more from their top performers they will improve the company’s overall performance. And, yes, on average, they will. 

But that is a losing strategy. 

Here’s an old story about averages.

If you have 10 people in a bar and the average salary of the group is $50,000 and one leaves and is replaced by Bill Gates the average salary skyrockets to $100,000,000. Not really representative of that group anymore, is it?

Your real goal should be to move the middle. Move the average performers up. 

Sure – you want to reward top performance. But even if you do increase the performance of your top performers….your real “average” is still the same. It’s just hiding behind Bill Gate’s income. And now you’re in a position where if you lose only one top performer – the entire average craters.

Don’t fall victim to averages. The real win is moving the entire performance curve from “average” – to “average PLUS”.

And that can only be done with top performing managers. 

Managers impact the middle of the curve. Managers raise the entire curve up – top performers included. 

This is why you should focus on managers not individual contributors. 

Give me a company with above average managers and average individual contributors any day. With that I can move the middle and actually increase overall performance. 

Check your own teams. Are you at the mercy of that one outlier that is defining your “average” performance? Don’t do that. Move the entire curve. 

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