When a company promotes people to certain positions of responsibility based essentially on how they perform in their current role rather than asking if they have the qualified managerial skills for a new position, problems will ensue.

This leads to problems because, for example, a successful salesperson may not be effective as a manager of a team.

Certainly, you’ve seen this.

A great engineer proves not to be the best head of an engineering firm. The top tier researcher may not lead to their becoming a department head at a university.

Recently, I happened upon a study using microdata on various salespeople in the U.S. and Europe. If you are familiar with the classic management book from the 1960’s “The Peter Principle” you’ll understand what I mean.

It was proven that companies are more likely to promote high performing salespeople in a management role. Once these once star salespeople are in management, they are leading a team of salespeople instead of selling on the frontlines.

Surprisingly, it was discovered that those with supremely better sales records are ineffective managers for the simple reason they are ineffective as leaders. Hence making their sales teams lackluster salespeople.

The companies doing this are well-intentioned. They want to showcase that they have a policy of promoting from within. Before these people were promoted their companies knew they weren’t the best management material.  

The real goal was for other employees to be incentivized to do great work.