Episode 609: How to Lose a Great Employee

How to Lose a Great Employee

In this week’s episode of What the Hell Just Happened?! Discover why talented employees often find themselves in management positions for which they might not be suited and the unintended consequences that can arise from such decisions. Paul Edwards and CeCe Wilson sit down to dissect the reasons behind these common practices, shedding light on the importance of recognizing different skill sets essential for effective management. Whether you’re running a burgeoning startup or steering a large enterprise, understanding the Peter Principle and how to navigate its challenges is key to building a resilient and thriving work environment. Tune in and empower yourself with the knowledge to make smarter, more effective managerial decisions.


Voice Over: You’re about to listen to an episode of What the Hell Just Happened. Join Paul Edwards and his guests as they discuss interesting topics and solve some of our listeners’ submitted questions.


Paul: And occasionally I’ll go off HR topic and talk about whatever I want to talk about. Think barbecue. Space exploration. Technology. Money. Managing. Business. Things that interest all of us.


Voice Over: We get a lot of e-mails with questions. Stay tuned for details on how you can submit yours to the show. And now let’s get started.


Paul: So as we get into today’s show this is another one of those instances, and you guys hear me say this all the time. It’s another big company principle, something that was that, came to light called the Peter Principle.

But it’s a problem that all businesses face. And so we’re going to boil down this big company problem in discussion into a smaller business. You know, somebody with six employees, ten employees, 50 employees who need to put a manager in place of their business. And kind of give you guys some ideas about what you can and can’t do.

Or I think maybe even more to point, we’re going to give you a kind of a cautionary tale about what the Peter Principle means and how you can use it and consider it when you are promoting someone from within. All right, everybody, welcome. So as I’ve done so many times on the podcast, I want to welcome you, CeCe, welcome. Welcome to the show!


CeCe: Thank you. Happy to be here.


Paul: I think you are a great person to, well, we were going to include this subject in one of our other podcasts…


CeCe: Mhmm.


Paul: …and then we realize it’s just too big to just put it in just a short three or four-minute segment. So I’m really excited to talk about this today.

For everybody who’s listening, we’re gonna talk about something called the Peter Principle. A little bit of history about the Peter Principle, although I want to say this CeCe, which I think is very, very interesting. By the way, everybody, CeCe is the HR manager of the HR people over at Cedr HR Solutions. She’s great at hiring. She’s great. CeCe, you’re just great.


CeCe: Thank you.


Paul: You really are. And you just you just finished something important. You just hit a professional milestone in education. Tell everybody.


CeCe: [laughs] I just got my master’s degree in human resource management.


Paul: It’s just… I just love it.


CeCe: Thank you so much.


Paul: Yeah, it’s just something you’ve been working on. She’s walking around here like, queen for the day for about a week. She was just up and down the stairs.


CeCe: You may call me Mistress. laughs]


Paul: [laughs] Yes, yes, yes, yes, yes Mistress. Yes. With the whole hand wave thing. You know, the twisty. Yeah, Queen hand wave. So anyway, I just want to say publicly congratulations and you’re awesome. Okay, so back to the Peter Principle. They’ve kind of washed the internet of this thing that I knew about it from before and reading the history.

So there’s this guy his name is Lawrence Peter and he was working with a guy named Raymond Hull. It’s Lawrence’s ideas sort of. And Raymond is the writer. He’s the one that put it into text and published it. So that’s, you know, that’s where this Peter principle comes from. But my understanding was that in the beginning, that it was satire.

Were they were he was just kind of being a smartass and just published this article that got picked up. And then all of a sudden he started getting contact from large companies saying, “We have this problem, can you help us cure it?” And so these two guys are kind of sitting there like, “Wait a minute, this was a joke.”You know, this wasn’t really a real thing. So I guess we should tell everybody what is the Peter Principle, since that’s what we’re talking about today.


CeCe: Right. So it’s the concept that people continue to get promoted until they reach the level of their own incompetency. So it’s different for everybody. Some are going to get promoted three or four times before they reach a level that they really shouldn’t be at.

And for some people, especially in smaller businesses, right, even sometimes one promotion might be…because they’re just not actually good at managing people, even though they’re really good at the thing that they’re managing.


Paul: Which I think is what occurs amongst most of our listeners and small businesses, which is the promotion happens, there’s not a lot of hierarchy of promotion.

So we look in the in your basic medical practice, you’re going to look at maybe a team leader manager and then you look at a practice manager. Those are kind of the hierarchy there. And honestly, someone could be a great team leader in that they can run the department. They know technically how to get things done. They don’t have to have incredible people skills.

Now if there are terrible people skills they may stick out a little bit. You know, a little bit like a sore thumb. But when you promote one of those people, which is logical, right? You’re trying to give people advancements, you always look inside when you promote them and then they have to run the entire business. They have the entire weight of the business on them. All the marketing, all the different things that a manager may have to do, including managing multiple people. Bringing multiple different problems to you on a daily basis, you could really fail into that.


CeCe: Yeah


Paul: It’s not, it’s not easy. And I don’t even I mean, spoiler alert, I don’t have a cure for this. But I have some thoughts about how to make it easier as they go up.


CeCe: Well, it makes so much sense because, intuitively, you would not promote someone who’s not as good on the phones just as an example, right? To supervise your phone people. But sometimes that actually might make a lot of sense in terms of their skill set. But man, what a drag on morale for the rest of the team if they see that person get promoted ahead of them when they weren’t as good at the actual function,


Paul: At the actual function of the job. Yeah, Yeah.

I mean, I think the way this usually works is, and I think one of the examples I saw is a good one to repeat. You have a sales team of six people, you lose your manager of the sales team, you have a very high-performing person on that sales team that’s not a manager. They’ve been with you for the longest. They’re articulate, they just crush it. They’re kind of the one that trains everybody else. They’re the one that you look to. And now that you’ve lost the manager, you just, you promote them and you say “you’re the new manager of the department and get in there and figure it out”, which has been my approach to promoting people to management here [laughs]. Which is, I figured it out, you should be able to figure it out too. And that doesn’t always work out.


CeCe: Not always.


Paul: The problem is it, sometimes it does work out.


CeCe: Yes.


Paul: That’s the, I don’t know. That’s the sirene, you know, that’s that thing out there that you hear the calling and you’re like, “Well it worked with Nancy ten years ago and she was with me for ten years. It’ll work again. I’m just going to pick my best employee and I’m going to move them up.” 


CeCe: Yeah, well, and some people kind of feel like that’s what they want. They want the person who can succeed that way. But then the problem, where the problem comes in is you might burn through a few people who could have still been really good in your business to find that person.


Paul: Yeah.


CeCe: Who will be great, when you just kind of let them do their own thing.


Paul: Yeah. When you just let them kind of do their own thing. Yeah. So I’m going to get into the nitty-gritty of some of the ideas here. So I hope everybody’s clear. What we’re concerned about is, this is a, like a larger company issue that happens in hierarchy.

It’s like eventually, I think their point was that eventually you’re going to promote them into their own incompetence.


CeCe: And then you have a management team that’s all kind of crappy.


Paul: And, the next thing you know, you’ve done it from several different directions and you have a bunch of incompetent people at the highest level because they didn’t get what they needed to get there You know, look, before I get to the solution, so I want to say something else. It is… if you’re not… if you own a practice, then you’re not good at things. And we give this guidance all the time. This is why we tell people to get office managers. We’re like, If you’re not good at everything and you have all the time in the world..Now wait a minute let me put it this way:

You can be good at everything that we’re talking about today. You could be the greatest manager, the greatest leader, greatest everything. You’re the owner of the business. We’re speaking mostly to practice owners. There’s something else you’re supposed to be doing, which is seeing patients. And that’s, you know, how you drive in income and keep it and do what it is that you’re there to do.

At some point, you run out of bandwidth. You can’t you can’t do everything.


CeCe: Right.


Paul: And then on the other side of that, there is you’re just not good at managing people. You don’t love hiring, you’re not good at it. You don’t want to be good at it. You just want to be focused on treatment. And that’s the other reason that people hire office managers to bring them in. So promote somebody from within and bring someone else in. So I’m gonna talk about promoting that good person. The only guidance that we really had been giving out over the years and, you know, was a bullet point on one of my PowerPoints was “Be careful when you promote someone because you could have an incredibly high-performing person doing one job, and you promote them into a manager’s position and they’re not good at managing.”

And that’s, that’s open. Everybody sees it.


CeCe: Yeah.


Paul: There’s a lot that goes on, there can be politics that go on. You discussed, you know, the rest of the team members maybe not being on board with that, thinking “This person wasn’t even good at their their original job. I don’t know why they get to tell me how to do my job now”.

So there’s a lot of variables that go into moving someone up, including there can be people on the team that are jealous and upset that they didn’t get the nod or even the consideration. And then they’re working…. Maybe they’re not overtly undermining, but they’re certainly not overtly assisting and trying to make this person a success.

CeCe: Now, you might be losing productivity from a bunch of ends because you lost your high performer because they moved into a new role and you’ve got all these people who are dissatisfied and their productivity goes down.


Paul: Well, imagine being the one who’s promoted and you were a rock star in your own position. And now you’re a month or two weeks or five months and you realize you’re not a rock star in your new position. And what if you just don’t have access to the training in the skills that you need in order to manage people?

Because there seems to be this idea out there that anybody can be a manager.


CeCe: Yeah [laughs]


Paul: You just put them in the job, give them the title.


CeCe: Yeah. There is kind of a lack of consciousness about the skill set that goes into effectively managing people. Absolutely.


Paul: Yeah. And, I didn’t make the point that I was trying to get to earlier, so I get to do it now, CeCe. For that second person that I described, that owner that isn’t good at a lot of things that really makes sense for them to try to get a manager who can do these things. They often wash their hands. They just put you in charge, they shove you out onto the field and say, “Get out there and be the quarterback.” And they’re just, you know, you know….They’re happy to get away from it.


CeCe: Yeah, Yeah.


Paul: And so that manager is just out there on a raft trying to make the best of everything.


CeCe: Which is what we would tell somebody to do, though, Right? Like “You’re not good at this piece, go get somebody who is.”

But that’s the piece that needs to be done intentionally to avoid this problem, is getting the person who’s actually good at that thing.


Paul: Yeah. I also… I think the tendency is to, like I said, to give everything over because you want to wash your hands of it. Or the tendency is to go out and either intentionally, internally look for someone or to go outside of the organization to try to bring someone in, you know, who has these skills. A difference maker. We talk about that. But I think the principles that we’re getting ready to talk about, or to discuss could be applied in either situation. And what I’m advocating for is that you take a minute and kind of segment everything that you expect this office manager to do, and identify the places where they should be pretty good at it.

They’ve got some experience. They already know about it or they’re telling you in their resume “I know how to do it.” They’ve tested, you’ve tested them, they know how to do whatever that is. And use those segments to prove out to both yourself and to the manager that they’ve got, they have this part. You know, and just move them through the segments over a period of time. Am I making sense?


CeCe: Yeah.


Paul: Do I need to describe that better?


CeCe: Maybe a little bit. So you’re talking about kind of giving them pieces of the job and letting them master it first? Is that what you’re saying?


Paul: Well, I’m saying give them the whole of the job, but don’t turn them loose in hiring. I’ll give an example. So part of the job is to hire, onboard, integrate, train, and get people in the company.


CeCe: Yeah.


Paul: They may be good at training because they’ve been there for 12 years and they’re the one who knows your systems. They can do a backflip with it, but they may not be good at writing job ads. They may not know how to phone screen, they may not know how to do behavioral interviewing. They may not have those skills and then they may contrast, they may have 9/10 of everything else. But they’re never going to be successful if they don’t have that one main skill, that is bringing in the best people. And, you know, figuring that part of it out. So what I’m saying is, in that segment, you need to identify the key segments of it and be there for them. Measuring it. They need to be, they need to put their hand out and say, “Look doc, you don’t have to be here anymore. I got this. You don’t need to be in the interviews.” And that’s, you know, applicable whether or not you’re raising somebody up from within and they’re learning the skill, or someone has told you they have that skill when they come in. And then let’s look at managing people. CeCe, what’s a typical day look like at the HR department? Give us a normal day.


CeCe: A normal day. Well…for me here? Yeah. A normal day is going to be… if we’re in the middle of hiring that I probably got phone screens scheduled throughout the day. So maybe four or five, you know, 15 to 20 minute phone calls to make to people.


Paul: And you could make them all and get nothing from that?


CeCe: Absolutely. Yes.


Paul: Ok, what else are you going to be doing?


CeCe: Responding to employees – 


Paul: Hang on a second,  I have a complaint. I need to tell you something CeCe. [laughs] Can you so that can you sit down with me for a second? I have a problem.


CeCe: Exactly [laughs] Responding to employees’ needs. So, I mean, I can tell you that right now I’ve had three people reach out to me for things that I’ve had meetings all morning, so I’m going to get to them. Probably as soon as we’re done with this. So a little bit of a break.


Paul: Okay. It could be everything from “my health insurance doesn’t seem to be working right” to “I’m trying to buy a house and I can’t get my W2 out of our interface” to “I think I’m being sexually harassed.” We haven’t had a thankfully, a whole lot. We haven’t had a lot of those things.


CeCe: Yeah.


Paul: To me coming in and complaining that the employee appreciation meal isn’t nice enough for the employees. I mean, literally, this is what an HR person’s day looks like.


CeCe: Or the bathroom was dirty earlier today. Or someone’s parked in my parking spot or, I mean, yeah, it can be everything from a really big thing to a small thing. And those just come.


Paul: So the skillset to do that part and handle that gracefully and professionally is, is another skill set. And you know, we all work, we’ve all worked with managers who don’t love being interrupted and don’t want to hear about your stupid problems. Even though they know it’s their job. They’re just they’re so frustrated by the different things that come at them all the time. I think we’ve given two examples. I think we could break that manager’s job into about eight segments, I think, maybe less. But you know something along those lines. So hopefully we’ve explained it well. We’ve said, you know, kind of break it up in segments and give them pieces and parts, check off the things you think that they’re going to be really good at. Don’t take it for granted and just kind of move forward. So it may take them a while to get good. Right?


CeCe: Yeah, absolutely. I mean, and some things may be, not necessarily that they don’t know how or they don’t do it well, but maybe they just don’t do it the way you want it done in your business either. And so that could take some coaching to help get them on the path that you want them to be. Even though they have that technical skill, there might be that other side of it that isn’t fully developed yet.


Paul: Every manager may not know that you’re not supposed to put it…when you’re mad with two employees out of eight because they keep doing something. You’ve been talking to everybody about it. You don’t you don’t put a memo out to the whole team.


CeCe: Exactly.


Paul: You sit down with each of them and not every manager understands how to have a good, constructive conversation with someone who you need to correct a behavior or make an adjustment or do those things. I mean, again, skill within skill within skill.

But these are the things that make your company run well. Yeah.


CeCe: Yeah.


Paul: Okay. So I kind of put a list together, a little bit of a list. Some of my thoughts about… Some basic things to consider when you’re going to when you’ve decided especially to move someone up. Okay. So I’m really focusing. I haven’t brought someone from the outside. I’ve picked my best person and I’m going to put them into the manager role. I think you should wait to announce a huge title change. I really do. I think you should work with him in the background. Doesn’t mean that you can’t tell certain members, “Hey, I’m putting Mary in charge of this specific thing and she’s going to be running this part of what we do.” You can do all of that, but we’re not making a big announcement that this person is moving into the manager’s position. Yeah.


CeCe: Can we talk about a challenge that comes with that?


Paul: Yeah. And I know, I know. I know what you’re going to say. Yeah, yeah.


CeCe: Because by not giving them the authority, the power, then that can create other challenges that they wouldn’t necessarily actually have to deal with.


Paul: Right.


CeCe: If you did do the formal thing. And so it’s almost like they’re not getting the real experience. It’s like a simulation. And then that creates its own set of problems.


Paul: And it really can. I think for me though, I can empower them in certain ways. And I believe that that momentum in that conversation is naturally going to lead to it.

And I’m not saying never make the announcement. I’m saying don’t start with that, that announcement by putting all that pressure on them. But you do have to get to it pretty quickly. To your point, I think you have to give them empowerment because if you don’t, they’re going to keep coming around that manager, back to you.


CeCe: And/or what could happen is some of the employees get resentful and think, “Well, Mary is trying to be my boss and she’s not my boss.”


Paul: Yeah, you don’t want that to happen. So that’s why I was like, if we’re working on some “Hey, Mary is now going to be she’s going to run and be responsible.” And that’s what I like to say. “I’m making Mary responsible for the outcome of our callbacks. And so Mary’s going to be very interested in reporting back to me what we’re doing and how we’re improving over the next couple of weeks.” That’s the kind of thing that you can give that little mini-power. You can give her that kind of mini-power. The other one that I advocate for is to make pay increases gradual and make them contingent upon success. And so if you’ve broken this thing down, this thing being the job of managing your business, you can actually tie the increases to those successes as they’re coming along.


CeCe: Yeah.


Paul: The one thing I want you to remember is you can never take the money back.


CeCe: Yeah. And so that again, comes with some challenges though that you’ve got to kind of think about ahead of the plan and especially with kind of some of the messaging on various social media platforms. There is…some people are going to hear that.


Paul: What is that?


CeCe: That I’m going to I’m not going to give you an increase immediately just for the new title.


Paul: I’m going to make you work harder and do more.


CeCe: I want to see the results and then I’m going to reward you for the results. What they hear is “I want you to do more work and I want you to do it for free. And now I’m going to have a bad attitude or be pissed off about it or I’m not going to engage the way that I would if you were paying me up front.” And so that can be a real-world challenge that’s a result of that. And so again, I’m not disagreeing with the tactic.


Paul: She’s a little bit disagreeable.


CeCe: [laughs] No, because I completely agree that if this is a person you want to keep, whether they succeed in this role or not-


Paul: This is the approach.


CeCe: Yes. This has to be the approach because you can’t take the money back. You just can’t. It’ll never work.


Paul: You can’t take the title back either. If you give them that big title and you try to bring them back, it’s hard. “Look, we’re putting Mary back into X. We’ve taken the office manager title away from her.” Yeah.


CeCe: Yeah. So however, if the person is so good that you would keep them at that pay rate, whether you put them back into the previous role or a modified role or whatever that looks like, then that’s something to consider. Which isn’t often doable, but there are some circumstances where it could be.


Paul: Well, I like to say to someone who is moving up or maybe a little incremental lateral movement is, “look, the first 30, 60 days is your opportunity to reverse this, because neither of us know if you’re going to love doing this job.” You know, everybody wants more pay, but I want to know how they like that job. Because if they like the job, then it’s easy to give them more pay because they’re going to more than pay for themselves. So I’d like to give them an opportunity to go “You know, I don’t really like this” and it’s happened recently here two or three times where I’ve moved somebody over into something and they’ve come back and said, “It’s not for me.”  Now they know they can do that, and they did it beautifully, you know?


CeCe: Yeah. And I know that as business owners or business leaders, we want the person who wants the role. Or wants the responsibility or wants those things, regardless of pay. There is always a component, though, that everybody works to be able to live. And so you just have to kind of marry all of that together.


Paul: Yeah, and if you’re going to metaphorically pull the reins back and not let that horse run, then you at some point, you really do have to plan for it. You don’t leave it open. “We’ll see how you do, and maybe we’ll give you some money. More money.” You really need to do it and have them achieve, you know, have them achieve success and get to it. So this is not a year-long it’s- I think it’s a year long process or longer to train. I think it’s weeks. To get them fully integrated with the title with a little bit of an announcement and a good, a commensurate raise that fits the job position. You know, the way to get to this is one on ones.I mean, it’s just the way to get to this. It’s because if you’re interacting with them, with anyone on a one on one basis, at least weekly, maybe every other week, it’s very easy for that other person to see their progress and know that your intentions are, for lack of a better way of putting it pure. That you’re not taking advantage of them, that they are heading towards the raise that’s been promised to them.

And it also gives you an opportunity, in those one on ones, to put pressure on them. “You know, you didn’t handle that thing very well the other day. This is one of those things where we’re either going to, you’re going to have to get this right or I’m not sure that this is the right position.”

Like if they can’t ever figure out how to take the mantle of hiring and get it right and you just see they just don’t have that skill, then they’re not your office manager.


CeCe: Absolutely.


Paul: Yeah, they’re probably not going to fill that role in a small business. I’d submit that learning to be a manager can expose you to, like I said, break it down into six or eight different little categories that you can measure and kind of, you know, work with this new manager on and see how they’re doing. I think it can expose you to… That new manager is going to get exposed to 30 new things they’ve never had ever had to do in their life.


CeCe: Yeah.


Paul: I mean, no wonder people fail up, you know? So the Peter principle. I mean, we use…this is what we do. We look for the warmest, the most, the warmest, longest standing, most reliable body and we promote them.


CeCe: Yes.


Paul: And it’s not always going to work out.


CeCe: Yeah. And it, because the other thing if you don’t do it that way is it can be really hard for the person who remains and thinks “I wanted that job, I could have been great at that job.”


Paul: I didn’t even think about that.


CeCe: And maybe and we might know as the managers what the missing piece is.


Paul: Right.


CeCe: And I mean, I’ve been there where even though you’re articulating, “I don’t want to lose you in what it is that you’re doing and you’re not ready for this thing”.


Paul: Yeah.


CeCe: That’s a really hard thing for that person to hear often. So there’s just so many moving parts that it totally makes sense why people do this, why people take their best performer regardless of…


Paul: Turn them loose.


CeCe: Yeah. And move them up and let them go. But as we’ve talked about, there’s a lot of consequences, can be a lot of consequences to that.


Paul:  I’m going to leave the podcast with just the list of like the things that a manager has to do right out the gate, like a really really simple thing, a really simple list. There’s HR compliance. There’s probably banking in cash flow that they now have to deal with, so they’re kind of part of the budgeting. There’s the day to day HR problem solving which we just talked about. And anybody who’s listening, you know how much that can take from certain days. You know, some days it’s heavier than others. You know, data reporting to let the practice know and to be able to identify where things are, you know, could improve where they need to be improved.

There’s training other people. There’s hiring and firing,  and there’s managing the employees and balancing their needs with the practice needs. And the doctor’s needs. And the patient’s needs.


CeCe: Gosh. And what a tightrope that can be to walk, right?


Paul: I mean, that’s a skill. That’s a skill onto its own, onto itself. And it’s again, I think giving someone time to grow into that is really the way to go here.


CeCe: Absolutely. Yeah.


Paul: So baby steps, if you can. Intentional. Break the job into some set of components that you and the office manager, new office manager can work on together. Kind of clear them as they go. Be careful about huge announcements, giving everybody all the power without any of the training, without any of the experience, without any of the other things.

Be careful about promoting someone out of a position where they’re awesome and putting them in charge of other people. I had a personal assistant, and if you’re listening, I know you’re not, because you probably hate my voice. She doesn’t hate me. Probably my voice. She was like, she was amazing. And I was thinking about promoting her out and putting her in charge of something. And she was very smart. And she said to me, “If you’re thinking about putting me in charge of other people in managing, I will quit.”


CeCe: [laughs] Good for her.


Paul: And I was like “Wow.”  And she was like, “I do not want to deal with people’s problems. I don’t want to any of this other stuff.” So, you know. I got lucky because Ann intervened and made it stop before it did.

But anyway, I didn’t know what my point was of telling that story. But I hope you guys got something from today. Read up on the Peter Principle. They’ve got a great wiki page. They’ll kind of explain and go through the whole hierarchal thing and some of their ideas for avoiding it and CeCe thanks for thanks for joining today.


CeCe: Thanks for having me.


Voice Over: Thanks for joining us for this week’s episode of What the Hell Just Happened. If you have an HR issue, question, or just want to add a comment about something Paul said record it on your phone and send to podcast@wthjusthappened.com. We might even ask if we can play it on the show.

Don’t forget to like and subscribe, and join us again next week.

Mar 25, 2024

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