Why your best employee may not be your best promotion

Most employers see promotions as a reward for good work. 

An employee consistently exceeds expectations, delivers strong results and becomes one of the most valuable people in the business. So the obvious next step is up the internal ladder.

The problem is that this often doesn’t work. The qualities that make someone an exceptional individual contributor don’t necessarily translate into being a great leader. In fact, they can often be at odds. 

So promoting an outstanding performer into a role they’re not cut out for gives you the double whammy of an ineffective manager and a gaping hole where your best employee used to be.

So, if you want to avoid the trap of simply promoting your best employees and start recruiting the most effective managers, here’s how to do it.  

Why promotions feel like the logical next step (but sometimes aren’t)

The logic behind most promotions is easy to understand.

When an employee consistently delivers strong results, exceeds expectations and becomes one of the most valuable people in the business, rewarding them with greater responsibility feels like the natural thing to do.

There’s also the practical consideration of employee retention. If you don’t provide a pathway upwards, together with additional remuneration, won’t your best people leave to find opportunities elsewhere?

That’s why most organisations confuse performance with leadership potential. One widely cited study examined almost 40,000 sales employees across 131 firms and found businesses consistently promoted their highest-performing salespeople into management roles, even when other characteristics were better predictors of managerial success. 

The result was that many exceptional salespeople became relatively ineffective and frequently unhappy managers. After all, selling usually rewards personal output. Managing other salespeople depends on coaching, influencing, developing others and achieving results through a team. That’s a very different skill.

This phenomenon is often referred to as the “Peter Principle” or the tendency for organisations to promote employees based on success in their current role rather than their suitability for the next one.

And the Peter Principle is exactly why a separate Gallup study found that companies fail to choose the right talent an incredible 82% of the time.

What makes a great employee vs what makes a great manager

One of the biggest misconceptions about leadership is that being a manager is a more senior version of the job someone’s already doing. That might be true sometimes, but more often it’s a completely different role.

A great individual contributor is typically rewarded for their own output. They’re measured on the quality of their work, their technical expertise, their productivity and their ability to solve problems. Managers, by contrast, are judged on something entirely different: the performance of other people.

Instead of doing the work themselves, they need to help others complete it. Instead of being the expert with all the answers, they often need to coach, guide and develop people who have different strengths, personalities and working styles.

Research into frontline leadership consistently identifies capabilities such as coaching, communication, team development, influence and managing difficult conversations as some of the most important skills for new leaders.

The challenge is that many of these skills aren’t usually required of high-performing individual contributors, whose role is usually based more on technical skills.

Take delegation, for example. The employee who consistently produces the best work in the business is often someone who has very high standards and likes maintaining control over outcomes. In other words, the same qualities that make them an outstanding individual performer make it extremely difficult for them to hand responsibility to others – something good managers have to do all the time.

Managers also need to influence, motivate and align people around shared goals. They have to communicate expectations clearly, navigate conflict, deliver difficult feedback and build trust across a team.

When you think about it this way, it’s obvious that the skills that make an outstanding employee and those that make an outstanding manager overlap far less than many organisations assume.

The warning signs you’re promoting the wrong person

Of course, none of this means high performers should never be promoted. Many exceptional leaders begin their careers as exceptional individual contributors. The challenge, however, is identifying whether someone is ready for leadership or whether they’re just very good at their current job.

While every situation is different, there are a few warning signs that should give you pause before promoting a great performer. 

1. They struggle to let go of work

A foundational study tracking failed managers at Sears over 30 years found that one of the clearest indicators that someone will struggle in a management role is an inability to delegate. 

High performers are often used to being the person who gets things done. They’re reliable, capable and trusted to deliver quality outcomes. The problem is that management requires a different mindset.

Leaders who insist on personally checking, controlling or completing everything themselves often become bottlenecks. They can frustrate their teams, slow decision-making and prevent others from developing their own skills.

If someone finds it difficult to trust others with important work, they may not yet be ready to lead them.

2. They solve every problem themselves

Many organisations promote people because they’re excellent problem solvers. But managers aren’t paid to solve every problem; they’re paid to build teams that can solve problems.

Employees who instinctively jump in and fix every issue can unintentionally create dependency, leaving team members less confident and less capable over time.

Strong leaders know when to provide support and when to step back and allow others to work through challenges for themselves.

3. They avoid difficult conversations

Leadership inevitably involves uncomfortable conversations. This includes providing constructive feedback, addressing underperformance, managing conflict and setting clear expectations.

Many technically strong employees have never had to develop these skills because their success has largely depended on their own output rather than the performance of others.

4. They don’t enjoy developing other people

Not everyone wants to be a manager.

Some employees derive enormous satisfaction from technical expertise, project work or solving complex problems. Others genuinely enjoy coaching, mentoring and helping people grow.

Neither preference is better than the other, but management is ultimately a people-focused role.

If someone shows little interest in supporting colleagues, sharing knowledge or helping others succeed, it’s worth considering whether leadership is actually the right next step for them.

5. They see promotion as a reward rather than a responsibility

Perhaps the biggest warning sign of all is when a promotion is viewed primarily as recognition for past performance – because promotion should never be a prize.

It’s a new role with new expectations, new responsibilities and an entirely different definition of success.

The strongest leadership candidates understand this. They recognise that management is less about personal achievement and more about creating the conditions for others to succeed.

If promoting a star performer isn’t the answer, what is?

One of the biggest mistakes organisations make is assuming that promotion is the only meaningful way to recognise and retain talented employees.

In reality, many high performers don’t necessarily want to manage people. They want to deepen their expertise, work on more complex projects, influence strategy or become recognised as leaders within their field.

The challenge is that many organisations still treat management as the default path to career progression. If someone wants more responsibility, more status or greater remuneration, they’re often expected to move into leadership whether they’re suited to it or not.

A better approach is to create multiple pathways for growth. That might include specialist or technical career streams, project leadership opportunities, mentoring responsibilities, stretch assignments or getting involved in strategic initiatives.

This has been the approach of companies including Walmart, Microsoft and IBM, all of which have a long history of offering dual-track career paths so technical experts can reach senior levels without moving into people management.  

More recently, Shopify has done the same – dividing its senior workforce into “crafts” and “managers”. The former’s job is to build the best products; the latter’s is to do what it takes to make that happen. 

By offering a similar split, you allow employees to continue developing their careers without necessarily taking on management responsibility. 

How to decide who to promote

Finally, for those who do show genuine leadership potential, promotion should rarely come as a surprise. Instead, you should be setting the groundwork from early on by testing and developing leadership well before a title change.

This might mean offering opportunities to lead projects, mentor junior staff, coordinate teams or act in higher duties roles. This allows both the employee and the organisation to assess whether leadership is the right fit before making a permanent decision.

Importantly, by providing this kind of pathway, you’ll be able to potentially identify any capability gaps that can be addressed through coaching, training and development, so that good performers can also become effective managers.

After all, the goal should never be to promote people as quickly as possible, but to place people in roles where they can be successful.

For the best organisations, sometimes that means promoting someone into leadership, sometimes it means helping them become a recognised expert and sometimes it means creating opportunities that don’t fit neatly within a traditional organisational chart.

Promotions matter, but so do people

Promotions shape careers, influence culture and ultimately go a long way to determining whether or not your organisation succeeds. 

That’s why they deserve more thought than simply asking who’s delivered the strongest results over the past 12 months.

So rather than treating promotions as a reward for work already completed, view them as an investment in future performance.

Because the goal isn’t to recognise your best employees. It’s to identify the people most likely to succeed in the role you’re asking them to perform next.

Want more?

Need help identifying future leaders, developing high-potential employees or building a succession planning strategy? 

Catalina Consultants helps organisations make better people decisions and build future leadership capability. 

Get in touch to learn more.