Erika Mangrum was a year into her business and was feeling pressured to promote a star employee to general manager. "She wanted more responsibility and more pay," says Mangrum, co-founder and president of Iatria Day Spa and Health Center, a 40-employee company in Raleigh, North Carolina. Mangrum felt a deep sense of loyalty to this employee, who had been with the company from the start, so she went ahead with the promotion. However, it wasn't long before Mangrum realized she was promoting doom and gloom.
The new manager's rudeness under stress and her inability to manage conflict created big problems as the company grew. Mangrum, 36, started getting complaints from customers and sensed growing tension in employees. "You could just feel it," Mangrum says. She offered training, but it was too late. The manager left 14 months after being promoted. And that wasn't the end of it. Mangrum, who co-founded the company with her husband, Dave, 47, also lost key employees in the turmoil. "We didn't know what a major impact [a promotion] could have," she says. "It's one of the biggest mistakes we've made."
She's not alone. Many entrepreneurs feel pressured to promote a star employee into management, even if this person was "behind the door" when soft skills--the ability to negotiate, influence, listen and mediate--were handed out. The problem is, these are precisely the skills needed to be successful in management. New managers "can get into a place where their raw talent can't compensate for their inability to work the relationships," says Kerry A. Bunker of the Center for Creative Leadership (CCL) in Greensboro, North Carolina. In fact, CCL's research estimates that one-third of those who reach the upper levels of companies fail within two years because they can't build teams, communicate effectively, or keep their cool in tough situations.
Entrepreneurs who haven't developed a recruiting process are prone to promoting too quickly. "They don't want to lose somebody who's valuable," says James Wright, president of Radican Staffing Inc. in Providence, Rhode Island
Entrepreneurs may also see themselves in a star employee, so much so they're willing to overlook a lack of maturity and people skills. "You reassure yourself that the things they're missing don't matter that much, or they'll learn it in time," Bunker says. But managers get things done by directing and motivating other people, and you'll have a big problem if your new manager can't do this from day one. You'll need to find a strategy for assessing and developing people skills before you promote.
A good place to start is by using one-on-one conversations or a survey to gather in-depth feedback from everyone in the company, before a co-worker is promoted into management. Do other employees see this person as a good communicator, mediator and listener? Can he lead, inspire, hold his temper and admit mistakes? Is he mature enough to be a manager? Next, have employees demonstrate their people skills. Require management hopefuls to cultivate a few client relationships outside the company, a critical skill in any manager. Look for temporary projects to improve influence and negotiation skills, and find a mentor outside the company who is strong where that person is weak. Your goal is to take management candidates out of their comfort zones to see how they react in unfamiliar situations. "You need to be able to challenge them to learn," Bunker says. Some employees will balk. This is a good time to tell them you're implementing management responsibilities slowly to make sure they'll succeed as managers.
Meet with management candidates to discuss their goals and strengths. "Talk about how much you appreciate their talent and how they want to grow," says Allan R. Cohen, a management professor at Babson College in Wellesley, Massachusetts. "A conversation deepens the relationship." It may also make employees more likely to stay if they aren't promoted, adds Cohen. Finally, offer resources--regular one-on-ones, outside training, books and mentoring--so a new manager knows there's a place to turn.
Mangrum learned from her experience. Today, she assigns employees a big project to see how they work with others on a management level before she promotes them. "It's going through their thought process and finding out what they're paying attention to," she says. She also evaluates how a potential manager will fit into the business five years from now. Mangrum's strategy must be working: Sales were $2 million last year.