Talentism ran an analysis a few years ago of 90 failed strategic initiatives and missed plans at growth companies. More than 80% of CEOs at those companies blamed bad hiring: employees with a lack of capabilities or character, or both. In a pre-pandemic study, it appeared that laziness was endemic in the workforce. 75% of respondents admitted they weren’t working to the best of their ability even once a week. This reinforced the perspective of those CEOs – bad employees were responsible for trillions of dollars in lost productivity.
When people lose focus or do dumb things, we tend to conclude it’s because they’re stupid or lazy. More often than not, that conclusion is wrong. What looks like an intractable bad employee problem, is in fact a pervasive bad design problem.
Our analysis indicated that the root cause of most underperformance is usually not bad hiring. Rather, it is one or more of the following problems with the business designs of role responsibilities, processes, goals, metrics, and plans.
1. Confusing Design
52% of the organizations we analyzed had significant gaps in executive-level understanding of business design, which led to over 40% of plan misses. Leaders often think they over-communicate, but don’t actually confirm that their teams are getting the message and have clarity. As a result, operational confusion quickly sets in.
2. Impractical Design
68% of failures in assigned responsibilities were foreseeable, given the qualities of the person in the role. Leaders defaulted to a standard organizational model rather than designing for that person. The most senior roles were more likely to contain mismatched responsibilities, for example: “a CFO should own X.” This was particularly common in the CEO role itself.
3. Static Design
Consistently hitting goals in a rapidly changing environment requires adaptive design. Failing to regularly use accurate data to track results and course correct was a significant factor in 65% of unsuccessful strategic initiatives. The cost of not actively experimenting and iterating that design is even higher.
4. Blind Design
A leader’s blind spots and biases result in distortions to design. Limits to the leader’s rate of personal development can bottleneck the entire organization’s productivity. When founders over-indexed to hiring C-level executives in areas they themselves were inexperienced in, less than 10% of those hires were able to succeed. Founders were unable to metabolize when perspectives misaligned.
Attributing business failure to stupid or lazy employees doesn’t solve anything, as shuffling new people into a bad design rarely works. In our analysis, nearly half of all senior manager hires failed within 18 months, and less than 20% had significant impact.
Most leaders first design the business according to a strategy and then slot people in to run it, but we’ve seen the most success when working with leaders to nurture business design as an evolving experiment, keeping the following behaviors in mind:
- Explicit: leader clarifies expectations, and ensures teams understand how things should work
- Practical: leader optimizes across people’s strengths, operational needs, and strategic opportunities
- Evolving: leader regularly uses evidence-based data to course correct plans and responsibilities
- Unbiased: leader intentionally guardrails against her/his blind spots and biases
Blaming employees not only ignores critical design flaws, it’s also a self-fulfilling prophecy. Leaders lower their expectations, standards, and plans. Employees shut down under clear signals that they are underperforming, or not the right fit for the role. Both sides enter a chronic state of learned helplessness and business suffers dramatically as a result. The path to better performance is to stop wondering if your people are stupid or lazy. Instead, start asking if your business design is getting the best out of them.
