CRE Talent Quality – Is it the Peter Principle Writ Large?

CRE Workforce Dynamics & Hiring in 2022

Author: Forbes J. Rutherford, Principal, Rutherford International Executive Search Group Inc., Managing Director, NEXTalent Marketplace & Job Board, T: 855-256-5778 or Chat

Introduction: In Q2/2020, Rutherford International asked 204 senior multi-sector industry leaders within Canada’s commercial real estate industry to rank the political, economic, social and technological threats they expected to face through Q4/2021. Participants with direct or indirect authority over their resource plans also provided details. Please note, the data collection was completed early on in the pandemic when few of us foresaw an extended lockdown.

This article is the eighth in a series of commentaries that examine potential threats to Canada’s CRE industry, post-pandemic workforce dynamics and the probable impact on industry employment in 2022.

CRE Talent Quality – Is it the Peter Principle Writ Large?

Peter Principle Writ Large 

One only needs to run a job ad on mainstream job boards or social media sites for professionals to understand that scarcity of applicants is not the primary threat to the CRE industry. The danger is the scarcity of ‘quality and institutional knowledge.’ In the current market, an increase in systemic retirements leading to the loss of seasoned management and learned expertise combined with an increasing demand for talent has allowed for average performers to advance above their acquired competency. Is it the ‘Peter Principle’ writ large?

What Is the Peter Principle? The Peter Principle was coined in the 1960s when management science was in its infancy—meant to be satirical, the Principle somehow resonated in explaining failed promotions. It encapsulated the observation that the tendency in most organizational hierarchies is for every employee to rise in the ranks through promotion until they reach a level of respective incompetence.

“Average Performers are Promoted Beyond Their Competency”

Forbes J Rutherford, Founder, NEXTalent Marketplace & Job Board, 2021

Performance benchmarking and behavioural science has proven Peter’s Principle wrong as it assumes management requires a higher level of competence than line employees. In reality, the behavioural traits and competencies necessary for high performance in one position can be quite different within the vertical of the same job category. As a result, a person can be more competent at a higher role than a lower one. For example, a VP Finance executive can be highly strategic on macro issues but lacks the tenacity and focus required of a Controller when searching for the missing dime in the trial balance. The star sales executive may be more suited to managing a sales team but was an average Account Executive. The Peter Principle doesn’t support these examples.

“Executives Struggle for Time to Mentor Their Rising Young Stars”

NEXTalent Marketplace Curates the Matching of Mentors/Coaches & Mentees

There are other factors for managers rising one level beyond their competence. For instance, lazy management may find it easier to reward incompetence by pushing it forward or into another department than to deal with it. The promotion of incompetence is not uncommon in organizations where the leadership style is Utilitarian or Directive. Acquiescent employees are promoted to lofty positions in top-down organizations because they are non-threatening to their leaders. Non-threatening is the best thing you can be in a toxic environment. It’s the principal job requirement. However, with the advent of a hybrid/remote distributive workforce combined with the scarcity of quality talent, this hierarchical dissonance is rapidly shifting. The best and the brightest will simply bypass these organizations. 

The range of today’s performance mandates are often highly complex and executed with minimal support requiring job talent cable of operating at the upper end of their performance profile. We find junior development and construction project managers who benchmark high for Senior Project Manager and Project Director pushed beyond their “learned” level of competence. The consequence of moving quality talent forward beyond their level of knowledge without adequate mentorship and job shadowing programs will translate into incumbents experiencing shorter tenure in higher positions, more frequent terminations and unnecessarily harmed careers.

Scarcity of quality and loss of institutional knowledge were problems before COVID19 and will become even more pronounced in 2022/23. No matter how well-intentioned, executives and upper management struggle to provide mentorship to their young rising stars, having time for mentoring is a rare commodity.

The current solution is to offer in-house group training and underwriting the cost of external college courses. This approach is a one size fits all solution. People learn differently. Some learn by doing or are experiential. Some by theoretical reasoning and prefer course work, while others are more linguistically oriented and learn by listening through job shadowing. Understanding an employee’s learning style allows a firm to personalize its career development. Rutherford International offers a Mentor and Coaching matching program where we test for learning styles and match mentees to mentors and executive coaches.

Learn More About Rutherford International’s Mentor & Coaching Program

Confirmation Bias – Mistaking Confidence for Competence 

Regardless of function, a talent pool’s performance potential is determinative. This fixed potential means that when setting up a project team, an employer should hire or promote talent whose performance exceeds the talent pool average.  To build a performance organization, an employer should always seek candidates who perform at or above the 75th Percentile of their industry’s functional cohort.

For example, consider a national cohort of 1000 Project Managers. Remember, the performance potential of the talent marketplace is statistically determinative, meaning 8% are Excellent, 10% are Very Good, and 13% are Good. Sixty-nine per cent are “Average, Low Average or Low” in their potential to perform. Subject to the scope of the project and the succession plan for the role, employers can get away with “High-Average” but should not settle for anything less in performance potential.

Put in the context of software development. “It took 600 Apple engineers less than two years to develop, debug and deploy OS X, a revolutionary change in the company’s operating system. By contrast, it took as many as 10,000 engineers more than five years to develop, debug, deploy and eventually withdraw Microsoft’s Windows Vista.” – Dr Larry Cash

“Mistaking Confidence for Competence”

Forbes J Rutherford, “Unwarranted Bromances on ELTs – Understanding Leadership Gaps” – 2014

Eighty per cent of involuntary departures are due to poor behavioural fit, which means employers may be hasty in their reliance upon instincts to assess fit. The search engine algorithms of mainstream job boards are optimized to sort and rank candidates based on the relevancy of their skills and education but exclude the most important factors for predicting performance, behavioural profile. As a result, when interviewing a person with a high skill ranking from a traditional job board, confirmation bias can play a role in confidence being confused for competence.

Imagine the time saved, if a hiring manager knows in advance of establishing a shortlist of prospects, who fits into the top 31% or the bottom 49% of their professional cohort. At Rutherford International, all talent prospects represented by our services must benchmark in the top 35% of their professional cohort – which places them “Above Average to Excellent.”

Learn More About Rutherford International’s NEXTalent Job Board

ABOUT NEXTalent MARKETPLACE & JOB BOARD

The NEXTalent Marketplace is an online knowledge community for thought-leaders, academics, top prospects and high-performing professionals in fund & asset management, capital markets, law, development, acquisition, project management, construction, accounting and operations. Members belong to a community, scientifically assessed for their potential to perform at or above the 75th percentile of their respective functional peer groups. Being real estate focused, members collaborate in developing their knowledge, promote projects inside encrypted pitch rooms and expand their networks while winning control over their personal and professional lives.

We understand the competitive value of talented people and spend considerable time identifying, engaging and connecting high-calibre individuals to corporations in all parts of the world. Confidence in our members’ calibre allows us to provide Talent Agent services by facilitating project and employment opportunities through market-making activities.

EMPLOYERS

All candidates submitted to employers through the NEXTalent Job Board platform have a performance benchmark at or above the 75th Percentile of their functional cohort for the potential to succeed. Please note, candidates who score in the 87.5th Percentile will meet or exceed a clients’ expectations by more than 92% of the time.

Qualified employers may advertise to NEXTalent’s membership community and Job Board for free, with the understanding Rutherford International’s research and behavioural assessment teams charge expenses for curating the results. We apply a machine-learning algorithm to evaluate education and skills relevancy upon resume submission. Subject to review by our research team, we follow up with AI-driven behavioural analytics commonly used by Global 2000 corporations for predicting leadership and career potential.

Typically, employers can expect candidates hired through our assessment process to achieve 55% higher levels of productivity and 25% greater profitability than employees in similar roles.

To learn more about sourcing candidates through the NEXTalent Job Board, or becoming a corporate member of the NEXTalent Community, chat with us – Click Here

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