Why Smart Companies Still Make Bad Leadership Decisions

Intelligence rarely explains a poor appointment or a failed promotion. The way the decision is made usually does.

Smart companies make bad leadership decisions because the problem is rarely intelligence. It is process. Decisions about who leads, how those people are prepared and what they are held accountable for are often made on thin evidence, under time pressure and inside a culture that prefers agreement to challenge.

That matters because these are among the most consequential choices an organisation makes. A weak appointment does not stay contained. Gallup estimates that managers account for at least 70 percent of the variance in engagement scores across business units, which gives a sense of how far a single decision reaches. It is also why the choice of leadership development programme Dubai employers make deserves the same scrutiny as the appointment itself.

This article looks at four reasons capable organisations keep getting these decisions wrong, and at what a stronger approach looks like.

Bad Leadership Decisions Often Start With Promoting the Best Performer

Companies often promote the person who performed best in the current role, not the person most likely to succeed as a manager. The two are not the same, and the gap is expensive.

A 2019 study in the Quarterly Journal of Economics by Alan Benson, Danielle Li and Kelly Shue examined sales workers at 131 firms. It found that firms gave priority to current job performance in promotion decisions, at the expense of other observable traits that better predicted managerial performance. The authors estimate that the cost of promoting people with lower managerial potential is high. They also found that some firms adjust, placing less weight on sales results when the management role carries more responsibility. So the pattern is not inevitable.

Gallup's research points in a similar direction. When it asked US managers why they thought they had been given their roles, many pointed to success in an earlier non-managerial job or to their length of service. Gallup's argument is that neither says much about whether a person has the talent to manage others. Its own analysis, based on its talent assessments, suggests companies fail to choose the candidate with the right managerial talent 82 percent of the time. That figure comes from an older analysis and from Gallup's own measure, so I would read it as a signal rather than a universal rate. The direction of the finding is harder to dismiss.

The Decision Is Rarely Challenged

Capable people often stay silent because the culture rewards agreement. When nobody tests a preferred candidate or a favoured plan, the group is not really making the decision. It is confirming it.

In a 2012 paper in the Journal of Management Studies, Mats Alvesson and André Spicer introduced the idea of functional stupidity. They describe it as an absence of reflection, a reluctance to use intellectual capacity beyond narrow ends and an avoidance of asking for justification. They argue it thrives where image and positive narratives dominate, and that it pushes doubt to the margins. The concept has critics, some of whom see it as closer to a management slogan than a rigorous theory, so it is best treated as a lens rather than a verdict.

It still describes something familiar. A candidate emerges early. The interviews become confirmation. A concern raised late is read as disloyalty rather than diligence.

Nobody was foolish. Everyone was aligned. That is the problem.

Development Is Treated as an Event, Not a Process

Many organisations book a leadership programme after a promotion and consider the decision closed. In my view, development that is not connected to real work, honest feedback and follow-up tends to change how leaders feel more than what they do.

Gallup's estimates are useful here. It reports that about one in ten people have high natural talent for managing others, and that a further two in ten show some of the characteristics and can perform well if their organisation invests in coaching and development plans. That suggests development pays off most when it is targeted at people with a foundation to build on, and when it follows a sound assessment rather than replacing one.

The sequence matters. Assess before promoting, then develop with purpose. Whatever programme an organisation chooses, the useful test is whether it changes what leaders do over the next quarter or only how confident they feel this week.

The System Rewards Something Else

Leaders do what the organisation rewards, whatever the development curriculum says. If promotions and bonuses reward short-term results, messages about collaboration and coaching will lose to the scorecard.

This is where good intentions often unravel. A company may sincerely want leaders who develop their people. But if the last three promotions went to people who hit their targets by burning through their teams, employees have learned what counts. No workshop will override that. It is worth looking at what gets rewarded and what gets tolerated before concluding that a leader is the problem.

How Organisations Can Make Better Leadership Decisions

Better decisions come from separating performance from potential, widening the evidence and building challenge into the process before the choice is made. None of this requires new technology. It requires discipline at the moments that feel most obvious.

Assess potential separately from performance. Ask what the new role demands that the current one does not, then gather evidence on exactly that.

Widen the evidence. Combine structured interviews with input from people who have worked with the candidate and, where appropriate, structured assessments, rather than relying on impressions alone.

Build in challenge. Ask someone to argue against the preferred candidate. Or ask the group to imagine the appointment has failed in two years and to explain why.

Support the first year. A promotion is the start of the decision, not the end. Plan support, feedback and check-ins before the person begins.

Review what you reward. Check whether recent promotions match the behaviours the organisation says it values.

Intelligence Does Not Protect a Decision

Smart companies rarely lack intelligence. What they often lack is a process that assumes intelligence can be wrong.

The best performer is promoted because it feels fair. The preferred candidate is confirmed because it feels efficient. The programme is booked because it feels responsible. Each choice is reasonable on its own. Together they produce bad leadership decisions that nobody chose deliberately.

Better decisions start by slowing down at exactly the moments that feel the most obvious.