RESEARCH INSIGHT

In the Peter Principle – a management book from the 1960s – it is said that “in a hierarchy, every employee tends to rise to his level of incompetence” since a person who is competent at one specific function such as sales will eventually be promoted to a position requiring entirely different skills. Is that thesis still valid today? Using data from the National Basketball Association (“NBA”), a recent paper explores whether former basketball stars could also succeed as managers/coaches (Star performer-turned manager, “SPTM”) and, if so, how.

Organisations tend to be led by employees who were outstanding as individual contributor. Thus, it’s common for a firm’s best salesperson or researcher to be asked to assume a more senior leadership role. But can star performers repeat their success in a different position? As it’s easy to identify which coaches were once star players and since a team’s performance can conveniently be measured by counting wins & losses, the NBA provides a fertile ground to assess the performance of SPTM. In addition, as the factors explaining the success of a NBA coach can also be partially measured using media commentary as a proxy, the dataset is also relevant to generate valuable managerial insights. Analysing 37,780 NBA games played from 1981–1982 to 2014–2015, the study classifies 37 out of 195 managers as SPTM, based on their selection in an All-Star team. The findings reveal that, despite some notable failures – such as Isaiah Thomas’s disastrous tenure with the Knicks – SPTM generally have a positive impact on the performance of the NBA teams they are hired to coach.

Findings suggest that being a role model for local players, having the authority to make personnel decisions – such as when a coach also acts as general manager – and possessing the talent to develop players all help explain why SPTM were able to produce better results than regular managers. Meanwhile, morale building – as measured by a coach’s ability to deliver the sort of inspiring speeches and rah-rah pep talks which are a staple of sport movies – the fostering of a collaborative learning environment and the adoption of specific basketball strategies had no significant impact on team performance. Additionally, SPTM achieve greater success when supervising less experienced employees such as rookies. Another crucial finding is that the impact of a SPTM’s stellar past performance depends on whether their subordinates are aware of it and appreciate their manager’s historical achievements. To compete against SPTM, non-SPTM should thus focus on excelling at building morale, acquiring strong organizational and strategic skills and developing the oratorical prowess required to deliver inspiring speeches.

So if you can’t hit your sales target, just try to sound like Al Pacino in “Any Given Sunday!

Dr. KIM, Jongsoo Assistant Professor Department of Management, Marketing and Information Systems