Blog MARKETING by IESE
Irrational Promotions versus Sales Promotions
Recently I saw a video with Professor Dan Ariely of Duke University, best-selling author of Predictably Irrational, that made me ask myself how promotions in companies come about. And by promotion I mean how someone moves up from a junior position to a more senior position. How satisfying it must be to receive this type of recognition, right?
Yet, it is not unusual to react incredulously to the promotion of a colleague who, from your perspective, is unqualified for his or her new job. And you ask yourself, how could someone with this inadequate level of competence move up in the company hierarchy when other much more worthy people should have been first in line for promotion? In the end, it is an irrational promotion.
Most of the time, promotions are associated with results and not necessarily with the means that are used to achieve them . That of course has to do with how we measure results. In other words, what is easier to measure, the thought process someone goes through to obtain a particular result (whether or not it is good or bad) or the result itself?
For example, imagine just for a moment that in 2010 your organization, an important real estate company, wants to expand its business by developing a mall in an Asian country. It is an important investment that requires a thoughtful and well-calculated decision. You may be able to create the perfect business plan by running all the numbers and dotting all the i’s and crossing all the t’s: the data and analysis, financial forecasting, defining teams, target audience, creating a plan to generate new client leads, identifying key partnership, etc.
You could decide to open the mall in a rich country like Japan with a high level of consumption. So you place your bets on Fukushima. Obviously the tragedy that unfolded in the area in 2011 would have produced undesirable business results. However, should the person who made that decision be penalized? Or should we acknowledge that the business plan was flawless and that in spite of the results, the process undertaken was adequate and therefore the employee is deserving of a promotion?
What kind of a manager do we want to be? The kind that punishes or rewards fellow professionals?
Let’s apply the same idea to promotions in a different realm: commercial. Think for a moment about a sales promotion, i.e., the actions that we follow to increase sales at a specific moment based on certain needs. How many times does great effort go unnoticed when the results have been unfortunate? And on the same token, how many times do someone’s results have nothing to do with their rather slack effort but instead with coincidence or luck?
Perhaps in the commercial realm, because of how simple it is to quantify them, the focus is exclusively on results. Meanwhile, the process that leads to the results tends to be overlooked. And I would prefer not to confuse irrational promotions with sales promotions. In companies, we need people who know how to think, because that is what will, in the long run and independently of chance and luck, produce results. And I mean the good kind.
This post is a copy of the original published in http://blog.iese.edu/marketing/
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