Makings of a Manager

The way we evaluate managers and teams often reflects a broader issue: misaligned incentives. Too often, companies prioritize metrics and measures that are easy to consume but fail to capture the nuanced dynamics that truly drive success. This creates a dangerous cycle: we reward behaviors that aren’t aligned with long-term company goals, and over time, these misaligned incentives shape how organizations operate.

One pervasive example is how we gauge managerial effectiveness. Leaders are often judged by the size of their teams—what’s their biggest org chart? How many direct reports do they manage? These metrics create incentives for managers to grow their teams unnecessarily, fostering internal competition over headcount and budget. The result? A bloated organization where decisions are driven by internal politics rather than the company's best interests.

Imagine instead a world where managers are celebrated for running lean, effective teams. It’s challenging, of course, because efficiency isn’t as easily measured as team size. A truly great manager may oversee a smaller team but deliver outsized results by fostering collaboration, prioritizing impactful work, and avoiding the bureaucratic sprawl of an empire-builder. Leaders of leaders need the expertise to assess these qualitative outcomes and reward managers who optimize for company success over personal advancement.

Metrics Aren’t the Goal—They’re Indicators

Another misaligned incentive lies in how teams are evaluated: through surface-level metrics that are easy to game. Too often, we rely on status meetings where teams proudly report “green” on their KPIs. But if green is the default, what are those metrics really telling us?

Let me share an example. During a status meeting, a downstream team reported their metrics as green. Yet, despite our upstream service meeting its KPIs, the company was failing to hit key outcomes. The culprit? That downstream team’s outage. When questioned, it became clear that because their service was down, no errors were recorded—leading to their flawless “green” status.

Had we embraced a “red sometimes” strategy—where a healthy failure rate of 5-10% on non-mission-critical metrics is expected—their constant green metric would have been flagged for review. We might have uncovered the faulty real-time monitoring system earlier, preventing the outage from escalating. Metrics are just tools. They tell us where to look—not what we’ll find. Effective leaders dig deeper, using metrics as indicators to guide meaningful investigation and intervention.

Shifting to Aligned Incentives

The key to fixing these misalignments is designing systems that reward the right behaviors. Let’s rethink how we assess team and leadership success:

1. Encourage Risk and Learning: A team that reports “green” all the time is playing it safe. They aren’t pushing boundaries or exploring opportunities for innovation. Great teams should strive for a failure rate of 5-10% in non-critical areas. Celebrate calculated risks and reward the lessons learned from failure.
2. Champion Qualitative Assessment: Efficiency, morale, and collaboration can’t always be measured with a dashboard. Good managers of managers understand what’s being accomplished, what’s slipping, and what needs improvement. They go beyond metrics to assess the real health of their teams.
3. Reward Company-First Thinking: Look for leaders who prioritize the company’s goals over their own empire-building. Leaders who make trade-offs for the greater good—whether by staying lean, reallocating resources, or taking on tough challenges—are the ones who drive long-term success.
4. Build Better Feedback Loops: Organizations should reward transparency. Instead of punishing teams for reporting red metrics, use them as a springboard for collaboration. The best managers foster environments where issues are surfaced early and addressed collectively.

The Role of Leadership

Effective leaders know that numbers can’t capture everything. They invest time in understanding their teams and align their incentives with the company’s broader goals. It’s not about hiring charismatic managers who make convincing arguments—it’s about finding leaders who are pragmatic, thoughtful, and focused on delivering sustainable outcomes.

Let’s not reduce our organizations to numbers. A team’s size isn’t a measure of its worth, just as constant green dashboards aren’t a measure of success. When we build cultures of trust, transparency, and aligned incentives, we empower teams to achieve more than the sum of their parts.

Call to Action: Are You Measuring What Matters? Metrics and KPIs can guide us, but they can also mislead us if we don’t approach them critically. How does your organization incentivize success? Are you building a culture that rewards transparency, risk-taking, and company-first thinking—or one that values optics over outcomes? Let’s have that conversation.