If I were running an enterprise right now, I’d be doubling down HARD on improving management systems and the capabilities of my organization’s leaders. Why?

Because bad management is about to get exposed. 

This is merely a prediction, but even with all the buzz about the “Great Resignation” I actually think most organizations - even ones that are actively investing in “talent” - are underrating the impact of workforce trends that have started during the pandemic. The first order effect of these trends manifests in the Great Resignation (attrition, remote work, work-life balance) but I think the second-order effects will reverberate much more strongly in the long-run.

Here’s my case for why.

A fundamental assumption a company could make about most workers, prior to the pandemic, was that they were mostly locked in to living and working in the same metro or region as their office location. Now, hybrid and fully remote work is catching on, and this fundamental assumption of living and working in the same region is less true than it was three years ago.

This shift accelerates feedback loops around managers in two ways. One, it lowers the switching costs and broadens the job market for the most talented workers. Two, it opens up the labor pool for the most talented managers - who can run distributed teams and have the reputation to attract good people.

I think this creates a double flywheel, which creates second order effects on the quality of management. If this model holds true in real life, good managers will thrive and create spillover effects which raise the quality of management and performance in other parts of their firms. Bad managers, on the contrary, will fall into a doom loop and go the way of the dinosaur. Taken together, I hope this would raise the overall quality of managers across all firms.

Here’s a simple model of the idea:

Of course, these flywheels most directly affect the highest performing workers in fields which are easily digitized. But these shifts could also affect workers across the entire economy. For example, imagine a worker in rural America or a lesser known country, whose earnings are far below their actual capability. Let’s say that person is thoughtful and hard working, but is bounded by the constraints of their local labor market.

Unlike before, where they would have to move or get into a well known college for upward mobility - which are both risky and expensive - they can now more easily get some sort of technical certification online and then find a remote job anywhere in the world. That was always the case before, but the difference now is that their pool of available opportunities is expanded because more firms are hiring workers into remote roles - there’s a pull that didn’t exist before.

Here’s what I think this all means. If this prediction holds true, I think these folks would be the “winners”:

• High-talent workers (obviously): because they can seek higher wages and greater opportunities with less friction.

• High-talent managers: because they are better positioned to build and grow a team; high-talent workers will stick with good managers and avoid bad ones.

• Nimble, well-run, companies: companies that are agile, flexible, dynamic, flat, (insert any related buzzword here) will be able to shape teams and roles to the personnel they have rather than suffocating potential by forcing talented people into pre-defined roles that don’t really fit them. A company that can adjust to fully utilize exceptional hires will beat out their competitors

• Large, global, companies: because they have networks in more places, and are perhaps more able to find / attract workers in disparate places.

• Talent identification and development platforms: if they’re really good platforms, they can become huge assets for companies who can’t filter the bad managers and workers from the good. Examples could be really good headhunters or programs like Akimbo and OnDeck.

• All workers: if there are fewer bad managers, fewer of us have to deal with them!

And these are the folks I would expect to be the “losers”:

• Bad managers: because they’re not only losing the best workers, they’re now subject to the competitive pressure of better managers who will steal their promotions.

• Companies with expensive campuses: because they’re less able to woo workers based on facilities and are saddled with a sunk cost. Companies feeling like they have to justify past spend will adjust more slowly - ego gets in the way of good decisions, after all.

• Most traditional business schools: because teaching people to manage teams in real life will actually matter, and most business schools don’t actually teach students to manage teams in real life. The blueboods will be able to resist transformational change for longer because their brands and alumni connections will help them attract students for awhile. But brands don’t protect lazy incumbents forever.

This shift feels like what Amazon did to retailers, except in the labor market. When switching costs became lower and shelf space became unlimited, retailers couldn’t get by just because they owned distribution channels and supply chains. Those retailers resting on their laurels got exposed, because consumers - especially those who had access to the internet and smartphones - gained more power.

And two things happened when consumers gained more power: some retailers (even large ones) vanished or became much weaker, and, the ones that survived developed even better customer experiences that every consumer could benefit from. It’s not a perfect analogy because the retail market is not exactly the same as the labor market, but switch “consumers” out with “high-talent workers” and the metaphor is illustrative.

Of course, a lot of things must also be true for this prediction to hold, such as:

• We don’t enter an extended recession, which effectively ends this red hot labor market

• Some sort of regulation doesn’t add friction to remote workers

• Companies and workers are actually able to identify and promote good managers

• Enough companies are actually able to figure how to manage a distributed workforce, and don’t put a wholesale stop to remote work

I definitely acknowledge this is a prediction that’s far from a lock. But I honestly see some of these dynamics already starting. For example…

The people that I see switching jobs and getting promoted are by and large the more talented people I know. And, I’m seeing more and more job postings explicitly say the roles can be remote. And, I see more and more people repping their friends’ job postings, which is an emerging signal for manager quality; I certainly take it seriously when someone I know vouches for the quality of someone else’s team.

So, I don’t know about y’all, but I’m taking my development as a manager and my reputation as a manager more seriously than I ever have. If you see me ask for you to write a review about me on LinkedIn or see me write a review about you, you’ll know why! I definitely don’t want to be on the wrong side of this trend, should it happen - you probably don’t.

Bad managers, beware.