Chapter 102 Question 092

Why does the strategy of firing leaders because of poor organizational performance seem so attractive to the top of organizations? If a professional sports team has a bad season, the knee-jerk impulse of the team owner is to fire the coach or manager.Likewise, if a business suffers huge losses, the board's knee-jerk impulse is to fire the president.Does it make sense for a team or business to perform better in the coming year under new leadership? Losing a season in a game, like a company losing a year, is usually caused by multiple factors.Leaders are partly to blame, but in a truly bad year, there are likely to be many other factors at play.Most of these factors exhibit random fluctuations, regardless of who is the coach or who is the president.If these factors are extremely unfavorable in one year, they are likely to return to normal ranges in the coming year.

New leaders generally arrive after bad years, which means that even if the new leader is no better than the original leader, the next year's performance will be better.This progress is just another example of regression to the mean.Of course, the previous leader could have been really bad and deserved to be fired.But we should understand one basic fact: the rebound in organizational performance immediately after firing people does not mean that firing managers is the right move.