Why your boss is incompetent
newscientist.com
newscientist.com
That's a conflation of cause and effect if ever I've seen one. It's also entirely consistent with the fact that people who don't get promoted (the majority, given the pyramidal structure) are stuck and get fed up with their jobs as they aren't challenged any longer.
To avoid this problem they recommend giving people promotion possibilities within job roles AND requiring that moving into management always come with a pay cut to make people honest about whether they are seeking the job because they think they would be good at it, or because they want a raise. (A manager who is good would likely make up the pay cut with interest over time.)
What about people that can't afford a pay cut financially?
If you're spending 100% of your income then you're not good at planning ahead.
If you can't find things to cut in your personal budget, you'll suck at managing the company's budget.
And if you can't talk your wife into making do with less, you're not persuasive enough to handle employees.
It sounds so trivial, but actually applying it is the difference.
Isn't it obvious? If you can't afford the pay cut, don't try to become a manager.
Stop and think about it from the employer's position. If your star programmer becomes a manager, the only guarantee is that you've lost a good programmer. The odds are low that you'll get a good manager out of the deal. So why should they pay more for less value?
Remember. Smart companies don't hand out money out of some notion of what is fair. They pay money because that is the cost of the value those employees are expected to provide. (Note that companies avoid paying the actual value provided, because doing so is a recipe for going bankrupt.) If the deal that they are willing to offer you does not meet your needs, you are free to find a deal that is more to your taste.
Why does your manager get paid more than you? It's a simple question that people simply don't ask. The Coasian model of the firm suggest that employees need managers to prevent the other workers slacking off and free riding on your effort. I'd love to work for a business where the really scare talent treaded the managers as the interchangeable, and easily replaceable, support staff that they really are.
Personally, I'm more interested in what happens if the correlation is non-zero, and performance at level N+1 has more impact than performance at level N? How does the best promotion strategy change as the level of correlation and impact of being higher up the ladder changes?
r = -1 ==> promote worst performers r = 0 ==> promote at random or based on completely independent criteria. r = 1 ==> promote best performers
And you can fill in everything in between. Putting it this way almost makes it seem obvious. In fact though, the hardest part is judging r.
impact of being higher up the ladder changes?
They did do this:
measured as a weighted average of employee competence, with higher-level positions counting for more
Edit: Missed a word.