That luck plays a significant part in our career is increasingly evident.  For instance, research from Harvard has shown that we’re judged more harshly for failing under the most extreme of circumstances than we are by succeeding in the most benign.

Indeed, research from the University of Catania suggests that luck is often more influential than talent in the accumulation of wealth.  Indeed, talent was found to be one of the least important factors.  Which perhaps makes a study from the University of Colorado at Boulder seem quite sensible when it shows that it’s logical to pay lucky CEOs more than unlucky ones.  As Napolean was famously believed to have said, it’s better to have a lucky general than a good one.

Generous bosses

New research from the University of Rochester reveals that luck can have a similarly enduring effect when it comes to the generosity of our direct manager.  There are obvious differences in the kind of performance appraisals that managers are happy to dole out, and the study found that simply working under a generous manager for a single year was enough to provide a lifetime boost to earnings of up to 12% per year.

The researchers began their research by exploring just how different managers were in the way they rate employees.  They gathered performance management data from a Scandinavian services firm and discovered substantial heterogeneity across managers.  Indeed, for those employees who were assigned to the most generous manager, they would receive a 30% boost to their performance rating, which in turn had a significant impact on their income.

Much of the differences in appraisals seemed to be largely due to the different personalities and managerial styles of the supervisors themselves.  For instance, some might regard high ratings as motivational, whereas others may regard punishing reviews in the same way.  What is evident is that the appraisals are largely a very subjective matter.

This supports the finding from Catania mentioned earlier that it’s perfectly possible for people to get stronger reviews for poor performances than peers who perform well.  The Rochester team set out to explore whether leniency was more of a factor than the fundamental managerial ability to gauge between good and bad performances.

Good judges

This was examined using two distinct tests, the first of which took advantage of the several years worth of performance data the researchers had to work with.  This meant that it was likely that the same employee would be rated by different managers during this time, and of course, their performance was likely to have changed relatively little, but the way each manager viewed that performance might not have.  This assessment highlighted that the potential difference between a generous and tight manager was up to 30%.

The next experiment then set out to determine whether this difference was due to inherent leniency in each manager, or differences in their managerial ability.  They did this by looking at objective performance measures that were available for each of the teams managed by each supervisor.  For instance, if teams had performed well in terms of both objective measures and appraisals from their manager, then the appraisal was likely to reflect the ability of the manager.  If that wasn’t the case, it was likely to be that managers were excessively lenient.  This analysis revealed that there was a correlation between teams performing well under managers who also rated highly.

So was it simply that good managers helped their team to perform well, and this boost endured throughout the career of each employee?  The benefits of working under a good manager are clear, as workers put more effort in, are more productive, and tend to get rewarded with higher earnings.  This creates a virtuous cycle as fellow high performers want to work in those teams, and the managers themselves also earn more because their employer wants to keep hold of them.

Managing performance

So what does this mean for the performance management systems that are such a ubiquitous part of the modern workplace?  The results suggest that despite accusations of subjectivity, a large part of the performance ratings awarded to employees and teams can be attributed to the quality of worker, and the quality of their output.

As a result, we may be somewhat hasty to dismiss performance management systems as a failing technology, and instead, accept that they do provide important information about the performance levels of employees.

This isn’t to say, of course, that subjectivity and bias is not a factor in managerial assessments, but rather that the focus of companies attention should be on understanding the potential differences in how managers assess staff when they judge on things such as promotions, dismissals, and pay rises.

For the time being, however, it would appear to help your career enormously if you can secure a spot on a team with an exceptional manager.