Many leaders believe the fastest way to reward excellence is to promote a top performer into management. It feels logical—if someone excels individually, surely they can lead others to do the same. But research shows otherwise. Studies by the World Economic Forum and University of Texas found that high-performing employees often struggle in leadership roles, leading to lower team productivity and even reduced profits. This happens because individual success doesn’t always translate into people management, coaching, or long-term strategy skills.

The Risks of Promoting a Top Performer Too Soon

When you promote solely based on performance, you risk creating weak managers who may rely on outdated leadership styles or replicate toxic behaviors they’ve observed. Without the right preparation, new managers face overwhelming challenges—like navigating conflict, leading under pressure, and nurturing talent—that they’ve never been trained for. The result? Confused leaders, demotivated teams, and declining performance. This common workplace trap is often called the “Peter Principle”: promoting people beyond their level of competence.

What to Do Instead of Promoting Top Performers

The smarter path is to evaluate leadership potential, not just output. Look for signs of emotional intelligence, resilience, collaboration, and a genuine interest in helping others grow. Strong future managers are often those who mentor peers, listen well, and thrive on team success—even if they aren’t the highest individual performers. Pair first-time managers with robust coaching and mentorship programs, and consider lateral career growth or specialist tracks for employees who shine individually but aren’t suited for people management.

Building Future Leaders the Right Way

Your best employees don’t always have to become managers to add value. Some thrive as subject-matter experts or project leads without direct reports. By rethinking how you identify and support leadership talent, you’ll not only avoid costly missteps but also build a healthier, more sustainable workplace culture. And with Gen Z entering the workforce at scale, the systems you create today to nurture leadership will shape your organization for decades to come.