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Pygmalion in Managementby}. Sterling Livingston

A manager's expectations are the key to a subordinate'sperformance and development.

In George Bemard Shaw's Pygmahon, Eliza Doolit-tle explains:

"You see, really and truly, apart from the thingsanyone can pick up (the dressing and the proper wayof speaking, and so on), the difference between a ladyand a flower girl is not how she behaves but how she'streated. I shall always be a flower girl to ProfessorHiggins because he always treats me as a flower girland always will; but I know I can be a lady to you be-cause you always treat me as a lady and always will."

Some managers always treat their subordinates ina way that leads to superior performance. But most

Pygmalion was a sculptor in Greek mythology whocarved a statue of a beautiful woman tbat subsequentlywas brought to life. The notion that one person can trans-form another is the basis for this "classic" article. At thetime he wrote it for tbe fuly-August 1969 issue, j. Ster-ling Livingston was a professor of busine.ss administra-tion at the Harvard Business School. He had foundedthe Sterling Institute, a management consulting firm, in1967. He is now chairman of tbe Washington, D.C.-basedinstitute, which specializes in executive training anddevelopment.

managers, like Professor Higgins, unintentionallytreat their subordinates in a way that leads to lowerperformance than they are capable of achieving. Theway managers treat their subordinates is subtly in-fluenced by what they expect of them. If managers'

I Enthusiasm and apathy-bothare infectious.

expectations are high, productivity is likely to be ex-cellent. If their expectations are low, productivity islikely to he poor. It is as though there were a law thatcaused suhordinates' performance to rise or fall tomeet managers' expectations.

The powerful influence of one person's expecta-tions on another's behavior has long been recognizedby physicians and behavioral scientists and, more re- •cently, by teachers. But heretofore the importance ofmanagerial expectations for individual and groupperformance has not heen widely understood. I havedocumented this phenomenon in a number of case

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Studies prepared during the past decade for major in-dustrial concerns. These cases and other evidenceavailable from scientific research now reveal:• What managers expect of their subordinates andthe way they treat them largely determine theirperformance and career progress.• A unique characteristic of superior managers is theability to create high performance expectations thatsubordinates fulfill.• Less effective managers fail to develop similar ex-pectations, and as a consequence, the productivity oftheir subordinates suffers.• Subordinates, more often than not, appear to dowhat they believe they are expected to do.

Impact on Productivity

One of the most comprehensive illustrations ofthe effect of managerial expectations on productivityis recorded in studies of the organizational experi-ment undertaken in 1961 by Alfred Oberlander, man-ager of the Rockaway district office of the Metro-politan Life Insurance Company He had observedthat outstanding insurance agencies grew fasterthan average or poor agencies and that new insur-ance agents performed better in outstanding agenciesthan in average or poor agencies, regardless of theirsales aptitude. He decided, therefore, to group hissuperior agents in one unit to stimulate their perfor-mance and to provide a challenging environmentin which to introduce new salespeople.

Accordingly, Oberlander assigned his six bestagents to work with his best assistant manager, anequal number of average producers to work with anaverage assistant manager, and the remaining lowproducers to work with the least able manager. Hethen asked the superior group to produce two-thirdsof the premium volume achieved by the entireagency during the previous year. He describes the re-sults as follows:

"Shortly after this selection had been made, thepeople in the agency began referring to this selectgroup as a 'superstaff because of their high esprit decorps in operating so well as a unit. Their productionefforts over the first 12 weeks far surpassed our mostoptimistic expectations...proving that groups of peo-ple of sound ability can be motivated beyond theirapparently normal productive capacities when theproblems created by the poor producer are eliminatedfrom the operation.

"Thanks to this fine result, our overall agencyperformance improved by 40% and it remained atthis figure.

"In the beginning of 1962 when, through expan-sion, we appointed another assistant manager and as-signed him a staff, we again used this same con-cept, arranging the agents once more according totheir productive capacity.

"The assistant managers were assigned...accord-ing to their ability, with the most capable assistantmanager receiving the hest group, thus playingstrength to strength. Our agency overall productionagain improved by about 25% to 30%, and so thisstaff arrangement remained in place until the endof the year.

"Now in this year of 1963, we found upon analysisthat there were so many agents...with a potential ofhalf a million dollars or more that only one staff re-mained of those people in the agency who were notconsidered to have any chance of reaching the half-million-dollar mark."

Although the productivity of the "superstaff" im-proved dramatically, it should be pointed out that theproductivity of those in the lowest unit, "who werenot considered to have any chance of reaching thehalf-million-dollar mark," actually declined, and thatattrition among them increased. The performance ofthe superior agents rose to meet their managers' ex-pectations, while that of the weaker ones declinedas predicted.

Self-Fulfilling Prophecies. The "average" unit,however, proved to be an anomaly. Although the dis-trict manager expected only average performancefrom this group, its productivity increased signifi-cantly. This was because the assistant manager incharge of the group refused to believe that she wasless capable than the manager of the superstaff orthat the agents in the top group had any greater abil-

Salespeople treated byti-ieirbosses as "superstaff" try to iiveuptotinatimage.

ity than the agents in her group. She insisted in dis-cussions with her agents that every person in themiddle group had greater potential than those in thesuperstaff, lacking only their years of experience inselling insurance. She stimulated her agents to ac-cept the challenge of outperforming the superstaff.As a result, in each year the middle group increasedits productivity by a higher percentage than thesuperstaff did (although it never attained the dollarvolume of the top group).

It is of special interest that the self-image of themanager of the "average" unit did not permit her toaccept others' treatment of her as an "average" man-

122 HARVARD BUSINESS REVIEW September-October 1988

ager, just as Eliza Doolittle's image of berself as a ladydid not permit ber to accept otbers' treatment of heras a flower girl. The assistant manager transmittedher own strong feelings of efficacy to her agents,created mutual expectancy of high performance, andgreatly stimulated productivity.

Comparable results occurred wben a similar ex-periment was made at anotber office of tbe company.Furtber confirmation comes from a study of tbe earlymanagerial success of 49 college graduates wbo weremanagement-level employees of an operating com-pany of AT&T. David E. Berlew and Douglas T. Hallof tbe Massachusetts Institute of Technology exam-ined the career progress of tbese managers over a pe-riod of five years and discovered tbat tbeir relativesuccess, as measured by salary increases and tbecompany's estimate of eacb one's performance andpotential, depended largely on the company's expec-tations of them.

The influence of one person's expectations on an-other's bebavior is by no means a business discovery.More than half a century ago, Albert Moll concludedfrom his clinical experience that subjects behaved asthey believed they were expected to. The phenome-non he observed, in wbicb "the prophecy causes itsown fulfillment," has recently become a subject ofconsiderable scientific interest. For example:• In a series of scientific experiments, Robert Ros-entbal of Harvard University bas demonstrated thata "teacher's expectation for a pupil's intellectualcompetence can come to serve as an educationalself-fulfilling prophecy."• An experiment in a summer Headstart program for60 preschoolers compared the performance of pupilsunder (a) teachers who had been led to expect rela-tively slow learning by tbeir children, and (h) teach-ers who bad been led to believe tbat their childrenhad excellent intellectual ability and learning capac-ity. Pupils of the second group of teachers learnedmuch faster.'

Moreover, the healing professions have long recog-nized that a physician's or psychiatrist's expectationscan have a formidable influence on a patient's physi-cal or mental health. What takes place in the mindsof the patients and the healers, particularly whenthey have congruent expectations, may determinethe outcome. For instance, the havoc of a doctor'spessimistic prognosis has often been observed.Again, it is well known that the efficacy of a new drugor a new treatment can be greatly influenced by tbepbysician's expectations-a result referred to by tbemedical profession as a "placebo effect."

Pattern of Failure. Wben salespersons are treatedby tbeir managers as superpeople, as the superstaffwas at the Metropolitan Rockaway district office.

they try to live up to that image and do what theyknow supersalespersons are expected to do. Butwhen the agents with poor productivity records aretreated by their managers as not having "any chance"of success, as the low producers at Rockaway were,this negative expectation also becomes a managerialself-fulfilling propbecy

Unsuccessful salespersons have great difficultymaintaining tbeir self-image and self-esteem. In re-sponse to low managerial expectations, tbey typi-cally attempt to prevent additional damage to tbeiregos by avoiding situations tbat migbt lead to greaterfailure. They eitber reduce tbe number of sales callstbey make or avoid trying to "close" sales when thatmigbt result in further painful rejection, or both. Lowexpectations and damaged egos lead them to behavein a manner that increases the probability of failure,tbereby fulfilling their managers' expectations. Letme illustrate;

Not long ago I studied the effectiveness of branchbank managers at a West Coast bank with over 500brancbes. Tbe managers wbo had bad tbeir lendingautbority reduced because of high rates of loss be-came progressively less effective. To prevent furtherloss of authority, they turned to making only "safe"

COUNTER PRODUCTIONÜCPARTMCNT

-p.

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loans. This action resulted in losses of business tocompeting banks and a relative decline in both de-posits and profits at their branehes. Then, to reversethat decline in deposits and earnings, they often"reached" for loans and became almost irrational intheir acceptance of questionable credit risks. Theiractions were not so much a matter of poor judgmentas an expression of their willingness to take desper-ate risks in the hope of being able to avoid furtherdamage to their egos and to their careers.

Thus, in response to the low expectations of theirsupervisors who had reduced their lending authority,tbey behaved in a manner that led to larger creditlosses. They appeared to do what they believed theywere expected to do, and their supervisors' expeeta-tions became self-fulfilling prophecies.

Power of Expectations

Managers eannot avoid tbe depressing cycle ofevents that flow fron:i low expectations merely hyhiding their feelings from subordinates. If managersbelieve subordinates will perform poorly, it is virtu-ally impossible for them to mask their expectationsbecause the message usually is communicated unin-tentionally, without conscious action on their part.

Indeed, managers often communicate most whenthey believe they are communicating least. For in-stance, when they say nothing-become cold anduncommunicative-it usually is a sign that they aredispleased by a subordinate or believe that he or sheis hopeless. The silent treatment communicates neg-ative feelings even more effectively, at times, than atongue-lashing does. What seems to be critical in theeommunication of expectations is not what the bosssays so mueh as the way he or she behaves. Indiffer-ent and noncommital treatment, more often thannot, is the kind of treatment that communicates lowexpectations and leads to poor performance.

Common Illusions. Managers are more effective incommunicating low expectations to their subordi-nates than in communicating high expectations tothem, even though most managers believe exactlythe opposite. It usually is astonishingly difficult forthem to recognize the clarity with which they trans-mit negative feelings. To illustrate again:• The Rockaway district manager vigorously deniedthat he had communicated low expectations to theagents in the poorest group who, he believed, did nothave "any chance" of becoming high producers. Yetthe message was elearly received by those agents. Atypical case was that of an agent who resigned fromthe low unit. When the district manager told the

agent that he was sorry she was leaving, the agent re-plied, "No you're not; you're glad." Although the dis-trict manager previously had said nothing to her, hehad unintentionally communicated his low expecta-tions to his agents through his indifferent manner.Subsequently, the agents who were assigned to thelowest unit interpreted the assignment as equivalentto a request for their resignation.• One of the eompany's ageney managers estab-lished superior, average, and low units, even thoughhe was convinced that he had no superior or out-standing subordinates. "All my assistant managersand agents are either average or incompetent," he ex-plained to the Rockaway district manager. Althoughhe tried to duplicate the Roekaway results, his lowopinions of his agents were communicated—not sosubtly-to them. As a result, the experiment failed.

Positive feelings, on the other hand, often do notcome through clearly enough. Another insuranceagency manager copied the organizational ehangesmade at the Rockaway district office, grouping thesalespeople she rated highly with the best manager,the average salespeople with an average manager, andso on. Improvement, however, did not result from themove. The Rockaway district manager therefore in-vestigated the situation. He discovered that the as-sistant manager in charge of the high-performaneeunit was unaware that his manager considered himto he the best. In fact, he and the other agents doubtedthat the agency manager really believed there wasany difference in their abilities. This agency managerwas a stolid, phlegmatie, unemotional woman whotreated her agents in a rather pedestrian way. Sincehigh expeetations had not been communicated tothem, they did not understand the reason for the neworganization and eould not see any point in it. Clear-ly, the way managers treat subordinates, not the waythey organize them, is the key to high expectationsand high productivity.

Impossible Dreams. Managerial expectationsmust pass the test of reality before they can betranslated into performance. To become self-ful-filling prophecies, expectations must be made ofsterner stuff than the power of positive thinking orgeneralized confidence in one's subordinates-helpful as these concepts may be for some other pur-poses. Subordinates will not be motivated to reaehhigh levels of productivity unless they eonsider theboss's high expectations realistie and achievable. Ifthey are encouraged to strive for unattainable goals,they eventually give up trying and settle for resultsthat are lower than they are capable of achieving. Theexperience of a large electrical manufacturing com-pany demonstrates this,- the company discoveredthat production actually declined if production quo-

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tas were set too high, because the workers simplystopped trying to meet them. In other words, thepractice of "dangling the carrot just beyond the don-key's reach," endorsed by many managers, is not agood motivational device.

Scientific research by David C. McClelland of Har-vard University and |ohn W Atkinson of the Univer-sity of Michigan has demonstrated that the rela-tionship of motivation to expectancy varies in theform of a bell-shaped curve (see the exhibit).^

Indifference says tosubordinates/1 don't thinkmuch of you"

The degree of motivation and effort rises until theexpectancy of success reaches 50%, then begins tofall even though the expectancy of success continuesto increase. No motivation or response is arousedwhen the goal is perceived as being either virtuallycertain or virtually impossible to attain.

Moreover, as Berlew and Hall have pointed out, ifsuhordinates fail to meet performance expectationsthat are close to their own level of aspirations, theywill lower personal performance goals and standards,performance will tend to drop off, and negative atti-tudes will develop toward the activity or job.' It istherefore not surprising that failure of subordinatesto meet the unrealistically high expectations of theirmanagers leads to high rates of attrition, either vol-untary or involuntary.

Secret of Superiority. Something takes place in theminds of superior managers that does not occur inthe minds of those who are less effective. While su-perior managers are consistently able to createhigh performance expectations that their suhordi-nates fulfill, weaker managers are not successful inobtaining a similar response. What accounts forthe difference?

The answer, in part, seems to he that superior man-agers have greater confidence than other managers intheir own ability to develop the talents of their subor-dinates. Contrary to what might be assumed, thehigh expectations of superior managers are based pri-marily on what they think about themselves-abouttheir own ability to select, train, and motivate theirsubordinates. What managers believe about them-selves subtly influences what they believe abouttheir subordinates, what they expect of them, andhow they treat them. If they have confidence in theirability to develop and stimulate them to high levelsof performance, they will expect much of them andwill treat them with confidence that their expecta-

tions will be met. But if they have doubts about theirability to stimulate them, they will expect less ofthem and will treat them with less confidence.

Stated in another way, the superior managers'record of success and their confidence in their abil-ity give their high expectations credibility. As a con-sequence, their subordinates accept these expecta-tions as realistic and try hard to achieve them.

The importance of what a manager believes abouthis or her training and motivational ability is illus-trated by "Sweeney's Miracle," a managerial and edu-cational self-fulfilling prophecy.

James Sweeney taught industrial management andpsychiatry at TUlane University, and he also was re-sponsible for the operation of the Biomédical Com-puter Center there. Sweeney believed that he couldteach even a poorly educated man to be a capablecomputer operator. George Johnson, a former hospi-tal porter, became janitor at the computer center; hewas chosen by Sweeney to prove his conviction. Inthe mornings, George Johnson performed his janito-rial duties, and in the afternoons Sweeney taught himabout computers.

Johnson was learning a great deal about computerswhen someone at the university concluded that to bea computer operator one had to have a certain I.Q.score. Johnson was tested, and his I.Q. indicated thathe would not be able to learn to type, much less oper-ate a computer.

But Sweeney was not convinced. He threatened toquit unless Johnson was permitted to learn to pro-gram and operate the computer. Sweeney prevailed,and he is still running the computer center. Johnsonis now in charge of the main computer room and isresponsible for training new employees to programand operate the computer.*

Sweeney's expectations were based on what he be-lieved about his own teaching ahility, not on John-son's learning credentials. What managers believeabout their abihty to train and motivate subordinatesclearly is the foundation on which realistically highmanagerial expectations are built.

The Critical Early Years

Managerial expectations have their most magicalinfluence on young people. As subordinates matureand gain experience, their self-image gradually hard-ens, and they begin to see themselves as their careerrecords imply. Their own aspirations and the expec-tations of their superiors become increasingly con-trolled by the "reality" of their past performance. Itbecomes more and more difficult for them and for

126 HARVARD BUSINESS REVIEW September-October 1988

their managers to generate mutually high expecta-tions unless they have outstanding records.

Incidentally, the same pattern occurs in school.Rosenthal's experiments with educational self-fulfilling prophecies consistently demonstrate thatteachers' expectations are more effective in influenc-ing intellectual growth in younger children than inolder children. In the lower grade levels, particularlyin the first and second grades, the effects of teachers'expectations are dramatic. In the upper grade levels,teachers' prophecies seem to have little effect onchildren's intellectual growth, although they do af-fect their motivation and attitude toward school.While the declining influence of teachers' expecta-tions cannot he completely explained, it is reason-able to conclude that younger children are moremalleable, have fewer fixed notions about their abili-ties, and have less well-established reputations in theschools. As they grow, particularly if they are as-signed to "tracks" on the basis of their records, as isnow often done in public schools, their beliefs abouttheir intellectual ability and their teachers' expecta-tions of them begin to harden and become more re-sistant to influence by others.

Key to Future Performance. The early years in abusiness organization, when young people can bestrongly influenced by managerial expectations, arecritical in determining future performance and ca-reer progress. This is shown by a study at AT&T.

Berlew and Hall found that what the company ini-tially expected of 49 college graduates who weremanagement-level employees was the most criticalfactor in their subsequent performance and success.The researchers concluded that the correlation be-tween how much a company expects of an employeein the first year and how much that employee con-tributes during the next five years was "too compel-ling to be ignored.'"^

Subsequently, the two men studied the career rec-ords of 18 college graduates who were hired as man-agement trainees in another of AT&T's operatingcompanies. Again they found that both expectationsand performance in the first year correlated consis-tently with later performance and success.

"Something important is happening in the firstyear...," Berlew and Hall concluded. "Meeting highcompany expectations in the critical first year leadsto the internalization of positive job attitudes andhigh standards; these attitudes and standards, inturn, would first lead to and be reinforced by strongperformance and success in later years. It should alsofollow that a new manager who meets the challengeof one highly demanding job will be given subse-quently a more demanding job, and his level of con-tribution will rise as he responds to the company'sgrowing expectations of him. The key...is the con-cept of the first year as a critical period for learning,a time when the trainee is uniquely ready to developor change in the direction of the company'sexpectations."'^

Most Influential Boss. A young person's first man-ager is likely to be the most influential in that per-son's career. If managers are unable or unwilhng todevelop the skills young employees need to performeffectively, the latter will set lower personal stan-dards than they are capable of achieving, their self-images will be impaired, and they will developnegative attitudes toward jobs, employers, and- in aflprobability-tbeir own careers in business. Since thechances of building successful careers with thesefirst employers will decline rapidly, the employeeswill leave, if they have high aspirations, in hope offinding better opportunities. If, on the other hand,early managers help employees achieve maximumpotential, they will build the foundations for success-ful careers.

With few exceptions, the most effective branchmanagers at a large West Coast bank were maturepeople in their forties and fifties. The bank's execu-tives explained that it took considerable time for aperson to gain the knowledge, experience, and judg-ment required to handle properly credit risks, cus-tomer relations, and employee relations.

One branch manager, however, ranked in the top10% of the managers in terms of effectiveness (whichincluded branch profit growth, deposit growth, scoreson administrative audits, and subjective rankings bysuperiors), was only 27 years old. Tbis young personhad been made a branch manager at 25, and in twoyears had improved not only the performance of thebranch substantially but also developed a younger as-sistant manager who, in turn, was made a branchmanager at 25.

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"Instead of my usual report, I've written a little song about ouraccounting pTOcedurc, our lack of cash flow, and why the businessis going to hell in a handbasket. Feel free to jump in on the chorus."

The assistant had had only average grades in col-lege, but in just four years at the bank had been as-signed to work with two branch managers who wereremarkably effective teachers. The first boss, whowas recognized throughout the bank for unusualskill in developing young people, did not believe thatit took years to gain the knowledge and skill neededto become an effective banker. After two years, theyoung person was made assistant manager at abranch headed by another executive, who also wasan effective developer of subordinates. Thus it wasthat the young person, when promoted to head abranch, confidently followed the model of two previ-ous superiors in operating the branch, quickly es-tablished a record of outstanding performance, andtrained an assistant to assume responsibility early.

For confirming evidence of the crucial role playedby a person's first bosses, let us turn to selling, sinceperformance in this area is more easily measuredthan in most managerial areas. Consider the follow-ing investigations:• In a study of the careers of 100 insurance salespeo-ple who began work with either highly competent orless-than-competent agency managers, the Life In-surance Agency Management Association foundthat those with average sales-aptitude test scoreswere nearly five times as likely to succeed undermanagers with good performance records as under

managers with poor records, andthose with superior sales aptitudescores were found to be twice as likelyto succeed under high-performingmanagers as under low-performingmanagers.'• The Metropolitan Life InsuranceCompany determined in 1960 thatdifferences in the productivity of newinsurance agents who had equal salesaptitudes could be accounted for onlyby differences in the ability of manag-ers in the offices to which they wereassigned. Agents whose productivitywas high in relation to their aptitudetest scores invariably were employedin offices that had production recordsamong the top third in the company.Conversely, those whose productivitywas low in relation to their test scorestypically were in the least successfuloffices. After analyzing all the factorsthat might have accounted for thesevariations, the company concluded

^m^mm that differences in the performance of

^ ^ ^ ^ new agents were due primarily to dif-ferences in the "proficiency in sales

training and direction" of the local managers.•*• A study I conducted of the performance of automo-bile salespeople in Ford dealerships in New Englandrevealed that superior salespersons were concen-trated in a few outstanding dealerships. For instance,10 of the top 15 salespeople in New England were in 3(out of approximately 200) of the dealerships in thisregion, and 5 of the top 15 people were in one highlysuccessful dealership. Yet 4 of these people previ-ously had worked for other dealers without achieving

Superior managers don'tgive up on themseivesand don't give up easiiyon subordinates either.

outstanding sales records. There was little doubt thatthe training and motivational skills of managers inthe outstanding dealerships were critical.

Astute Selection. While success in business some-times appears to depend on the luck of the draw,more than luck is involved when a young person isselected by a superior manager. Successful managersdo not pick their subordinates at random or by thetoss of a coin. They are careful to select only thosewho they "know" will succeed. As Metropolitan's

128 HARVARD BUSINESS REVIEW St:ptember-October 198S

Rockaway district manager, Alfred Oherlander, in-sisted: "Every man or woman wbo starts with us isgoing to be a top-notcb life insurance agent, or he orshe would not have been asked to join tbe team."

When pressed to explain how tbey "know"whether a person will be successful, superior manag-ers usually end up by saying sometbing hke, "Thequalities are intangible, but I know tbem wben I seethem." They have difficulty being explicit becausetheir selection process is intuitive and is based on in-terpersonal intelligence tbat is difficult to describe.Tbe key seems to be tbat they are able to identifysubordinates with whom they can probably workeffectively-people witb whom tbey are compatibleand whose body cbemistry agrees witb their own.They make mistakes, uf course. But they "give up"on a subordinate slowly because that means "givingup" on tbemselves-on tbeir judgment and ability inseleeting, training, and motivating people. Less effec-tive managers select subordinates more quickly andgive up on tbem more easily, believing tbat tbe inade-quacy is tbat of the subordinate, not of tbemselves.

Developing Young People

observing tbat bis company's research indicatestbat "initial corporate expectations for performance(with real responsibility) mold subsequent expecta-tions and behavior," R.W. Walters, Jr., director of col-lege employment at AT&T, contends that "initialbosses of new college bires must be tbe best in theorganization.'"' Unfortunately, however, most com-panies practice exactly tbe opposite.

Rarely do new graduates work closely with experi-enced middle managers or upper-level executives.Normally they are bossed by first-line managers wbotend to be the least experienced and least effective inthe organization. While there are exceptions, first-line managers generally are eitber "old pros" whohave been judged as lacking competence for higherlevels of responsibility, or they are younger peoplewho are making the transition from "doing" to"managing." Often these managers lack the knowl-edge and skill required to develop the productive ca-pabilities of their subordinates. As a consequence,many college graduates begin their careers in busi-ness under the worst possible circumstances. Sincetbey know their abilities are not being developed orused, tbey quite naturally soon become negative to-ward tbeir jobs, employers, and business careers.

Altbougb most top executives have not yet diag-nosed tbe problem, industry's greatest cballenge byfar is to rectify tbe underdevelopment, underutiliza-

tion, and ineffective management and use of its mostvaluable resource-its young managerial and profes-sional talent.

Disillusion and Turnover. The problem posed tocorporate management is underscored by tbe sbarplyrising rates of attrition among young managerial andprofessional personnel. Turnover among managersone to five years out of college is almost twice as bigb

We all are like Eliza Doolittle-we behave according tohow weYe treated.

now as it was a decade ago, and five times as bigb astwo decades ago. Three out of five companies sur-veyed by Fortune magazine in the fall of 1968 re-ported that turnover rates among young managersand professionals were higher tban five years ago.'"While the high level of economic activity and theshortage of skilled personnel have made joh-hoppingeasier, the underlying causes of high attrition, I amconvinced, are underdevelopment and underutiliza-tion of a work force that has bigh career aspirations.

The problem can be seen in its extreme form in theexcessive attrition rates of college and universitygraduates who begin their careers in sales positions.Whereas tbe average company loses about 50% of itsnew college and university graduates within three tofive years, attrition rates as high as 40% in the firstyear are common among college graduates who ac-cept sales positions in the average company This at-trition stems primarily, in my opinion, from thefailure of first-line managers to teach new college re-cruits what they need to know to be effective salesrepresentatives.

As we have seen, young people wbo begin tbeir ca-reers working for less-tban-competent sales manag-ers are likely to bave records of low productivity.Wben rebuffed by their customers and considered bytbeir managers to bave little potential for success,tbe young people naturally have great difficulty inmaintaining their self-esteem. Soon they find littlepersonal satisfaction in their jobs and, to avoid fur-tber loss of self-respect, leave their employers for johstbat look more promising. Moreover, as reports aboutthe high turnover and disillusionment of those whoembarked on sales careers filter back to college cam-puses, new graduates become increasingly reluctantto take jobs in sales.

Tbus ineffective first-line sales management setsoff a sequence of events that ends witb college anduniversity graduates avoiding careers in selling. To alesser extent, tbe same pattern is duplicated in otber

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functions of business, as evidenced by the growingtrend of college graduates to pursue careers in "moremeaningful" occupations, such as teaching and gov-ernment service.

A serious "generation gap" between bosses andsubordinates is another significant cause of break-down. Many managers resent the abstract, academiclanguage and narrow rationalization characteristi-cally used by recent graduates. As one manager ex-pressed it to me, "For God's sake, you need a lexiconeven to talk with these kids." Nondegreed managersoften are partieularly resentful, perhaps because theyfeel threatened by the bright young people withbook-learned knowledge that they do not understand.

For whatever reason, the "generation gap" in manycompanies is eroding managerial expectations ofnew college graduates. For instance, I know of a sur-vey of management attitudes in one of the nation'slargest companies that revealed that 54% of its first-line and seeond-line managers believed that new col-lege recruits were "not as good as they were five yearsago." Since what managers expect of subordinates in-fluences the way they treat them, it is understand-able that new graduates often develop negativeattitudes toward their ¡obs and their employers.Clearly, low managerial expectations and hostile atti-tudes are not the basis for effective management ofnew people entering business.

Industry has not developed effective first-linemanagers fast enough to meet its needs. As a conse-quence, many companies are underdeveloping theirmost valuable resource-talented young men andwomen. They are incurring heavy attrition costs andcontributing to the negative attitudes young peopleoften have ahout careers in husiness.

For top executives in industry who are concernedwith the produetivity of their organizations and thecareers of young employees, the challenge is clear: to

speed the development of managers who will treatsubordinates in ways that lead to high performanceand career satisfaction. Managers not only shape theexpectations and productivity of their subordinatesbut also influence their attitudes toward their jobsand themselves. If managers are unskilled, they leavesears on the careers of young people, cut deeply intotheir self-esteem, and distort their image of them-selves as human beings. But if they are skillful andhave high expectations, subordinates' self-confi-dence will grow, their capabilities will develop, andtheir productivity will be high. More often than onerealizes, the manager is Pygmalion.

References

1. Tht Rosenthal and Headstart studies are cited in Robert Rosenthal andLenore laciibsiin, Pygmalion m the Classmom ¡New York: Holt, Rinc-hart, and Winston, Inc., 19681 p.11.

2. See John W. Atkinson, "Motivational Determinants of Risk-TakingBehavior," Psychological Review, vol. 64, no. 6,1957, p. 365.

3. David E. Berlew and Douglas T Hall, "The Socialization of Managers:Effects of Expectations on Performance," Administrative ScienceQuarterly, September 1966, p. 208.

4. See Rosen thai and facobson, Pygmalion in the Classroom, p. 3.

5. BerlewandHall, "The Socialization of Managers," p. 221.

6. David E. Berlew and Douglas T. Hatl, "Some Determinants of EarlyManagerial Success," Alfred P Sloan School of Management Organiza-tion Research PruRram #81-64 iCambricige: MIT, 1964), p. 13.

7. Robert T. Davis, "Sales Management in the Field," HBR [anuary-February Í958,p.91.

8. Alfred A. Oberländer, "The Collective Conseienee in Recruiting," ad-dress to Life Insurance Ageney Management Association annual meet-ing, Chicago, ¡llinois, 1963, p. .5.

9. "Hdw tu Keep the Go-Getters," Niilion'^i Business, |une 1966, p. 74.

10. Robert C. Albrook, "Why It's Harder to Keep Good Executives," Foi-tune, November 1968, p. 137.

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130 HARVARD BUSINESS REVIEW September-October 1988

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