Failing Up: Why Mediocre Workers Keep Getting Promoted

The economics of how average people get some of the best jobs in the most high-profile industries ... and why (just maybe) they deserve more credit than we give them

615 mcconaughey.jpg

Reuters

I have a confession to make. I have a problem with actor Matthew McConaughey. Matthew could be a really swell guy, but for a star cast in ten movies in the last five years, he lacks a certain je ne sais quoi. Actually, scratch that. I do sais quoi. He can't act. We grow up. His emotional capacity stays the same age. 

You might have heard the term "failing up." I would define it as the ability to advance in your career -- e.g.: being promoted, finding a better job, being cast in Ghosts of Girlfriends Past -- despite demonstrating mediocre talent. It's true for entertainers. It's true for overpaid corporate executives. What's behind the failing up phenomenon?

Marko Terviö might have an idea. He's the author of Superstars and Mediocrities: Market Failures in the Discovery of Talent, a 2008 research paper I read, after seeing it at Marginal Revolution. Terviö's thesis is that some industries are particularly susceptible to the career advancement of mediocre talent -- especially in fancy management positions, sports, and Hollywood.

THE TRIUMPH OF MEDIOCRITY

Terviö doesn't use the term "failing up." His subject is "market failure in the discovery of talent." But these are related problems, I assure you.

Let's say you want to hire somebody to run your well-known magazine. The pool of candidates includes (a) journalists who show some promise, but haven't run a magazine, and (b) journalists who have run magazines but performed at a mediocre level. Whom do you hire?

There are no correct answers here, only risks and opportunities. The risk of hiring the whippersnapper is that he might be in over his head. The risk of hiring the incumbent is that, having been visibly mediocre in a former job, she might demonstrate the same mediocrity in the new job.

220px-Isiah_Thomas.jpgBut the odds favor the second "incumbent" candidate for a few surprising reasons (besides "she has more experience"). First, an unproven worker might cost extra money. You might have to train him. You might have to wait until his talent emerges. And after all this, he might leave you before the firm has captured the full benefits of his talent.

Second, at the highest levels of some very public industries -- such as sports or entertainment -- there is a perceived scarcity of talent. But the more important limitation might be the scant opportunity to demonstrate talent. There are fewer elite jobs than super-talented people. As a result, we probably underestimate the number of uniquely talented people, because only a sliver of them are currently in jobs where they can prove how awesome they are.

"When talent is industry-specific, can only be revealed on the job, and once learned becomes public information, firms tend to bid excessively for the pool of incumbent workers at the expense of trying out new talent," Terviö writes. This bias leads to mediocre workers crowding out the talented whippersnappers. The upshot is a worse-off company (or movie, or sports team) and higher wages for "known high talents."

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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