Not every high performer should become a people leader.

Promoting the wrong person into management is one of the most common and costly mistakes startups make. It doesn’t always show up immediately. Sometimes, it’s slow erosion: a frustrated team, a spike in turnover, a few missed deadlines. You can’t quite pinpoint the issue… until the damage is done.

The reality is that bad managers don’t just derail performance, they erode trust, flatten morale, and create ripple effects that spread across the entire company. And once culture starts to break, it’s hard to rebuild.

So, how do you spot the red flags early, before the wrong promotion wrecks your entire team? And more importantly, how do you build a system that helps you evaluate leadership potential, so you're not gambling every time someone moves into a people role?

Let’s get into it.

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The Cost of a Bad Manager

Most “bad managers” aren’t intentionally toxic. They’re accidental. They got promoted for being technically strong, not because they’re great leaders who had the right leadership skills or management style.

And when leadership misalignment goes unchecked, here’s what you start to see:

• Micromanagement instead of autonomy
• Poor communication that confuses rather than clarifies
• Team members who feel unrecognized, unheard, or unsupported
• Check-ins that feel rushed, robotic, or skipped altogether
• Managers who take credit for team success, but pass the blame when things go wrong
• Favouritism, with top performers passed over while others get special treatment
• A slow but steady breakdown in employee morale, satisfaction, and retention

One undertrained manager can create a toxic work environment that drives your best people out the door. And the cost of that high turnover? It adds up, in rehiring, onboarding, lost momentum, and broken trust.

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Why Technical Skill ≠ Leadership Readiness

Here’s the trap most companies fall into: they assume high performance equals leadership potential.

However, the truth is that your top engineer, designer, or marketer might thrive in autonomy but completely flounder when asked to manage direct reports. That’s because leadership isn’t about individual excellence. It’s about enabling others to perform, grow, and stay engaged over the long term.

Good management requires a shift from “doer” to “coach.” It requires:

• Emotional intelligence and self-awareness
• A clear and flexible leadership style
• The ability to provide constructive feedback
• A mindset that prioritizes teamwork, wellbeing, and growth, not just hard work
• Understanding when and what to delegate. If they can’t delegate, they’ll drown in decisions, and their team will feel it. We’ve written about how to master delegation and avoid decision fatigue.

Too often, startups reward execution with management titles. But that leads to poor management, because the skillset hasn’t been built yet. And instead of developing the team, these accidental managers default to control, burn out themselves, and hurt the employee experience.

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Early Red Flags: How to Spot the Wrong Manager in Action

If you want to avoid long-term damage, you need to be able to identify the signs of a bad manager early.

Here are the most common warning signs:

• They micromanage instead of trusting their team
• They avoid tough conversations or overcorrect with blame
• They rarely give constructive feedback, and when they do, it’s vague or harsh
• They play favourites, creating resentment and inequality
• Their team members don’t grow, there’s no clear career development
• Their one-on-ones become rushed status updates (if they happen at all)
• They can’t articulate their management style or leadership philosophy
• Their team sees a spike in burnout, disengagement, or turnover
• They seem overwhelmed or reactive, not proactive and composed

If any of this sounds familiar, it’s time to take a deeper look. These red flags don’t just indicate a bad manager — they’re often signs of deeper leadership traps. We broke down the 9 most dangerous ones here.

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The Ripple Effect: When One Bad Manager Breaks the Culture

When you leave the wrong person in a leadership role for too long, it starts to corrode your company culture, from the inside out.

Lack of trust becomes the default. Teamwork suffers. Employee engagement drops. High performers quietly update their LinkedIn. And because feedback is weak or nonexistent, no one knows what success actually looks like anymore.

The negative impact isn’t just emotional. It’s strategic. Projects slow down. Innovation stalls. New ideas don’t surface. Cross-functional friction increases. And suddenly, you’re doing exit interviews with people you really wanted to keep.

This is how culture breaks not with a single blow, but with repeated exposure to the wrong kind of leadership.

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How to Evaluate Leadership Potential Before You Promote

Most business owners want to believe their instincts are enough when it comes to spotting leadership talent. But gut feel is not a strategy. The real competitive edge? Turning your top talent into actual leaders, if you want to prevent the rise of a bad boss, the kind who derails culture, plays favourites, or makes their team quietly dread Mondays. You need to treat leadership evaluation with the same discipline you’d use for any high-stakes business decision.

Here’s how to do it with structure, clarity, and rigour before the damage is done.

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1. Watch for early leadership behaviours

Leadership potential doesn’t magically appear the day someone receives a title. It shows up in how they work on a regular basis, long before they’re officially in charge. The best future leaders naturally step into behaviours that support the entire team, not just their own success.

Pay attention to how someone:

• Takes ownership of shared outcomes, not just individual wins
• Helps peers navigate challenges and shares referrals or resources without being asked
• Responds to failure with accountability, not excuses
• Stays calm and clear in moments of ambiguity or conflict
• Advocates for team wellbeing, not just delivery speed
• Balances drive with emotional intelligence, recognizing when someone’s personal life might be affecting performance

These actions signal a leadership mindset, and they’re often the best predictor of whether someone will create a healthy, high-performing environment or spiral into bad manager territory.

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2. Run real-world simulations

The safest time to test leadership ability is before a promotion, when the stakes are lower, and learning curves won’t cause collateral damage. You want to see how someone shows up when they’re given a little more influence, not just authority.

Give high performers a chance to lead initiatives that require collaboration, decision-making, and accountability. Ask them or watch them:

• Lead a team meeting with cross-functional stakeholders
• Coach a junior teammate through a complex decision
• Navigate tension or disagreement with clarity and empathy
• Own a cross-functional initiative from start to finish

And don’t just evaluate outcomes, look at how they led. Did they build buy-in? Did they ask questions and clarify roles? Did they align the project to company goals? Did they understand and support their teammates’ career goals, or did they bulldoze through to hit a metric?

The point here is not to create pressure, but to surface real data. Because if someone collapses under a simulation, they’re not ready for the real thing.

These simulations reveal how someone manages pressure, communicates, and leads all before they have direct reports.

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3. Use 360-degree feedback

One of the best ways to avoid promoting a bad boss is to ask the people who’ve worked alongside them. Peers and direct reports often see a clearer picture than the person’s manager or the CEO.

Use structured 360 tools to gather input from all sides. Ask things like:

• How do they respond to feedback?
• Do they share credit or take credit for team efforts?
• Are they inclusive, communicative, and emotionally steady?
• Would you want them to lead a team, or would that be a dealbreaker?

You’ll quickly find patterns. If peers consistently mention issues with control, favoritism, or a lack of trust, these are red flags, regardless of the person's technical talent.

Don’t be afraid to share anonymized feedback back with the candidate. If they’re truly ready for leadership, they’ll be eager to reflect and grow, not defensive or dismissive.

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4. Invest in leadership development early

Here’s the hard truth: if someone learns how to lead after they get the title, it’s often too late. By then, bad habits have taken hold. Team morale might already be slipping. And you’re back in the course correction cycle.

Instead, build your leadership bench before you need it. Offer training, coaching, and frameworks to promising ICs. Teach them how to:

• Run high-quality one-on-ones
• Deliver constructive feedback in ways that land
• Set and communicate clear expectations
• Support team wellbeing, psychological safety, and work-life balance
• Think like a good boss, not just a top performer

This kind of investment pays off, not just in promotions, but in employee engagement, retention, and internal referrals. People want to work for leaders who challenge them, respect them, and support both their careers and personal lives.

This is how you build a real leadership pipeline not by accident, but by design. That’s why investing in middle managers pays off more than you think.

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What To Do If You’ve Already Made the Wrong Call

Sometimes, despite best efforts, you’ll promote someone who isn’t the right fit. What matters next is how you handle it.

First, open a dialogue early and often. Don’t wait for the performance review. Ask how things are going, what they’re struggling with, and what kind of support they need. Leadership is learned, but only if the person is willing to grow.

Then, set specific expectations for change:

• Hold them accountable for team engagement and retention
• Track improvements in check-in cadence, feedback quality, and clarity
• Provide tools, coaching, and space to learn, but be firm about outcomes

If there’s no shift, consider a graceful transition back to an IC role. Done right, this preserves the relationship and prevents further damage to the team. Reassigning isn’t a failure. It’s a course correction. Frame it as a move toward strength, not a punishment.

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What Great Managers Actually Do

Let’s flip the lens. What does it look like when you get it right?

A good manager is someone who builds trust, fosters psychological safety, and helps their team grow. They aren’t perfect but they’re consistent.

They do things like:

• Set clear expectations and revisit them regularly
• Give timely, honest, and constructive feedback
• Make space for mental health and support work-life balance
• Coach toward career development, not just task completion
• Celebrate wins publicly and take responsibility when things go wrong
• Stay curious, humble, and adaptable in their management style

They don't just lead, they multiply the impact of those around them. And that’s when your team hits its stride.

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Final Thoughts: Leadership Is a Strategic Decision

If you're a CEO, VP of Talent, or manager in a growing company, you can’t afford to treat leadership like a reward for hard work. It’s not a thank-you gift. It’s a strategic role with serious consequences.

Every manager you promote becomes a steward of your company culture. They influence employee satisfaction, performance, wellbeing, and career growth. They shape the way people feel when they come to work, and whether they want to stay.

So start assessing leadership potential early. Build in structure. Create feedback loops. And don’t wait until things break to intervene.

Because the longer a bad manager stays in place, the more good people you’ll lose.

And that’s too steep a price for any company to pay.

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Keep the Momentum Going

Spotting the wrong manager is one part of the equation. The other part? Building the right ones from the ground up.

If you want to create a strong leadership bench, one that grows with your company, not against it, the work starts long before promotion.

Here are two posts to guide your next move:

👉 You Hired the Talent, Now Build the Identity
How to turn individual contributors into confident, culture-driving leaders.

👉 Invest in the Middle
Why your middle managers are your most important and overlooked investment.

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