Why middle-management is essential for business survival and the risks you run of if you lose or alienate them.
Middle management. Often described as the ‘backbone’ of the company, they provide the continuity across the business and the key people for getting things done; communicating and resolving problems up, down and across the line; translating strategy into action; leading key operational areas; have considerable expertise and experience within the business; providing linkages between senior executives and front-line staff; and are implementing and responding to change.
As such, middle management is crucial to the on-going success and survival of the business. Senior executives are starting to appreciate their role and the impact of their work, but at a time when it becoming harder to develop and retain middle management.
Middle Management Stress & Turnover
In a recent poll by Lane4 in the UK (July 2012) more than 90% of workers believed that the vast majority of workplace stress was falling on middle management, and two in five (39%) of middle management reported that they were under severe stress. As such, many mid-level managers are dissatisfied and would like to leave their current organization. In harder times it is those middle managers who are your best and who perform well who find it easiest to find new roles and new opportunities.
This has several impacts on your business: firstly, the business will lose its top middle management talent, this will put an increase burden on those who are left behind; secondly, the exodus of mid-level talent seriously compromises the business’ future leadership pipeline and its ability to have the right people in the right place to enable the business to grow and develop in the future; and finally those mid-level managers remaining will be the low-performers, who are more likely to be disengaged and who have “quit and stayed”. All of this means that business’ ability to survive and thrive – especially in challenging times – is seriously compromised.
The Impact of Mid-Management Turnover
One of the current major growth challenges facing CEOs is the lack of key talent to enable them to grow the business. This is exacerbated with the turnover of good mid-level manager as it compromises the business’ ability to execute the CEO’s strategy and drive results and outcomes.
Furthermore, the costs of middle management turnover are also high. A common rule of thumb is to assess the cost of a middle manager to the bottom-line at one-and-a-half to two times their annual salary. Assuming an average salary of $125,000 then this could mean $250,000 off your bottom line. Alternatively, look at it in terms of the extra revenue you need to achieve just to stand still – assuming your net profit is 10%, then that is a further $2.5m of revenue required!
Practically, I think this heuristic is conservative. Once you take into account the corporate knowledge, experience, expertise and insights that have been developed over a number of years you are looking at the loss of a very valuable contributor. Furthermore, to recruit someone who is an equivalent is both difficult and expensive to do.
Causes of Mid-Management Stress
Middle management is under increasing stress for a number of reasons. They are the people who have to lay off staff when the company downsizes (or more cynically “right-sizes”), in an environment of poor morale, having to do more with less, with little or no increase in salary or benefits whilst being responsible for more, a reduced opportunity for career progression, dealing with people who like them are worried and scared, and frequently being seen as an “unwanted layer” and at a high risk of being laid off themselves (often having had to lay off others first).
So what do we do?
Dealing with the Problem
In challenging times we need to maintain our middle management. In economies which are struggling the senior executives need to work with and engage with their middle management even more closely. It is at the mid-levels that the most important projects are, and reducing their resourcing is nigh on suicidal. If the level of responsibility for middle management is extended, and their capacity and resources is limited or reduced, then you need to invest in their developing the necessary capabilities. If this is not done then senior management will be faced with a “frozen” middle management compounded by cycles of low morale and low engagement.
Companies need to be resilient – leaders need to provide clear direction, they need engage the middle management and rebuild trust, and in doing so enable them to engage with their reports and teams in turn. If you cut out the middle, then you are just left with the head and tail of the business – unable to do the necessary work effectively, and a corpse all but in name.
It may seem counter-intuitive but now is the time to invest in your middle management – this will pay off in terms of loyalty, results and longer-term growth. Treat your key people as an investment, not a cost to be cut but people to be valued, developed and through whom you can achieve leverage and significant returns.
So what are you going to do?
Click here to find out more about Andrew Cooke and Growth & Profit Solutions.
Blue Sky GPS Executive Insights 