Don’t Eliminate Your Middle Managers

Summary:

In today’s world of work, human capital is at least as important as financial capital. To survive and thrive, organizations must shift their mindset, recognizing not just that employees are a crucial asset but that those who recruit and develop them are the most important asset of all.

In recent months, amid signs that the economy might be softening, many companies announced layoffs aimed at curbing expenses, with middle management a common target. Cutting such jobs hastily or too deeply can be a costly mistake. Over the past several years of advising clients and researching workforce trends, we’ve seen that this vital organizational layer often gets severely depleted. The problem is, middle managers—positioned close to the ground but not too close—are essential to helping businesses navigate rapid, complex change. They can make work more meaningful, interesting, and productive, and true organizational transformation can occur only with their involvement. They’re the glue that holds teams and enterprises together, fostering the inclusion and psychological safety individuals and groups need to thrive.

If middle managers are to fulfill this promise, though, leaders must reimagine their roles and give them the training and support they need. Instead of eliminating them or relegating them to administrative and individual contributor work, companies should reassess their responsibilities, push to more fully understand their value, and then develop, coach, and inspire them to realize their potential as organizational linchpins.

All that may sound like a tall order, but leaders can’t afford not to take those steps, as we learned when we recently explored the economic impact of investing in the development of human capital—including the critical management layer. We studied HR data on 1,700 global companies—for example, figures on attrition, hours of training, and internal mobility. We also examined their McKinsey Organizational Health Index scores, which are based on an analysis of organizational performance outcomes (such as employee motivation and an inclusive work environment) and management practices (such as employee empowerment and bottom-up innovation). When we compared that information with the firms’ financial results, we found that companies whose managers excelled on human capital metrics had high returns on invested capital (28%), were four times as likely as their peers were to have superior long-term financial performance, and experienced more sustained revenue growth during the pandemic.

Why Middle Managers Can Be Your MVPs

Many companies don’t know how to make the most of their middle managers—the people at least one level away from both the front line and senior leadership. In survey after survey those managers report being mired in bureaucratic and individual contributor work. If freed from those demands, they can take the lead in several areas critical to the 21st-century workplace.

Responding to increasing automation. As algorithms and machines take over tasks from humans, companies will be engaged in what we call the Great Rebundling: finding ways to reconfigure employees’ work. Although such redesigns may be broadly shaped at headquarters, the details can be defined and carried out only by those with firsthand knowledge of what happens on the ground. Smart organizations will deputize middle managers to pull apart and reassemble the pieces of affected jobs.

The world’s largest private employer, Walmart, has recognized the importance of rebundling in the face of rapidly changing technologies and consumer preferences. Its Walmart Academy provides instruction and on-the-job coaching to prepare associates for supervisory positions, and its Live Better U program offers free classes and training in areas including cybersecurity, business administration, supply chain management, and logistics—all in anticipation of skills associates will need going forward. Building a strong managerial pipeline is essential, Lorraine Stomski, Walmart’s senior vice president of enterprise leadership and learning, told Harvard Business School’s Joseph Fuller in a podcast episode. The manager is “the person that believes in you—that sees you can do more than what you’re doing,” she explained.

Winning the war for talent. Research by our firm and others has found that people are looking for more than a good salary. They want to understand how a prospective job would fit into the organization’s strategy and align with their personal purpose. They want to join a team that’s caring, trustworthy, interesting, high performing, and fun. They want their employers to participate in their development, and they want more control over what they do and when and where they do it.

Middle managers can make a huge difference in a firm’s ability to attract talent. They, far more than their higher-ups or their colleagues in HR, can craft individualized working arrangements that will enhance recruitment, retention, and diversity while facilitating high-value work. Consider the case of Julia, a highly qualified recent graduate who interviewed at two investment firms. David, the hiring manager at one, was shocked when she turned down his six-figure offer. He’d failed to perceive that the hiring process now involves more than an economic exchange, and he’d grown tongue-tied when asked about job sharing and whether the company had pledged to go carbon-neutral.

Julia went on to take a job with the second firm, which focused on environmental, social, and governance (ESG) investing. Karl, the manager who’d interviewed her there, had talked about the firm’s values and priorities and whether they connected with her own. That kind of conversation can be driven only by someone operating near the ground level, where it’s possible to understand both the company’s purpose and that of each individual. Karl expressed his openness to remote and part-time work and sealed the deal by introducing Julia to his team, whose enthusiasm and commitment won her over.

By removing the tasks that weigh managers down, you can elevate their work and let them elevate their reports’ work.

As work becomes ever more dynamic, other hiring practices need to evolve. HR can ensure that policies are consistent, fair, and legal. But only managers understand their individual departments deeply enough to see gaps between old and new realities and identify which policies need to change. For example, do university degrees still make sense for particular roles, or are more-creative recruiting strategies called for? Managers and HR can work together to widen the hiring aperture and bring in new kinds of talent. In doing so they’ll also be helping their firms meet diversity goals while leveling the playing field for historically disadvantaged groups.

Leading employee development. Middle managers can engage in a dialogue with HR about how the organization’s people are overseen and developed. They know their team members better than anyone else does, so they’re best equipped to provide continual coaching and to identify and address performance issues early on.

Bob, who worked in a support function at an ad agency, was knowledgeable about the industry and had creative ideas. But he had a habit of going off on tangents, making projects needlessly time-consuming and complex. Instead of dealing directly with this issue, Bob’s manager encouraged him to make a lateral move. Fortunately, Bob’s new manager, Aisha, took her job as a coach and career developer seriously. She communicated her expectations from the start and talked with Bob about more-effective ways to work. For instance, she pointed out that he could have solved a particular client problem with a single phone call rather than a group email, thus saving his time and others’. With Aisha’s guidance, Bob became a valuable contributor and colleague.

Demonstrating purpose and compassion. The need to do this doesn’t end once employees are hired. When workers feel meaning and a sense of belonging on a day-to-day basis, it elevates their satisfaction, commitment, and performance. The CEO can begin by crafting a compelling narrative about what the company stands for. But the continuing conversation requires skilled managers who can drill down to learn what each employee values, connect it to the bigger picture, and try to tailor each job to what people find to be their greatest inspiration. This is especially crucial in light of the pandemic. In an August 2020 McKinsey survey of U.S. employees, two-thirds said that Covid-19 had caused them to reexamine their personal purpose, and nearly half said they were considering changing jobs as a result.

Middle managers can make organizational goals relevant by exploring questions such as What is the work that needs to be done? and Why does that work matter? with their reports. They can be gifted storytellers and sensemakers. With many organizations having loosened their headquarters model in response to the pandemic, connecting employees to company goals has become more complex and critical than ever.

Just as important, skilled managers understand that their employees are people with rich, deep lives and show concern not just for their work but also for their hopes and dreams. Such managers recognize that if someone is underperforming, it’s rarely because that individual doesn’t care; it’s usually because the job is a poor fit or because of personal pressures. When the former is the case, managers can scan the company horizon for something more suitable. When the latter is the culprit, they may be able to lighten the employee’s load.

Checking in on team members’ mental health is no longer a nice-to-have; it’s a must-have. In a recent McKinsey Health Institute survey of 15,000 employees in 15 countries, 59% of respondents reported having at least one mental health challenge. One-on-one conversations are an ideal way to learn what employees are coping with, convey compassion, and offer concrete help. Middle managers who have them regularly with their reports can heighten employee loyalty and performance.

Making smart use of data. The neglect and misuse of data puts organizations at a serious disadvantage, especially in a volatile environment where the nature of work is rapidly changing. Many leaders complain that they’ve invested in expensive data technologies but seen few concrete results.

The difficulties often stem from a “last mile” issue: the challenge of making data understandable to employees who are in a position to use it and of giving them clear recommendations for its implementation. Some companies have assembled cross-functional data-science teams to wrangle, analyze, and disseminate information and help manage any new projects that result. Middle managers can play key roles on such teams by helping shape their analyses and organize their work. Because middle managers have the best understanding of how data is gathered and applied to day-to-day work, they’re essential to ensuring that data-based activities don’t perpetuate bias or impede performance.

But harnessing data doesn’t have to involve complex technology. Simple employee surveys, for instance, can be an effective way to learn what people want. Senior leaders should work with middle managers to ensure that the questions in them are thoughtfully designed; more than anyone else, managers know what factors are important to measure. They can translate results for those above and below them. And they can help create action plans that will yield tangible results.

What Senior Leaders Need to Do

Too many top executives fail to empower people to do the work they’re uniquely suited to. Middle managers in particular have suffered as a result. In a recent McKinsey survey many of them reported spending nearly half their time on low-value administrative and individual contributor tasks. In interviews they say they lack their superiors’ trust. Those things can induce a state of learned helplessness across the organization.

Much has been written about the need to set aside the old command-and-control style of leadership, reassess roles, and transfer more power down through the ranks. We can’t emphasize that imperative enough. To be truly effective, managers need autonomy and flexibility. By removing the tasks that weigh them down—whether by automating or reassigning those tasks or eliminating them altogether—you can elevate their work and allow them to elevate the work of their reports. That means prioritizing trust over bureaucracy and discarding the popular “player-coach” model that has managers balancing two jobs instead of focusing on one.

Begin the reassessment process by identifying the most critical managerial roles: those that will generate the greatest profit or involve the highest risk. Think carefully about whom to put in those positions according to the specific jobs to be done in them. Next pinpoint your most influential managers. You can do that by surveying employees about the people they turn to when they want to know what’s going on and seeing which names come up repeatedly. Not all those people will hold important roles, so you should home in on what we call “the critical few,” who are both influential and high value. You’ll want to bring them into the tent when making important strategic decisions. Influencers who don’t hold high-value positions can serve as megaphones. If you keep them informed and inspired, they can spread energy and excitement throughout the ranks.

Managers who are smart and innovative but not especially influential or well-connected can be encouraged to join networks that help them generate and share ideas and execute resulting plans. And managers who are not top-tier in terms of either influence or value can make a difference if you’re thoughtful about deploying them. Putting them on critical projects or connecting them with more-influential colleagues may give them the motivation to shine.

When engaged in this reassessment, you may bump up against a hard reality: Some people aren’t equipped for any of these roles. You can train many to be more effective or match them with a more appropriate team. Those who excelled as individual contributors can resume that role and be put on a promotional track in their area of expertise. Some may not be a good fit even with reshuffled assignments and additional training, and you may need to let those few managers go.

You’ll also need to change how you evaluate your managers. Don’t reward them simply according to the revenue and profit their departments produce; recognize those who have taken on tough assignments regardless of the revenue potential. Most crucially, reward managers for their most important job: managing. One executive we know devised a scorecard that uses traditional metrics but also accounts for team performance, diversity, attrition, the number of open team positions, the number of one-on-ones with reports, succession planning, and employee engagement. Whatever criteria you prioritize, be explicit about the behaviors you want to see.

As you work to reenergize your middle-management ranks, you should do the following:

Ensure that your organization has a clear statement of purpose that aligns with the managers’ purpose.
Do all you can to keep good managers working as managers. Promote them within the managerial track, move them to high-value roles, and reward them with substantial pay increases that will keep them from looking for other jobs.
Communicate that these are desirable roles—destinations, not way stations.
Encourage managers to meet with one another and share best practices.
Create a culture in which managers feel free to speak up. They’re often the first to identify systemic problems and see solutions.
Show your managers compassion, just as you expect them to show compassion to their reports.

Managers have some of the hardest jobs around. Surveys show that they’re the most depressed and stressed category of worker. Keep that in mind and support them to the fullest.

. . .

Getting started on the changes we’ve outlined will be the hardest part of the process. And those changes must be accompanied by rigorous training because few if any managers will have all the high-level people skills required in their reimagined roles. But once you’ve invested time and energy in empowering your middle managers, the rewards for your organization will be immense.

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