Middle Managers: The Key to Unlocking Organisational Performance

“Middle managers are the glue that holds teams and enterprises together … by removing the tasks that weigh managers down, you can elevate their work and let them elevate their reports’ work.” — Field, Hancock, and Schaninger. HBR Magazine July-August 2023

Like many people, I’ve spent most of my career as a middle manager, from the first step leading people to the level below the CEO’s executive team. As a middle manager, I often found myself constantly buried under a mountain of administrative tasks from various functions, sometimes my own. Each day began with an overwhelming array of forms to fill out, boxes to tick, mandatory tasks to complete, or meetings to attend. This feeling only increased when I was required to remove headcount costs in my function. Despite this, I felt my primary responsibility remained: to coach, develop, and lead my team effectively. The dichotomy was stark and exhausting.

Later in my career, as I transitioned into a more senior role, I noticed a pattern every time we convened for meetings. We seemed to generate endless lists of additional responsibilities for our middle managers, always pushing for more—more reports, more compliance checks, more forms to fill out. It felt like a relentless cycle of increasing demands. I began to ask questions about our strategic priorities and advocated for defining what we would stop doing or delay. The reality is that middle managers in similar situations often end up sacrificing the very thing they should be doing more of—engaging with and leading their teams and delivering superior financial and operational performance through the connection to their company's purpose. So, let's look at how companies can recognise the immense value middle managers deliver and give them the space to harness their full potential.

Why Middle Managers Are Crucial

Middle managers play a pivotal role in bridging the gap between senior leadership and frontline employees. They are responsible for executing strategy, fostering employee engagement, and driving performance. As organisations increasingly adopt remote and hybrid work models, middle managers are on the front lines, balancing the need to hit business goals with the imperative to support their teams.

According to a study by McKinsey, companies that invest in middle management see significant improvements in returns on invested capital and have superior long-term financial performance compared to their peers.

They also cited that middle managers, if freed from the burden of bureaucracy and unnecessary extra admin, can lead a 21st-century organisation in areas like increasing automation, enhancing recruitment, retention, and diversity, while facilitating high-value work, leading talent development and succession readiness, and demonstrating purpose and passion.

George Serafeim, in his talk titled "Reimagining Capitalism", highlights something that might surprise some people, which is that “the sense of the company’s purpose in senior executives in an organisation has zero relationship with organisational performance and that when you look at that sense of the company’s purpose within middle managers, you find a very strong relationship with future profitability, with future returns even after accounting for current performance. So, how you diffuse that sense of purpose and whether people buy into that seems to be an important aspect of how well the organisation is functioning.” Middle management is really where “the rubber meets the road,” and where a company’s success and the operationalisation of its strategy are reliant on middle managers.

What Companies Are Doing Wrong

Despite their importance, middle managers are often undervalued and burdened with tasks that detract from their core responsibilities. One of the most significant issues is the excessive administrative workload placed on them. Several research papers on this topic estimated that the average middle manager spends between ~25% - 35% of their time on non-value-adding activities. This inefficiency not only stifles creativity and innovation but also prevents managers from effectively leading their teams.

Moreover, many companies resort to cost-cutting measures that involve eliminating middle management roles, believing it will lead to short-term financial gains. However, research from McKinsey shows that this approach can have long-term negative consequences, including decreased employee motivation and a weakened organisational structure. By removing these roles, companies disrupt the critical flow of communication and strategy execution, ultimately harming their overall performance.

Reflecting on Serafeim's earlier observations concerning the connection between a sense of purpose and middle management, his research indicates a decline in this sense deeper within organisations. He notes that while CEOs and senior executives often see significant meaning and impact in their roles, this sense diminishes considerably among mid-level managers and even more so among frontline employees. This suggests that although many organisations and their leaders are well-meaning, they struggle to effectively spread this sense of purpose and fail to convince the broader employee base of the authenticity of their endeavours.

Finally, David Marquet, author of the best-selling book “Turn the Ship Around”, highlights that the typically leader-follower model adopted by many organisations is dated and no longer fit for purpose. Under this model, individuals are not empowered to make decisions and when they are asked to make a decision, it can sometimes be a bad decision as we have created an environment of "learned helplessness" through the lack of developing their competence, or not providing clarity. Under this model, leaders don’t relinquish control and instead issue directions or require followers to seek permission to do something, thus becoming a single point of sensitivity.

What Companies Can Do to Harness the Power of Middle Managers

To unlock the full potential of middle managers, companies need to rethink how they support these vital leaders. Here are five actionable tips:

• Invest in Leadership Development: Provide middle managers with the resources and training they need to grow and make independent decisions as leaders. This includes development in "intent-based leadership language and practices", peer-to-peer best practice scenario learning workshops, mentoring, and access to executive coaching.
• Flip the Leadership Model on Its Head: Marquet advocates for changing the leader-follower model by empowering people, relinquishing control for decision-making while still retaining responsibility, building competence, and providing clarity. Field, Hancock, and Schaninger advocate for the same change, by transferring power down through the ranks and prioritising trust over bureaucracy. A friend of mine once said that you need to delegate until you feel like you no longer have control and then go a little further. This is when our middle managers truly feel empowered to make decisions. Of course, we need to ensure we have the necessary risk mitigation steps in place, and we need to learn how to fail fast and adopt a learn versus blame philosophy when things go wrong.
• Demonstrate That Human Capital is as Important as Financial Capital: Firstly, throw away the spans and layers methodology that many consultancies use as part of organisation headcount cost-cutting exercises. Some of the best leadership models stem from the military, where a Platoon Commander or even a Squadron Leader generally have four to five direct reports. When assessing costs, build checks and balances that weigh up the loss of financial performance through a reduction in middle manager headcount. If you are still required to reduce headcount costs as a last resort, then run a parallel program as suggested below to streamline processes so the remaining leaders are not expected to do more with less.
• Streamline Administrative Processes: Identify and eliminate non-essential administrative tasks. Implement technology solutions to automate routine processes, allowing managers to focus on high-impact activities. This, in my opinion, is where AI can play a powerful role. Instead of replacing the role of a middle manager, it can be used to automate, complete, or streamline essential internal processes and administrative tasks, freeing up managers to concentrate on operational imperatives. For the non-essential tasks, I recommend establishing a project led by the best or high-performing middle managers from each function to identify which tasks should be eliminated.
• Enhance Communication Channels: Ensure that middle managers have direct lines of communication with senior leadership. Regular check-ins and open forums can help bridge the gap between strategy and execution. Consider setting up a dedicated transparent communication channel that enables middle managers to directly engage with the executive team and CEO. This forum could be used to harness improvement ideas, support change initiatives, or even keep this level informed and engaged.
• Align with Organisational Purpose: Help middle managers understand and internalise the company’s purpose. Provide them with the tools to effectively communicate this purpose to their teams, fostering a sense of shared mission and commitment. As George Serafeim's research indicates, the alignment of middle managers with organisational purpose is strongly linked to future profitability. You could run dedicated purpose work clarity sessions with teams to distil the purpose into everyday team tasks, activities, and deliverables.
• Recognise and Reward Contributions: Acknowledge the efforts and successes of middle managers. Recognition programs, promotions, and financial incentives can motivate them to continue driving performance. If middle managers are the strategy and performance multiplier then consider rewarding and incentivising them more than what you possibly do now. The typical salary grading and remuneration structure sold by many remuneration consultants largely follows a hierarchal framework where the people at the top get paid more. This means your most valuable capability may not be remunerated in line with the value they create. What if their short-term incentive (STI) percentage was the same as the company executives? What if they could earn 200% of their base salary through an STI if the organisation overachieved against its financial goals? If they are paid well then maybe they won't leave, or seek a promotion to get paid more, and they may happily continue to deliver value as a middle manager.

Conclusion

Middle managers are the unsung heroes of organisational success. By investing in their development, reducing their administrative burden, and aligning them with the company’s purpose, organisations can unlock significant performance gains. As George Serafeim’s research suggests, the true power of purpose-driven leadership lies in the hands of middle managers. So, it's time for companies to recognise this and take meaningful action to support these pivotal leaders.

#Leadership, #Trust, #Culture, #Communication #MiddleManagers #Purpose #Purpose-Driven #PurposefulCharacter

For over three decades, Russell has passionately led diverse HR and non-HR functions, notably serving as Chief People Officer for a global company across 24 countries. Co-founder of Exeden, he challenges traditional HR norms and inspires action to foster purpose-first workplaces that deliver outstanding value to customers, communities, society, and shareholders. Leveraging his hands-on experience, research, and time spent with other practitioners and thought leaders, Russell writes insightful articles on Purposeful Leadership. His impact and passion for people go beyond businesses, where Exeden has committed to donating 100% of its annual dividends to organisations dedicated to uplifting disadvantaged or underrepresented talent in our community.