Middle Management and Separate Consideration
According to Caye, Rainer, Orlander, Kilman, Espinosa, Francoeur and Haen, “Middle managers are critical to improving overall engagement and corporate performance” (p. 1). In addition, the authors further concluded that the success or failure of most corporate initiatives/strategies is based on whether or not employees are going the “extra mile” (Caye et al., p. 1). Since middle managers are the link between general staff and higher tiers of management, the productivity related to staff is highly influenced by the efficacy of middle managers. Wharton established middle managers as the glue that holds the company together as they bridge gaps between top managers and lower level workers. Though they have a high concentration in most middle to large sized firms, they can be a challenging group to develop and retain. In a typical organization that contains 50,000 employees, there are generally 50 to 200 senior executives and approximately 7,000 middle managers. In terms of concentration alone, it can be stated that the sheer numbers of middle managers in most organization makes them a consideration when structuring incentive plans. According to research studies collected by Wharton, 20% of middle managers are not satisfied with their current job and this causes high turnover, which some have estimated as being 20% as well. Financially, recent calculations from the same study have suggested that for every 1% that turnover of middle management could be reduced, that would increase partner earnings by 80,000.
As a result of these statistics and statistics beyond those cited, there is a great deal financially at stake in motivating middle managers. Some of the top reasons in which middle managers have reported dissatisfaction include: lack of prospects for advancement, monotony of position, brining in new people instead of promoting from the inside, lack of specific incentives while upper management has transparent incentives and micromanagement/lack of respect by senior managers (Wharton, 2008). With the right short term and long term incentives, however, middle management can be motivated far more efficaciously than they have been traditionally.
Long term strategy one. To first successful create incentives for middle managers, the organization has to properly align itself to fit the needs of this demographic. Acona (2005) has demonstrated that the efficacious 21st Century organization has flattened tiers of management. For middle managers, organizations that flatten their managerial structures can create environments that middle managers need, which are are new roles, responsibilities and levers (Caye et al., 2010). This decreases attention on upward mobility and at the same time it continues to keep the position fresh and challenging the middle managerial staff demographic.
Long term strategy two. Though flattening tiers of management is important, most organizations cannot completely flatten their managerial tiers. There will be potential for some degree of upward mobility in any dynamic. Many dissatisfied middle managers have pointed to the practice of organizations hiring from the outside for higher level or new positions. This phenomenon is common and damaging to morale as it basically sends a message to the existing middle managers that the organization is not confident in their abilities and that they are no interested in rewarding them for their time and service. The reality of the situation is that that track records of external people when hired for managerial positions are not as good as internal employees as internal employees have a deeper knowledge of the company. This long term strategy will consist of giving existing middle managers first priority in consideration for new positions and upward mobility over outsiders.
Short term strategy one. Another common mistake organizations make is requiring effort beyond the every dat job responsibilities in order to receive incentive pay (Miller, 2012). A more efficacious short term incentive strategy should reward excellent performance that occurs within their daily/normal job duties (Miller, 2012). When normal duties contribute to the organization’s success in an overt capacity, incentives should be rewarded to those individuals who were part of that success.
Short term strategy two. There incentives and bonuses awarded to middle managers need to be fair and transparent. There is an existing habit of higher level managers getting bonuses and incentives that middle managers see. For them, however, there is no similar motivational factor for their position. As a result, the organization has to create a tangible system of bonuses and reward structures that specifically targets middle management. The two short term strategies are complimentary and they both can be integrated into existing cultures right away. The long term strategies like flattening managerial tiers and hiring inside the company will take longer and require significant change management.
Caye et al. developed a middle manager incentive plan that uses the code name: DEAL. Within this plan, it is suggested that organizations delayer their structures and create larger and new exciting roles for middle manager. It is also suggested they empower managers to act and accelerate leadership skills (Caye et al.). In addition, the final step is what they consider leveraging the power of middle managers. Essentially, the proposed steps of this particular plan mirror the Caye, et al. ideology for motivating middle management, which in turn will make the company more efficient. Overall, while there may be debate as to which way best motivates middle management, what is difficult to debate is the importance of middle management to an organization. From direct cultural influence on workplace morale to financial/economic benefits from productivity and turnover rates, organizations that ignore the unique needs of their middle managers will be at a disadvantage to those who who understand the importance of the positions and how to use that human capital.
Acona, D. Managing for the Future. Canada: Thomson.
Caught int he middle: Why developing and retaining middle managers can be so challenging. Wharton: University of Pennsylvania.
Caye, J., Rainer, S., Orlander, P., Kilman, J., Espinosa, E., Francoeur, F. & Haen, P. Creating a New Deal for Middle Managers.
Boston: Boston Consulting Group. Miller, S. Incentive compensation tips and pitfalls shared. Society for Human Resource Management.