for Stemming the Flight of Middle Management Talent
Middle managers: in most companies, they are the mentors, the subject matter experts, the future corporate leaders. According to recent research, they are also some of the employees most likely to be job hunting.
According to a recent study by Accenture, job loyalty among today’s middle managers is weak. Survey results show that nearly half of all U.S. middle managers are actively seeking or planning to look for a new position. Approximately two-thirds also noted that they expect their job search to intensify when the employment market strengthens. In many industries, that means now.
Any HR manager who has been in his/her position for four or more years will remember how difficult it is for an organization to run efficiently in an environment of low unemployment and high turnover. That’s why it’s important to focus on retention now, before the revolving door starts spinning.
An Ounce of Prevention
The potential loss of middle management talent is a devastating proposition. In addition to the cultural implications, which are enormous, middle managers help drive corporate profitability. When middle management positions are vacant, the cost of finding, hiring and bringing a seasoned professional on board equals 45% of the new manager’s first year’s salary. That’s in addition to the costs associated with training, integration and leadership development.
As the economy heats up, the last thing a corporation needs is to bleed people and to spend money staunching the flow. Therefore, now’s the time to identify top-performing middle managers and shore up retention programs to increase their loyalty and commitment. With HR budgets still reeling from the effects of three-plus years of corporate cost cutting, the question is how? The answer lies in proven tactics: needs identification, communications and coaching.
A Six-Step Process
While no two middle managers – or companies – are exactly alike, most seasoned employees are driven by two things: recognition and meaningful opportunities for professional development and growth. Helping middle managers feel a greater sense of connection and personal satisfaction can often be accomplished in six simple steps:
Step One: Identify the high-potential middle managers and key positions within the company. To understand where to focus your attention and resources, begin by identifying the middle managers with the greatest potential for growth. Next, identify the positions and capabilities that are essential to your organization’s long-term success. Focus your attention on the high-potential managers identified, together with those middle managers who have the skills and/or experience to hold key company positions.
Step Two: Assess the needs of the most important middle managers. Once you know who the high-performing middle managers are, determine what they need and value most – e.g., training, recognition, flexibility, salary/benefits, responsibility. Often, simply asking managers about their needs goes a long way to boosting satisfaction.
Of course, the real challenge comes with implementation. Often, the range of needs and wants can be dauntingly complex. In the case of one Fortune 500 manufacturing company, HR identified more than 200 high-performing middle managers. While there were some commonalities, many managers required very different things to make them feel valued by the company. One manager, for example, noted a desire for greater public recognition, while another requested increased exposure to top executives. In total, there were more than 100 different priorities for HR and senior executives to manage.
Step Three: Develop a profile of success. Armed with an understanding of what your best performing middle managers want and expect, work with them to outline a clear development plan for getting there. The plan may map out a career path, identify new target assignments or recommend training opportunities. What’s essential is that middle managers understand the plan and know that it is achievable. Once finalized, HR executives should work with middle managers to communicate the plan to business leaders.
Step Four: Communicate long-term organizational goals and how middle management fits in. When middle managers are able to envision the company’s future – and know that they will have a significant role in it – their satisfaction and loyalty increases. Companies routinely develop long-term plans, but don’t always walk their people through them with an eye toward synching corporate and individual goals. By helping middle managers understand the value that they will bring to the organization three to five years down the road, HR professionals create a shared sense of purpose and security.
Step Five: Attack low morale and low motivation, wherever it exists. When middle managers demonstrate low morale, there is a ripple effect throughout the organization. Because they function as mentors, supervisors and subject matter experts, middle managers interact with front-line workers on a day-to-day basis and can easily damage their sense of purpose. Junior employees also look to middle managers for an interpretation of company events and long-term plans.
To root out low morale before it festers, HR professionals need to identify disgruntled middle managers. Sometimes, all that these managers require is a forum for voicing dissatisfaction and concerns. Other times, a change in reporting structure or job position is necessary. In all cases, it’s essential to attack dissatisfaction quickly – before it spreads to junior employees or other middle managers.
Step Six: Reinforce direction and purpose through one-on-one meetings and coaching sessions with senior management. HR professionals play an essential role in helping middle managers understand their “profile of success.” But, senior leadership support is necessary for middle managers to feel fully appreciated and engaged. To create a sense of top leadership support, HR professionals must build a bridge between senior and middle management. In fact, an HR manager’s most important role is arguably to serve as an informed advisor to employees at every level of the organization.
Nowhere is this advisory role more critical than in communications between senior executives and middle managers. On the one hand, HR needs to make sure middle managers understand senior leadership goals and plans. When communications channels break down, middle managers feel a lack of commitment and security. On the flip side, HR also needs to make sure that company leaders are aware of middle management’s needs and development plans. The better the communications are between senior and middle management, the more invested middle managers feel in the company’s success.
Take, for example, a global consumer goods company where HR professionals bring high-performing managers and senior executives together on a regular basis to discuss career paths and development needs. In preparation, HR professionals work with outside coaches to identify each high-potential manager’s strengths, weaknesses and long-term goals. Because open communication is essential, the coaches communicate feedback to HR, the manager and his/her supervisor at the same time. This provides an opportunity for four-way communications and reduces the likelihood of misunderstanding. It also enables HR professionals to monitor progress and recommend new opportunities for training and development.
The Return on Investment
The problem of course is that middle management retention, like most things worth doing, requires resources – time, energy, dollars. To make the business case for investment, HR executives need to outline the expected benefits (and costs) of an effective retention program.
One good way to do this is to get a hold of the company’s 12-month, three-year and five-year plans. Sometimes these plans are drafted by a strategic planning group and other times, by a sub-group of senior managers. The goal is to demonstrate the link between middle management retention initiatives – training, promotions, new assignments – and the company’s goals for the year or years ahead.
Another approach is to demonstrate the cost of middle management turnover. This tact works well with senior executives who respond best to financial analyses of projected investment dollars versus expected returns. Begin by calculating the direct costs of turnover (new hire salaries, search costs, training costs) for the past one to five years and then factor in a multiplier for indirect costs (impact on workplace morale, company culture, social networks, customer service). Weigh these turnover costs against the projected cost of a robust middle management retention program.
Another useful exercise is to calculate – and chart, for maximum visual effect – the cost of replacing 10%, 20%, 30% or 40% of the current middle management team. With research indicating that nearly half of all middle managers are actively looking for new positions, business leaders need to invest in high potential employees, or risk losing up to 40% of the group.
Finally, communicate – and re-communicate – the vital role that middle managers play in the company. They are the employees directly responsible for implementing company strategy. They are also the pool of talent from which today’s executives will select tomorrow’s leaders.
A New Measure of Success
As the job market begins to pick up steam, HR executives face a serious challenge: retaining those middle managers who contribute significantly – either directly or indirectly – to the company’s bottom line. Because middle managers are critical to every aspect of company performance – corporate culture, leadership development, productivity – retention will increasingly become a key indicator of long-term profitability and success.
For HR professionals seeking to contribute to this success, the mandate is to understand the needs of top-performers and give them a reason to stay and grow in the organization. In most cases, this can be accomplished by working closely with both middle and senior managers and by catalyzing support through coaching and training. While retention programs require a dedicated investment of time as well as dollars, the cost of doing nothing is unbearably high. It is the cost of losing one of the company’s most valuable assets: its seasoned team of middle managers.