While much attention is typically paid to the top of organizations, namely CEOs, having top-performing middle managers is not just “nice to have.” They are a “business imperative” and lead to strong financial outcomes.
The finding comes from a recent analysis from McKinsey & Co.
“Organizations with top-performing managers yield multiple times the total shareholder returns of those with average or below-average managers over a period of five years,” write the report’s authors.
For the analysis, McKinsey examined 11 of the 40 practices measured in its Organizational Health Index that directly relate to manager behaviors, ranging from creative and entrepreneurial to talent development. McKinsey then determined the organizations with top-quartile managers — those whose managers perform these 11 practices more frequently than 75 percent of other organizations in the sample.
The data, from companies’ Organizational Health Index from 2017 to 2022, show that organizations in the top quartile realize up to 21 times greater total shareholder returns over five years compared with those whose managers are in the other three quartiles.
The middle manager role has typically garnered less attention or curiosity than the top organizational role, in healthcare and across other industries. Union members will often cite hospital CEO pay as they seek certain provisions during labor negotiations. Some organizations have also looked at restructuring divisions or flattening organizational charts.
But the McKinsey report and its findings bring attention to the role.
Chris Van Gorder, CEO of San Diego-based Scripps Health, also highlighted the job in a recent interview with Becker’s. Mr. Van Gorder credited middle managers for Scripps once again earning recognition as a great place to work. He was also once a middle manager himself.
“I was administrative manager of a clinical laboratory after I had been promoted from being a security officer. I had 17 people reporting to me, and I never really had any management training,” he told Becker’s. “I lasted a year. I never realized how many problems people brought to work with them, and I wasn’t prepared for it.”
Mr. Van Gorder currently supports middle management through involvement in a program for first-time managers, which involves a yearlong orientation that covers various topics.
McKinsey outlines five strategies human resources leaders should employ to strengthen middle managers’ performance. These include resetting manager roles and drilling down into manager experience.