After writing about Google’s proof of the value of middle managers, a Wharton Professor, Ethan Mollick, has calculated the actual value add of great middle managers to businesses.
His study of computer-game makers shows something different — that individual middle managers matter a lot. And of all the individuals, the choice of who is the middle manager on vital projects goes the furthest in explaining why some firms do better than others.
Nice to know we managers in the middle are so valuable.
His research showed in a gaming-company context, middle managers – project managers who supervise game designers – account for 22.3% of the variation in company revenue. The front line game Designers, by contrast, account for just 7.4% of the variation — a relatively marginal impact.
For comparison, everything else that’s part of the firm, whether it’s senior managers or strategy or marketing, accounts for just 21.3% of the variation in firm performance. (The rest is due to external factors such as changes in technology and the marketplace, as well as some of the natural variation in any creative products). What’s more, the talent of individual middle managers was portable — when they left one company to join another, they took their ability with them.
Why did these middle managers have such a large impact?
The answer has to do with the challenges middle managers typically face. You know the scenario well… your bosses don’t give you the resources you want/need, and subordinates are annoyed by what they see as a dumb or misguided strategy middle managers have to implement from their bosses.
Squeezed from above and below, middle managers just have to make do. Some people are very bad at this and destroy value. But some are really good at it. The best have a knack for turning restrictions on resources into creative solutions. Mollick calls it the magic of middle management, the creative deployment of scarce resources and motivation of front liners, which delivers great value for businesses.
All we need us for businesses to recognise these qualities and reward performance more appropriately.
Have you ever managed the value of your middle management, care to share your views?