What Could Ineffective Middle Management Cost your Company?

What Could Ineffective Middle Management Cost your Company?

At NBRI, we talk a lot about employee engagement and employee satisfaction. A well-known, significant factor in employee satisfaction is how well the management team manages employees. Usually, we discuss all managers rather than singling out the middle managers.

Recently, one of our team members was conversing with a friend who works in the insurance field as a claims adjustor. The friend made a mistake in the claims process that cost his company $2,000. It was an honest mistake, and when noticed, the claims adjuster immediately went to his manager. The manager did not handle the situation well which put the employee on edge.
After their meeting, the employee thought his job was in danger and began applying for jobs outside the firm. After a week passed, the employee went to his manager’s superior to talk to her about his fears of losing his job. The senior manager said that he was a valued employee, and that though the incident was a serious issue, his job had never been in danger, which is not the impression that had been given a week earlier.

Though the senior manager righted the situation, the employee started receiving job offers from their panic reaction of a week earlier. The engaged, valued employee resigned to work for another firm because one of those job offers was too good to pass up. The company lost a valued employee because the middle manager reacted to the situation in a way that caused the employee to fear for his job.

Typically, losing an employee will cost the company about three times the employee’s annual salary to recruit and train another employee. In this case, the middle manager’s reaction to the $2,000 claims mistake cost the company approximately $150,000 in direct and indirect costs.

What can be done to help prepare middle managers to handle situations like this one in a more appropriate fashion?

1. Training: Middle managers are often promoted into management positions, and because of this, they may not have received any supervisory skills training. Setting up a training program that includes supervisory skills, conflict management, and communication skills helps ease the transition from employee to middle manager.

2. Sit-Ins: When there is a situation that requires any type of reprimand, have a manager’s supervisor sit in the meeting to observe. The middle manager will receive direct feedback on how the company prefers to handle given situations, and if the middle manager acts or speaks out of line with company policy during the meeting, the senior manager can interject to rectify the situation immediately.

These are two simple ways to keep your middle managers working in a positive way when faced with a reprimand situation. Are your middle managers ready to lead? Are they leading effectively? NBRI offers several types of employee surveys to help you evaluate and eliminate these types of issues before they cost you hundreds of thousands of dollars in lost profits.