Establishing an effective middle management tier

Establishing an effective middle management tier can make or break a growing business. For most small businesses, the ambition is to grow. The ownership and nature of the organisation will often change along the way, but what about its managers?

Growth often brings with it a crisis of management

It is common knowledge that growth often brings with it a crisis of management. Greiner’s growth model, for instance, describes how organisations experience different growth phases, segmented by regular crises demanding major organisational change.

Often, this takes the form of a new source of funding, a shortage of skills, or the existing management structure becoming overwhelmed by its responsibilities. The latter of these is a common burden for those making the step from small organisation to medium. And it is often the most challenging, as it requires the management team – and usually its founders – to delegate to a new level of management and stand back from the daily work they began.

It’s not uncommon for investors to take their stake in a business on the provision that the existing management team is changed or removed, as business founders are rarely the right people to continue long-term growth. The question for the individual responsible for a rapidly growing organisation’s HR structure is: how can you prove you are a facilitator, and not a blocker, of the coming change?

The key to that is understanding the process or organisational development both academically and practically.

Growing pains

The ideal solution, is a unitised approach

When a business management team recognise that they are unable to retain control over day-to-day operations, it’s time for new managers with specific responsibilities and reporting lines.

There are several structures open to organisations looking to put in place a more formal managerial set-up, suggests Andrew Campbell, Programme Director for the Advanced Organisation Design course at Ashbridge Business School. He argues that there are three basic structures: a functional set-up where the main functions report to the CEO; a ‘unitised’ approach where ‘units’ focused on products, countries or brands report to the CEO; or a matrix of units, products and countries (or countries and market segments), reporting to the CEO.

“The ideal solution, if you have a choice, is a unitised approach, because it’s easier to manage and each unit is then largely self-managing, and there are far fewer conversations which have to happen,” he says.

Just when an organisation is ready to consider implementing more formal structures for middle managements posts is hard to gauge. In 2002, Campbell – along with his colleague Michael Goold – developed nine organisational tests to guide the choice around the design of any structure. These include ‘strategy’ tests – identifying where the business wants to focus and where people will need to be devoted to those activities – as well as an ‘accountability’ test, where the ultimate aim is to get two functions to work effectively together.

“If the salesforce reports to the head of sales and the factory reports to the head of factory, it’s hard to hold either of them to account because the salespeople will say the factory doesn’t make the right products and the factory will say the salespeople don’t sell enough,” Campbell points out. “You benefit, then, from having someone looking after both of them, who you can hold them to account for their combined performance. A ‘difficult links’ test has a similar aim; creating a management post for functions such as HR and accounting to report into, where that individual, rather than the CEO, will be able to commit sufficient time to help functional heads understand each other.

Keep your balance

Another issue is how far specific responsibilities should be divided between senior and middle management. In practice,  this will depend on the type of organisation and the nature of its customers, says professor Nick Holley, Co-Director of the Centre for HR Excellence at Henley Business School. In reality though, he says, senior management should focus on four aspects.

The first is creating the right strategic vision for the organisation’s continued growth. Second is building the capability of the organisation to deliver this, and third is keeping an eye on day-to-day operations. Motivating their direct reports in middle management to deliver it is the fourth and final task.

HR has an important role to play in developing job responsibilities

Middle management, by contrast tends to focus more on translating the vision into activities. That means achieving short-term goals and acting as a conduit between senior management and employees, says Holley.

 

 

HR’s role

HR has an important role to play in developing job responsibilities and matching these with the skills of individuals. This includes creating career plans to help existing employees move into more senior positions in time.

Banking on the future

The UK’s newest high street bank, Metro Bank, has made developing career plans for its employees a central part of its efforts to put in place a middle management structure.

Each role, says Danielle Harmer, Chief People Officer, is matched against five key criteria to ensure it has not been created unnecessarily: its customers, what the employee needs to know, who they will lead, how far ahead they look, and what kind of problems they are there to solve.

Metro Bank has been careful to avoid unnecessary hierarchy, she adds, preferring instead a flatter structure where jobs are divided into customer-facing roles, leaders and specialists.

“Within each of those we have defined career steps, and we’ve mapped all of our jobs to a career step in each family,” she says. But she admits this has required some explanation to employees concerned about where they sit in the structure, which the business has partly overcome through personal reviews held twice a year, where individuals are given a ‘talent family’.

“If they’re a ‘hero’, it means that their job is reasonably steady-state, and we think they need to stay in it and develop,” says Harmer. “If they are an ‘explorer’, it means that we think they should be looking at a different job, perhaps in a different job family. If they are a ‘pioneer’, it means they’re in one of these jobs that is rapidly growing and the challenge is to try and keep up with it. If they are ‘revolutionary’ they are someone we think should do a different, bigger job.”

Growth conversations

69 per cent of managers believe they can trust their immediate managers

It is these kinds of conversations that will have the most impact on employees, rather than any theoretical job structure or career path, suggests Steve Hearsum, a development consultant at the leadership institute Roffrey Park.

“Ruggedness is less useful than honest,” he says. “If I were a manager, I would value an honest, open and transparent conversation about the possible outcomes of any redesign and my new position within that. I would expect reassurance that my employer was agile, adaptable, flexible and able to respond to changes in the environment and their plans, for the organisation and me. Also, that I would be in that conversation from the start, and on an appropriate ongoing basis.”

Roffey Park’s own Management Agenda 2015 research found that 69 per cent of managers, believe they can trust their immediate manager, adds Hearsum, but it also highlighted poor promotion prospects as the main reason they leave their jobs.

A further challenge is the need to ensure that staff buy into – and retain – the wider company philosophy as it grows. “You need to make sure new appointments buy in before you give them the job,” says Campbell, to ensure that managers entering the middle tier are aligned with the way the organisation has been set up. A well-documented organisation model helps, he adds, along with an articulated strategy, but the key is to explain the model to them and to make sure incentives are aligned with the mode, “so they are at least paid on the right outcomes”.

If you enjoyed the above blog then you might also appreciate these other articles, which too originally appeared in the Hays Journal:

• Training at the top
• Why talented Chinese graduates are aiming high in Dubai
• Establishing an effective middle management tier
• Managing external resources
• Four pillars of people
• Family values

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