COVID-19 has had a big impact on corporate balance sheets and many companies will look to cut costs in the first half of 2021, but research suggests that the impulse to shed middle-managers could rob organisations of key innovators.
Strong links: Research has shown that change has the greatest employee support when it is initiated by middle managers, says Associate Professor Wilden.
Associate Professor Ralf Wilden from the Macquarie Business School and his co-authors, Associate Professor Pitosh Heyden and Dr Chelsea Wise, predict that in coming months many organisations will consider staff cuts, and that long-term strategy, not short-term savings amid COVID, should drive these decisions.
Wilden says that crisis situations are the opportunity for middle managers to shine.
“In times of crisis, we can’t expect that suddenly top-tier executives can innovate everything when they aren’t usually connected with the day-to-day frontline work,” he says.
The bottom line: we need to increase the trust that we give to middle managers in order to drive change.
Wilden’s paper, published in the journal Industrial Marketing Management, argues that middle managers can drive new product and service innovations when given the opportunity.
He says that past research showed that change has the greatest employee support when it is initiated by middle managers and then executed by top managers.
“This reversing of roles might go against conventional thinking on change management – that it’s top-down – but effective change starts in the middle, then it’s implemented from the top,” says Wilden.
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“The bottom line: we need to increase the trust that we give to middle managers in order to drive change.”
Wilden says that while the ‘death of the middle manager’ is often discussed in business circles, and organisations home in on middle managers when considering axing jobs to cut costs, the roles that serve as an intermediary between top managers and frontline staff perform a critical function.
He says that there’s long-term gain for firms that invest in their middle-tier management.
“Take marketing budgets, which are often an early victim of cuts during crisis, but research suggests firms that invest more in marketing and advertising at the time of crisis are more likely to succeed in the long term.”
Crisis drives innovation
Wilden says that in marketing divisions in particular, middle managers can drive product and service innovations that are new to the firm.
New rules: Associate Professor Wilden (pictured) says firms need to to rethink who does what during a crisis, and understand that middle managers can react quickly to rapid changes.
“Crisis situations present an opportunity for top and middle managers to rethink their assumptions about ‘who does what’ in radical change initiatives in marketing,” he says.
He gives the example of a large software-as-service organisation which had to move events and conferences online.
Middle managers had to change how they saw themselves, moving from implementers of change to initiators of change.
“Business-to-business firms rely on personal connections and often connect to potential clients at events,” he says, adding that online events change the dynamic of connection.
“Middle managers were the ones who hosted special expert events that were segmented to smaller parts of their client base on topics that related to the software or to the clients’ interests and increased access to more decision-makers in the firm’s target markets.”
Closer to staff and clients
Wilden says that firms need to rethink ‘who does what’ during a crisis, and enable their middle managers to enact the more strategic roles of initiating change, which are typically assumed to be the domain of C-level leadership.
“Marketing middle managers are closer to clients and customers, they talk to frontline staff and they can react quickly to the rapid changes occurring in a crisis,” he says.
This close relationship with clients and staff allows savvy marketing managers to spot emerging technologies and see what their competitors are offering more quickly, he adds.
There’s a caveat, though: senior management must enable middle managers to identify and react in the time of crisis.
A time for radical change
Pandemic lockdowns and restrictions introduced massive changes to many business operations, says Wilden. “Firms had to work out how to keep revenue streams running when the physical presence and foot traffic didn’t matter anymore.”
He says that middle managers had to change how they saw themselves, moving from implementers of change to initiators of change.
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Examples include companies that engaged with their clients on digital channels such as WeChat – and middle managers were often the ones driving this change, he says.
“To navigate crisis, rather than reactively cutting costs by culling middle management, top managers can benefit from enabling radical change initiatives by middle managers.”
Ralf Wilden is Associate Professor of Strategy and Innovation at Macquarie Business School.
