• Home
  • Management
  • Startup/Entrepreneur
  • Gamechangers
  • Tech/E-Commerce
  • Career
  • Global Business
  • Women's Business

  • Middle Managers: Most Important In The Company

    The importance of individual skills and characteristics can be especially significant when measuring firm performance in industries and fields that value innovation, like computer games, software, consulting, biotech and marketing.

    Upstart: Management

    Wharton management professor Ethan Mollick has a message for knowledge-based companies: Pay closer attention to your middle managers. They may have a greater impact on company performance than almost any other part of the organization.

    In other words, says Mollick, “the often overlooked and sometimes-maligned middle managers matter. They are not interchangeable parts in an organization.” His view upends the long-held belief that performance differences between firms are due mainly to organizational factors – such as business strategy, management systems and HR practices — rather than to differences among employees.

    The importance of individual skills and characteristics can be especially significant when measuring firm performance in industries and fields that value innovation, like computer games, software, consulting, biotech and marketing, according to Mollick, who recently completed a paper on this topic titled, “People and Process: Suits and Innovators: Individuals and Firm Performance.” It is in these knowledge-intensive industries where variation in the abilities of middle managers – the “suits” he refers to in his paper — has a “particularly large impact on firm performance, much larger than that of individuals who are assigned innovative roles,” he says.

    The influence these suits exert, he suggests, stems from their key role in project management, including such tasks as resource allocation and supervision of deadlines – responsibilities often perceived as the bureaucratic, more routine and less glamorous side of the business. Middle managers also can play a key role in fostering innovative and creative environments.

    A Look at the Gaming Industry

    One challenge Mollick faced in his research was a lack of studies that measured the relative contribution of middle managers vs. innovators. He addressed that gap by analyzing the computer game industry, which not only is typical of many knowledge-driven industries, but also “represents a case where the tension between the firm and the individual should be at its most visible.” The industry, he notes, is populated by companies that are relatively established, have clear product strategies and yet depend to a great extent on the “innovative output of key individuals.” In addition, he writes in his paper, “success in the game industry relies not just on managers in charge of innovation, but also on project managers capable of organizing dozens of programmers and coordinating budgets that often reach into the tens of millions of dollars.”

    He does not include top managers in his analysis although his paper cites an earlier study showing that the impact of CEOs, CFOs and other top-level executives on large firms is limited. Indeed, these top positions explain less than 5% of the variation in firm performance among Fortune 800 companies – a finding that Mollick says is in line with other research in this area. In large, established organizations, “the top managers, at least, account for relatively little of why some companies perform better than others.”

    Mollick acknowledges that top management plays a significant role in setting the overall direction of the company. “But they don’t have a big part in deciding which individual projects are selected and how they are run. At least for the computer game industry – and no doubt for a lot of knowledge-based industries – it is all about the middle managers.”

    Read More:

    http://knowledge.wharton.upenn.edu/article.cfm?articleid=2783

    Upstart: Business and Management for 20-40 Year Old Professionals

    Filed Under: Management

    Tags:

    About the Author:

    RSSComments (0)

    Trackback URL

    Leave a Reply

    You must be logged in to post a comment.