Contents
01
INTRODUCTION
02
01| THE CHALLENGES FACED BY MANAGEMENT TODAY
05
02| WHAT SKILLS DO MANAGERS NEED TODAY?
06
03| GOOGLE’S PROJECT OXYGEN
08
04| HOW TO DEVELOP MANAGERS AND TRAIN NEW LEADERS FOR THE FUTURE
INTRODUCTION
We are currently going through a management crisis. A recent study by Deloitte showed that two out of three millennials plan to leave their current job by 2020.[1] Alarmingly, Gallup found that 50% of workers who quit their jobs left due to issues with management, supporting the idea that employees leave bosses, not jobs.[2] What employees are now looking for are companies with less layers of management and more freedom in the workplace.
50%
of workers left due to issues with management
With flat organizational structures on the rise, more and more companies are reconsidering the role of managers, especially in the tech industry where internal dynamics are very different from traditional top-down companies. Top gaming company, Valve has abolished management all together, while Zappos has replaced the management level with a new more autonomous organizational alternative. Even, tech giant Google went through a period of experimentation with a flat organizational structure and has since revamped its management practices. This begs the question, is it time to get rid of management? What many industry leaders have caught onto is the fact that managers are still needed in today’s demanding business world but their role is being reshaped by new workplace trends. To stay on top, companies must now reassess the responsibilities of their managers and train them to effectively manage the modern workforce.
01 | HOW TO DEVELOP YOUR MANAGERS
01| THE CHALLENGES FACED BY MANAGEMENT TODAY
Management strategies have changed greatly with the needs of the global business world. Rather than strictly delegating and assessing employee output, managers have to find a way to reconcile traditional management responsibilities, while cultivating a collaborative environment that fosters innovation and company loyalty. The New Employee Today major tech companies don’t want people who will listen and carry out - they want creative thinkers who will come up with innovative ideas and solutions. As a result, rather than giving orders, managers must find ways to foster this creativity. This means companies want: • Less micromanaging and more autonomy • Faster development of new skills • Higher employee retention TURNOVER CAN COST A COMPANY UP TO
400%
OF AN EMPLOYEE’S ANNUAL SALARY
Today’s highly skilled employees are not easily replaceable. Turnover can cost a company up to 400% of an employee’s annual salary.[3] Even when they don’t leave the company, disengaged employees are less motivated and more likely to get by doing the minimum. According to Gallup’s State of the American Workplace survey, 52% of US employees are disengaged. They estimate that the resulting lost productivity costs the US $450 - $550 billion per year.[4] In fact, it costs more to onboard new employees than to train your existing workforce. Providing more proof of this reality, studies have shown that higher engagement equals higher productivity. Gallup found that companies
02 | HOW TO DEVELOP YOUR MANAGERS
with a higher ratio of engaged to disengaged employees (9.3 to 1) experienced 147% higher earnings per share than their competition.[5] As a result, companies are now paying much more attention to managers’ employee turnover and satisfaction rates. Millennials
2/3
BELIEVE IT’S THEIR MANAGER’S RESPONSIBILITY TO PROVIDE THEM WITH TRAINING AND OPPORTUNITIES
28% FEEL THEIR SKILLS ARE BEING FULLY UTILIZED IN THE WORKPLACE
67%
judge their employers based on their technological knowledge
02 | HOW TO DEVELOP YOUR MANAGERS
The key to attracting and retaining this new workforce is understanding what motivates them. Millennials have different expectations of their managers than the previous generation. Even top companies are realizing that simply offering higher salaries than their competitors is not the answer. There are several things millennials are looking for in a company that managers will have to provide: Studies show professional development and leadership opportunities are more important to millennials than monetary rewards. Not only are millennials hungry for development, according to a Deloitte study two-thirds believe it’s their manager’s responsibility to provide them with training and opportunities. In fact, only 28% feel their skills are being fully utilized in the workplace.[6] Tired of using technology? Three quarters of millennials believe access to technology makes them more effective at work. Growing up in the age of social media, they’re used to getting answers fast. In fact, 41% prefer to communicate electronically at the office rather than face to face or over the phone.[7] Not only do they want to use technology, 67% judge their employers based on their technological knowledge.[8] This means managers must be tech savvy and able to provide the answers their reports need in real time using the latest workplace tech tools. Culture trumps benefits. According to the World Economic Forum’s 2015 Global Shapers Survey of millennials from 125 countries, company culture was the second most important attribute respondents were looking for in an em-
ployer.[9] While some mistake culture for company-wide trips and events, these are facilitators rather than creators of company culture. A manager’s goal in creating a strong company culture is to create a positive and collaborative work environment, spread common company values and, as a result, encourage a deeper sense of company loyalty.
83%
PREFER TO WORK FOR COMPANIES WITH LESS LAYERS OF MANAGEMENT
Unlike, Baby Boomers and Generation X, millennials eschew the idea of traditional employee-manager hierarchies with 83% preferring to work for companies with less layers of management.[10] This means they want managers who are easily approachable and willing to take their opinions into account. This is evident in today’s millennial led organizations that favor open work spaces where CEOs, managers and employees work alongside each other. Millennials want their work to be meaningful. They want to be appreciated for their hard work and to feel in charge of their own tasks and responsibilities.
95%
of millennials consider work/life balance to be important to them
They want greater workplace flexibility. Ninety-five% of millennials consider work/life balance to be important to them.[11] Telecommuting and flexible hours is one way companies have been catering to this demand. Rather than assessing performance based on hours, there is more emphasis on results. However, this type of work environment places new demands on managers. Remote Workers Another challenge facing today’s managers is the rise of remote workers or telecommuters. In the globalizing workplace many teams are now made up of employees working from as widespread as Japan, Dubai and Germany. Managing these types of teams presents a new set of challenges. Communication can be challenging with the need to coordinate across time zones and navigate cultural differences
03 | HOW TO DEVELOP YOUR MANAGERS
in the way team members communicate. When co-workers have never met in person, or communicate mostly via internet, creating a sense of team spirit can be difficult. In this kind of environment being open to trying out innovative ways of team building is essential. Webapp-Automation service Zapier has been made up of a completely remote working team since its inception in 2011, proving that creating a virtual company culture is possible. To face this challenge managers are harnessing the power of modern tech tools to create a living virtual workplace. Regular all hands meetings via Google Hangouts allow people to keep up to date with what the rest of the team is working on, avoiding duplication of tasks and encouraging collaboration. Zapier has named Slack the virtual water cooler. While it’s a great way to communicate about work tasks instantly, it’s also an important forum for creating stronger relationships between co-workers through the sharing of news, achievements, jokes and virtual high fives. The Need for Greater Diversity and Equality
48% of millennial women feel they’re being overlooked for leadership positions
In the past few years the need for greater transparency in the distribution of promotions and pay has entered the spotlight. While tackling the gender pay gap is not a new challenge for companies, the surprising thing is that efforts to do so have not had a huge impact. Even amongst the new generation we’re continuing to see a significant gap with 48% of millennial women feeling they’re being overlooked for leadership positions.[12] A number of new studies have come to light revealing the existence of bias in performance reviews, especially in the tech industry. [13] According to Deloitte’s 2015 study on millennials, women are also less likely than men to list leadership as one of their top skills and less likely to seek leadership positions. Yet studies show that female managers are often most effective at driving engagement. According to a Gallup
04 | HOW TO DEVELOP YOUR MANAGERS
study, employees with female managers exhibit higher levels of engagement.[14]
ONLY 1 IN 18 LEADERS IN THE TECH INDUSTRY ARE BLACK OR LATINO
It’s not only women, unconscious bias also impacts the promotion of minorities. Only 1 in 18 leaders in the tech industry are black or Latino.[15] Even if managers are not overtly biased, statistics show that unconscious bias often leads minorities to receive less training and development opportunities than their peers. This leads to less minorities in management positions. While it’s important to train all managers to overcome unconscious bias, it’s also essential to ensure leadership training for management positions is available to everyone.
02| WHAT SKILLS DO MANAGERS NEED TODAY?
ONLY 1 IN TEN PEOPLE HAVE WHAT IT TAKES TO BE AN EFFECTIVE MANAGER
63%
24%
05 | HOW TO DEVELOP YOUR MANAGERS
Not everyone is cut out to be a manager - just because someone excels in the technical skills they bring to a team does not mean they will necessarily be good at managing people - or want to do so. Only one in ten people have what it takes to be an effective manager.[16] In fact Gallup alarmingly found that companies choose the wrong person for the job 82% of the time.[17] Amongst the best managers, the study makes a distinction between those with a high level of talent for managing others and those with a basic talent for management. It reported that together these managers can produce 48% higher profit than average managers. This will also be a great concern as millennials enter into management positions. According to Deloitte’s 2016 study on millennials, only 24% saw leadership as one of their strongest personal skills upon graduation. Yet, 63% feel their leadership skills are not being fully developed
71%
were unsatisfied with development of leadership skills
in the workplace. As Generation X exits the workplace, companies may face a major management gap if they fail to develop their future leaders. What’s more, Deloitte reported that 71% of employees who were likely to leave their jobs in the next two years were unsatisfied with how their leadership skills were being developed. The consequences of failing to develop your managers
“
TRANSFER OF DISENGAGEMENT FROM MANAGERS TO EMPLOYEES COSTS THE US
$319 BILLION TO $398 BILLION A YEAR
It’s not just employees that need to be engaged, when your company suffers from low management engagement levels the impact can become widespread. Gallup found that a striking 65% of US managers are either not engaged or actively disengaged. As managers are largely responsible for employees’ engagement levels, disengagement in managers can lead to a cascading effect on employees. The financial impact of the transfer of disengagement from managers to employees costs the US a staggering $319 billion to $398 billion a year. However, the opposite is also true. Employees who work for engaged managers are 59% more likely to be engaged themselves. [18] This shows that if companies are able to develop and engage their managers they can also leverage the impact of the cascade effect in their favor.
03| GOOGLE’S PROJECT OXYGEN
Each industry and company will have different needs, but there are a number of overarching qualities that make a good manager. In 2008, Google’s Project Oxygen set out to explore this question. Many tech companies like Google find it hard to reconcile their core values with the idea of a traditional manager. They try to foster an environment of knowledge sharing and innovation by hiring the top engineers, developers and designers to work together on one campus. The tra06 | HOW TO DEVELOP YOUR MANAGERS
ditional hierarchical relationship of bosses to employees has no place in this type of environment, with employees strongly favoring openness and independence. Yet, managers were still needed for some key functions such as organization, decision-making, performance management and onboarding. In an interview with Harvard Business Review, business school professor David Garvin explained that the problem Google faced was convincing its engineers that management matters.[19] To solve this problem, they hired a group of statisticians to evaluate the differences between the highest and lowest rated managers. Data was collected using past performance appraisals, employee surveys, interviews and other sources of employee feedback. The Results
Google’s Project Oxygen findings: 1. Is a good coach 2. Empowers the team and does not micromanage 3. Expresses interest in and concern for team members’ success and personal well-being 4. Is productive and results-oriented 5. Is a good communicator— listens and shares information 6. Helps with career development 7. Has a clear vision and strategy for the team 8. Has key technical skills that help him or her advise the team
07 | HOW TO DEVELOP YOUR MANAGERS
When reading the results they seemed pretty obvious. Being a good coach and giving space to your employees is management 101. What was interesting was the source of the information - Google employees. There exists endless literature and academic studies on what it takes to be a great leader, but if you really want the secret to developing great effective managers who better to ask than your employees? Keeping the source in mind, perhaps the most interesting aspect of the findings was the order of importance in which employees ranked these skills. In a company made up of first class engineers the top skill they valued in a manager was coaching abilities - even over technical skills which came in last. According to the results, being a good coach involves holding regular 1-on-1s with your employees, asking questions rather than dictating answers and being able to provide personalized balanced feedback. While the top management skills vary in every company, coaching is the number one skill that employees of all generations are looking for.
Tech, Data and Inclusion While the results were straightforward, the fact that they were achieved using people analytics gave them greater credibility and company buy in. This facilitated the introduction of new management policies, making it easier to get both managers and employees onboard. After receiving the results, Google changed its feedback surveys to mirror these qualities. Instead of simply measuring how much output a manager achieves, the surveys now focus on how much time they spend coaching their team, whether or not they communicate a clear vision, etc. They also developed new management training programs centered around these skills.
04| HOW TO DEVELOP MANAGERS AND TRAIN NEW LEADERS FOR THE FUTURE
Google’s study can serve as a useful guide for your company’s own management rethink. The common thread in Google’s list is the need for greater communication and, most importantly, coaching. In addition, identifying your company’s specific management needs using people analytics will help you to create your own list of top management skills. Involving employees will give you greater company wide buy in and credibility. While it may be costly to roll out your own Google style management overhaul, Impraise is an easy alternative to help you reassess what your employees need. Impraise is a user friendly solution that can help your managers to easily give, receive and analyze feedback. The real time feedback given through the system is instantly generated into aggregated people analytics reports that can be used by HR to identify top performing managers 08 | HOW TO DEVELOP YOUR MANAGERS
who would make great peer coaches or managers who might need extra training in certain areas. Make your employees part of the process Start off by sending out an employee survey using Impraise. This is a great way to find out what skills your employees value most in a leader. If you’re already an Impraise user, combine the results with your management team’s previous feedback data. Analyzing the information you receive in Impraise’s Dash will help you make a list of the top skills and identify leaders who scored highest in these areas. Develop a management strategy together and recruit top performers to become coaches for managers who are having difficulties. Give your managers the tools they need to lead the modern workforce: Based on the results, devise a training program to develop your managers’ skills. Just like your employees, offering regular trainings on key skills will keep managers engaged and motivated to improve their management strategies. A few topics that every management training program should include: • • • •
Learning how to give and receive feedback How to run effective 1-on-1s New tech tools Tackling unconscious bias
Making training available to both current managers and potential new leaders will help you to develop your millennial workforce as they begin to transition into management roles. Create a Feedback Culture So now you’ve gotten the results of your study and started up a training program. The question is how do you make sure your managers are implementing these learn09 | HOW TO DEVELOP YOUR MANAGERS
ings into their management style? Feedback is the key to helping your managers become better leaders. In a survey by Trinet 62% of millennials reported feeling blindsided by performance reviews and 74% reported being “in the dark” about how their managers and peers perceive their performance. However, 85% agreed that they would feel more confident if they had more frequent conversations with their manager.[20] As Google found, the most important components of being a great coach are more continuous communication and being able to deliver actionable feedback targeting an employee’s strengths. 62%
74%
85%
With Impraise managers can give and receive feedback in real time anytime anywhere via mobile app, cutting down the time needed. Instead of waiting for an annual review, managers can give pointers to an employee just after giving a presentation or show appreciation for a successful sales pitch instantly. Today company loyalty has to be earned. No matter the perks your company offers, missing out on giving guidance and recognition to employees is the number one killer of employee satisfaction. Unlike traditional top down reviews, Impraise’s 360 degree feature allows both managers and employees to give feedback, placing everyone on an equal footing. Receiving or requesting feedback from employees enables managers to track their progress and take ownership of their own development. Impraise also allows you to customize feedback questions based around your company’s specific leadership values. With Impraise’s aggregated reports, your HR team can easily track manager’s results and recommend extra training when needed. Basing performance on employee feedback rather than output gives you greater insight into how managers are doing on improving employee satisfaction rates and lowering turnover. This facilitates the shift towards an employee first strategy.
10 | HOW TO DEVELOP YOUR MANAGERS
While there are some overarching skills all managers should have, each will have his or her own unique management style. Some managers are good listeners, others are great motivators, what’s important is that they realize how these strengths can be leveraged to engage employees. The feedback data collected by Impraise can help your leaders easily identify their strongest skills. It’s important that they then continue to develop and learn how these skills can be used to support their employees. Following these steps will help your managers navigate the management crisis and face today’s new workplace challenges. Giving your employees a voice in the process will result in an effective people first strategy. Your company in return will see higher engagement and productivity levels and lower employee turnover rates. As Google takes its No. 1 spot for the sixth year in a row in Fortune’s ‘100 Best Companies to Work For’ list, isn’t it time to try a new strategy for developing your managers?
11 | HOW TO DEVELOP YOUR MANAGERS
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tech-tools-at-work.aspx [9] Oliver Cann, “3 Things Millennials Want From Work”, World Economic Forum, 25 October 2015, retrieved 12 February 2016 from http:// www.weforum.org/agenda/2015/10/3-things-millennials-want-fromwork [10] “The Millennial Leadership Survey”, Workplace Trends, 20 July 2015, retrieved 12 February 2016 from https://workplacetrends.com/ the-millennial-leadership-survey/ [11] “Millennials at work: Reshaping the workplace”, Price Waterhouse Coopers, December 2011, pg. 8, retrieved 12 February 2016 from https://www.pwc.com/gx/en/managing-tomorrows-people/futureof-work/assets/reshaping-the-workplace.pdf [12] “The 2016 Deloitte Millennial Survey”, Deloitte, 2016, pg. 7, retrieved 12 February 2016 from http://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-millenial-survey-2016-exec-summary.pdf [13] Rachel Emma Silverman, “Gender Bias at Work Turns Up in Feedback”, The Wall Street Journal, 30 September 2015, retrieved 12 February 2016 from http://www.wsj.com/articles/gender-bias-at-workturns-up-in-feedback-1443600759 [14] Kimberly Fitch and Sangeeta Agrawal, “Female Bosses Are More Engaging Than Male Bosses”, Gallup Business Journal, 7 May 2015, retrieved 12 February 2016 from http://www.gallup.com/businessjournal/183026/female-bosses-engaging-male-bosses.aspx [15] Bill Snyder, “Laura Weidman Powers: Opening Doors for Minorities in Power”, Stanford Graduate School of Business, 21 June 2013, retrieved 12 February 2016 from https://www.gsb.stanford.edu/insights/laura-weidman-powers-opening-doors-minorities-technology [16] Amy Adkins, “Only One in 10 People Possess the Talent to Manage”, Gallup Business Journal, 13 April 2015, retrieved 12 February 2016 from http://www.gallup.com/businessjournal/182378/one-people-possess-talent-manage.aspx [17] Randall Beck and Jim Harter, “Why Great Managers Are So Rare”, Gallup Business Journal, 25 March 2014, retrieved 12 Febru-
ary 2016 from http://www.gallup.com/businessjournal/167975/ why-great-managers-rare.aspx [18] Amy Adkins, “Only 35% of US Managers Are Engaged In Their Jobs”, Gallup Business Journal, 2 April 2015, retrieved 12 February 2016 from http://www.gallup.com/businessjournal/182228/managers-engaged-jobs.aspx [19] David A. Garvin, “How Google Sold Its Engineers on Management”, Harvard Business Review, December 2013, retrieved 12 February 2016 from https://hbr.org/2013/12/how-google-sold-its-engineerson-management [20] Rob Hernandez, “Here’s What Millennials Want from Their Performance Reviews”, Fast Company, 3 November 2015, retrieved 12 February 2016 from http://www.fastcompany.com/3052988/ the-future-of-work/heres-what-millennials-want-from-their-performance-reviews