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7 Min Read

How Manager Effectiveness Impacts Performance, For Better or For Worse

Genevieve Michaels

To quote everyone from Damocles to Spider-Man, with great power comes great responsibility. 

It’s a truism for a reason, but it’s more relevant to managers than most. An employee’s relationship with their manager defines their workplace experience. That gives them exceptional power over their team’s performance, for good or bad. Company culture, policies, and values all filter through the manager — no matter how carefully they were crafted at the strategic level. 

Manager effectiveness impacts organizational health and influences all areas of an employee’s experience, including engagement, growth and development, and productivity. And with the right structures to support your people, good managers can be provided with the conditions to become great.

The impacts of low manager effectiveness

When managers are underskilled, they create stress, frustration and disengagement in those working under them. Managers can quite literally make or break an employee’s workplace satisfaction. That’s why 63% of workers with a bad manager are thinking about quitting within the next 12 months. 

Interpersonal challenges like these aren’t just subjective, individual to be dealt with at the team level. Inefficient managers have far-reaching impacts, and can devastate crucial business metrics like turnover, retention, and morale. The statistics are sobering—poorly engaged managers cost the American economy $319 to $328 billion dollars every single year. 

How bad managers hold back their team

Here are just a few ways low manager effectiveness impacts performance: 

Low morale 

Underskilled managers might fail to give their team the praise they deserve for a job well done. This proves discouraging and demotivating for employees, leaving them unsure of their performance and where they stand. A self-perpetuating cycle is created as employees continue to underperform, and consequently, receive even less recognition. 

High turnover and poor retention 

Turnover rates are one of the clearest indicators of manager efficiency. Managers who don’t inspire their team’s best work create restless, unfulfilled employees, who eventually seek professional development elsewhere. 

High burnout 

Workplace struggles aren’t just isolated to the 9-5. Manager-related stress can take a serious toll outside of work, even leading to physical illness and burnout. When affected workers need to take time away, other staff end up overloaded to compensate for their absence. This further perpetues the problem. 

Low productivity 

Ineffective managers often don’t provide their teams with enough clarity around roles, expectations, and responsibilities. That creates an environment where employees are not equipped to do their best work, and struggle to prioritize and complete important tasks. In fact, 76% of employees shared in a recent survey that they work harder when their employer shows investment in their professional growth. 

The managerial skills crisis 

Unfortunately, these manager-related issues are not the exception. They’re a widespread issue across the American workforce. In an already tightly squeezed labor market, underskilled, ineffective managers are causing hundreds of thousands of talented people to leave their jobs. 

But while companies should certainly take the existential threat of poor management seriously, the flip side is that investing in managers is a powerful strategy to improve employee experience and company performance across the board. 

These assertions are backed up by real data.  According to 15Five’s 2022 Workplace Report, over 53.8% of Americans shared that an unsupportive manager would be a key factor behind their decision to leave. But an even larger portion felt that strong, supportive management would be an important reason to stay. 

Closing the experience gap

Frustratingly, ineffective managers often don’t perceive themselves as needing improvement—in sharp contrast with their teams’ experience. Recent 15five research revealed this experience gap and has found it to be shockingly widespread among managers and their teams. 

Recently, we conducted research into the state of the performance review, one important tool managers can use to boost performance and productivity. The report revealed that: 

  • 83% of managers felt they were skilled at having regular performance related conversations with their team — but just 54% of those team members agreed
  • 75% of managers perceive themselves as skilled at facilitating performance reviews, but only 53% of their employees agreed
  • 68% of managers thought their review process improved relationships with their direct reports — but that feeling was shared by only 43% of their workers 

These figures reveal that often, managers think they’re providing feedback and guidance that empowers their people and elevates their work. 

But employees aren’t accessing that value. They may be unsure of how to express this disconnection, or even worried that voicing disagreement could jeopardize their jobs. 

How boosting manager effectiveness impacts organizational health

Managing people is a skill — a skill that can be taught, learned, and practiced. If your managers need attention, improving how their work is possible. Even better, doing so will create a domino effect across your entire organization, leading to better performance, better employee experience, and a healthier, more productive organization. 

It trains managers to be great coaches.

While managers influence at least 70% of your employees’ engagement, most aren’t given the right training or structure to properly coach their teams. The reality is that most people are promoted to manager-level positions through their stellar technical skills, not because of how well they’re able to connect with and lead people.  

Soft skills, such as emotional intelligence, empathy, and compassion, are becoming power skills that managers must master in order to help their organization succeed. When these so-called soft skills are paired with strategic day-to-day practices it creates a powerful structure and an effective method of management. 

It encourages strengths-based management.

Creating the space and offering the right resources for people to discover their natural talents allows those at the top to help develop leadership strengths on every level. But companies often fall short of actually utilizing these abilities because they aren’t taking the time to discern the true talents of their employees.

When managers seek out the unique strengths of their employees and foster an environment that builds on those attributes, businesses can remain agile even through challenging times. Plus, giving employees the opportunity to gain mastery in specific skills and the space to perform at their peak helps them become more intrinsically motivated to do their best work.

It sets managers up with the right tools and practices.

Organizational systems are designed at the top, but it’s managers who reinforce these systems by guiding individual employees to success. And because 65% of managers today are struggling to perform, they’re feeling less prepared and more challenged than ever before, according to 15Five’s 2020 Workplace report.

Help your managers better support their teams by giving them the right tools and practices to do so. These structures, such as 1-on-1s, check-ins, and objective tracking, help set your managers and their employees up for short- and long-term success. 

Want to dive even deeper into manager effectiveness? Check out our eBook, Spotlight on Manager Effectiveness: Why It Matters and How to Improve It.

To learn more about how 15Five can help boost manager effectiveness, check out Transform.

How to measure manager effectiveness all in one place

The factors that contribute to manager efficiency and effectiveness are numerous and complex. An evaluation process that includes the above metrics can help you get started—and it helps tremendously when you have a holistic performance management platform that captures them for you.

Measuring manager effectiveness at scale requires an ability to continuously pull in real-time data, make sense of it, and come up with the right next steps to move the needle. That’s why 15Five developed the Manager Effectiveness Indicator (MEI).

The MEI uses data from 15Five to examine the skills, behaviors, and outcomes of a manager and their team. You can easily identify great managers in your organization and see which ones need more support—and in what areas—so you can take action. It offers a holistic view of how effective your managers are, how they’re impacting bottom-line metrics, and what you can do to help them improve. 

Learn more about the Manager Effectiveness Indicator >