The hidden costs of a soft-skills deficit in middle management
“Advancement in a position is based on the candidate’s performance in his or her previous roles, rather than performance in their current role.” –LJ Peter, 1968
LJ Peter’s enduring principle of business is still true nearly 50 years later; most people are not prepared for the job they have when they begin it.
As they advance in their careers and begin to manage others, their success or failure in jobs for which they are initially unprepared generates exponential effects -- good and bad -- for their organizations. Peter specifically noted that, as employees advance into leadership, soft skills take on more importance to their success than technical skills alone. It is proficiency in skills such as collaboration, conflict management and prioritization that distinguish between an effective employee and one causing the company damage.
Unfortunately for most businesses in 2017, while some employees take the individual initiative to grow themselves in the fine art of leadership, the clear majority believe it’s their company’s job to ensure their growth in these areas. As a result, while employers expect employees to develop themselves -- in their off time -- into soft-skill-proficient leaders, most employees are using that time to look for new jobs instead.
What does a soft-skills deficit look like?
Payroll eats up a large portion of any business’ expenses, so it is unsurprising to realize that some of the greatest contributions to profitability lie in employee retention, engagement and performance improvement. And yet, low engagement and high turnover runs rampant across industries, which is why 71% of employees are currently looking for another job.
What does this look like when you walk into the average workplace?
- Depressed productivity: Stressed employees who work longer, produce less and feel undervalued.
- Greater conflict: Teams who spend more energy in unproductive coordination, conflict or conflict avoidance than in effective communication and collaboration.
- Missed customer opportunity: Employees who are not effective brand ambassadors and are unable to communicate business value when engaging with customers and potential recruits.
Here’s an example. A middle-management client of mine, Marty, had taken the initiative to revise a key process in his division to achieve greater operational efficiency. After trying to ram it down his teams’ throats, they rebelled and complained to Marty’s boss, who recognized that Marty had unwittingly used divisional resources to pursue development funded elsewhere by corporate.
The boss pulled Marty in and chastised him for (1) duplicating an effort already underway at corporate (2) getting his team angry at him (3) not telling the boss, who could have informed him of the duplicate efforts, and (4) setting customer expectations inappropriately. Marty felt undervalued and upset that his proactive efforts backfired so thoroughly. He began to consider leaving the company, despite an otherwise good job experience.
What exactly was the problem here, and whose job was it to help Marty learn from this experience? Was the company at fault for failing to ensure Marty’s boss had enough leadership skills to coach him back to success? Was it Marty’s fault for not having figured out how to sell his ideas better on his own?
The link between employee engagement and performance
Too often, companies try to reduce employee turnover and increase engagement by adjusting compensation and stocking the fridge with free soda, but Marty’s example offers us greater insight. Marty’s interest in looking around wasn’t about compensation, but about feeling penalized instead of coached.
When his boss missed the opportunity to help Marty channel his good intentions into productive skills development, choosing to shame him instead, Marty immediately saw an upside to putting his resume together.
As this example demonstrates, employee loyalty and performance is complicated. If you ask employees why they like working for their company, compensation is rarely number one on their list. Efforts to “buy” employee loyalty aren’t usually financially feasible and don’t necessarily work, so most organizations use rewards and recognition to make employees feel appreciated.
Unfortunately, many recognition efforts miss the mark too. While overt signs of appreciation -- even as simple as saying “thank you” regularly -- can positively affect employee retention, most employee-recognition programs reward tenure instead of performance and, in so doing, reward endurance over performance.
Most organizations fail to recognize and address the subtle soft-skills challenges that cause middle managers like Marty to struggle and feel unappreciated. As the data below shows, most employers do not offer effective training and coaching for managers. Instead, they spend development dollars on senior leaders and hope it will trickle down to everyone else.
This strategy of underfunding training in middle management is particularly short-sighted because younger workers, who are quickly becoming the beating hearts of our organizations, highly value opportunities to grow and improve themselves on the job. In my experience, middle managers welcome interpersonal skills training and quickly adapt its lessons when managing their teams. This enthusiasm ensures that the company’s training and coaching investments directed at middle managers provide immediate returns in the form of performance and productivity.
While the financial impact of employee disengagement, poor communications and stress can be hard to measure in a spreadsheet, all you have to do is walk into almost any growth company’s offices and talk to people to get a quick sense of the costs. The most common soft costs you’re likely to hear in talking to leaders and employees alike include:
- Project delays: Mid-level employees need to be as skilled in managing the human critical path as they are the technical one, because delivery projections are notoriously incapable of predicting the effects of poor employee soft skills (but the company and its customers pay the price anyway in the form of delays.)
- Client relations: When mid-level managers are not skilled in stress management and communicating brand value, senior leaders often end up spending their account management time mediating misunderstandings and resetting expectations instead of growing contract value.
- Pressure on profit: Poor client relations and delayed delivery dates drive up contract costs while reducing the chance of renewals and extensions.
Of course, if you wander into the HR department to talk about the impact of employee disengagement, you’ll also hear about the hard costs of employee turnover (which are job-specific but typically run into the tens of thousands of dollars per employee lost.)
New solutions to old problems
Despite these challenges, there is untapped, low-hanging fruit in improving middle-management impact in areas that commonly fall under the soft-skills categories, including: stress reduction, interpersonal communications effectiveness, conflict reduction, accountability, team empowerment and even career and personal brand development.
New strategies that focus on these tactical, behavioral outcomes are becoming available.
- Asynchronous, online program formats allow people to absorb information, act on it and reflect over time. Remember, Marty? After a few online sessions of soft-skills group coaching, which included homework and group reflection, he developed some listening and stakeholder-management skills. Midway through the program, Marty successfully engaged his team in collectively pitching a new initiative to management, which was approved. Marty and his team began to realize their potential and became more productive once he understood how to sidestep some of the invisible and interpersonal traps around him.
- In-placement programs are also underutilized to help employees advance in their careers internally; only 7% of individuals who switch jobs do so inside their current companies. Another of my clients found that when they proactively helped downsized employees network and interview for positions inside the company as a part of their outplacement program, over 30% transferred internally, quickly filling open positions, reducing recruiting costs and mitigating the impact of the layoffs on morale.
All this is to say that most organizations can get more creative than they usually do in addressing the hidden costs of talent development and retention. I always suggest to my clients that they invest in the win-win, supporting the individual employee’s well-being, personal effectiveness and career development while also upgrading behaviors and skills that will pay off for their company and their customers in the form of productivity, reduced conflict, improved collaboration and improved brand communications.
Yes, these things can be hard to put on a spreadsheet, but they’re not hard to find among your people if you look.
Dana Theus is president and CEO of InPower Coaching. An executive coach and change management thought leader, she cracks the code on personal power in the workplace. In addition to her private practice, Theus helps organizations bring emotionally intelligent coaching services to middle management through facilitation, consulting and group coaching. Follow her on Twitter at @DanaTheus and on LinkedIn.