Middle managers are important. They are critical and yet often underappreciated in shaping a firm’s performance. Not only do they execute the strategies laid out by senior management, but they also help senior and lower management to align their goals and efforts for the firm. It is essential to retain good middle management talent to sustain a firm’s competitive advantage.
Management practices say that to minimize employee turnover, good bosses who are humble and empower their subordinates, and job satisfaction are key.
In a study at the National University of Singapore Business School involving over 500 middle managers and 300 top executives at more than 40 companies, we found another critical but often overlooked factor—divisions or faultlines.
Divisions in the composition of a firm’s top management team (TMT) can have unexpected spillover effects that intensify job dissatisfaction among middle managers, leading to higher turnover.
These divisions or faultlines are hypothetical partitions that commonly occur within any team. They cause the team to split into subgroups based around one or more individual characteristics.
When faultlines are particularly strong, teams tend to face more communication issues, have more conflicts, and coordinate less effectively.
While diversity is often viewed as beneficial because it encourages creative thinking and different perspectives, diversity that leads to faultlines within teams is more likely to be detrimental to team functioning.
Teams can be equally diverse but have faultlines that differ in their intensity and hence affect the team’s performance. For example, two teams may be seen to be equally diverse when they consist of two women and three men, a mix of young and old age, and Filipino and Indian nationalities.
However, one team made up of two young Filipino women and three older Indian men would have stronger faultlines and therefore likely to perform worse. Yet a second team made up of an old Filipino woman, a young Indian woman, a young Filipino man, a young Indian man, and an old Indian man would have weaker faultlines because their characteristics do not all align. This latter team is therefore likely to be more effective.
In our study, we measured the degree of faultlines through information gathered from the top manager in each team. From middle managers, we asked how they perceived humility of their bosses. We also measured their job satisfaction. A year later, we gathered data on middle manager job turnover.
We found that in TMTs with stronger faultlines, these faultlines superceded efforts by senior management in that team to boost the job satisfaction of their middle managers and minimize turnover. In other words, even if top managers were seen as especially humble and empowering to their subordinates, this had no impact on retention because of the strong faultlines.
On the other hand, we found that in TMTs with weaker faultlines, executive humility was effective in increasing job satisfaction and minimizing turnover.
Our findings go against conventional management wisdom that job satisfaction is one of the most powerful predictors of employee retention. Instead, our study suggests that job satisfaction by itself cannot predict middle manager retention when there are strong faultlines in the TMTs.
But more disconcerting is that while it is generally understood that faultlines cause teams to malfunction and decrease the team’s performance, we find that there are negative effects that go beyond just the team but spill over to undermine the functioning of other talented employees.
What are the takeaways?
First, when companies are recruiting new members of their TMT, they should consider the demographics of these candidates and whether they may create or accentuate faultlines that inhibit the team’s functioning.
Take, for example, an entrepreneurial firm looking to expand its top management team from three founding male executives to five and also aiming to increase gender diversity. The original team could all be Filipinos from Quezon City graduating from the University of the Philippines. Recruiting two female, from Manila, graduates from De La Salle University may prove problematic because several individual attributes are aligned to create strong faultlines between the two new hires and the three incumbents. Instead, the firm may consider recruiting two female UP graduates, while keeping the same level of gender diversity but reducing the strength of the faultlines.
Second, in situations where faultlines already exist, teams must put more effort into team building. This may include focusing the team around a shared vision and building more effective communication to bridge the subgroups.
Lastly, for firms that have difficulty retaining talent, it may be worthwhile to broaden their viewpoint beyond these employees or their immediate leaders. While exit interviews are a common approach to troubleshooting, they may not reveal the substantial yet invisible causes such as faultlines and interaction dynamics in the firm’s top management team.
The author is an assistant professor in the Department of Management and Organization at National University of Singapore (NUS) Business School. The opinions expressed are those of the writer and do not represent the views and opinions of NUS. The study referenced in this article was co-authored by Jungmin (Jamie) Seo, California State University, Fullerton; Dongwon Choi, National University of Singapore; and Peter W. Hom, Arizona State University)