Company S is a partnership enterprise that has been growing domestically for over ten years. Three years ago, influenced by internal and external factors, Company S experienced a high-level shake-up: the general manager and two senior executives left successively, the board of directors was reorganized, and the new chairman, Mr. W, also took on the role of general manager. Four deputy general managers were selected from the original director-level middle managers to oversee four of the company’s business units. An energetic young industry elite was hired externally to manage the product R&D department and another business unit. Together with two local branches, they formed eight independent business units, implementing a divisional management system.
In the first year after the shake-up, the newly appointed vice presidents each formulated annual plans based on the business strategy goals set by the company. To the relief of the senior management of Company S, that year, the company's performance not only did not decline but slightly improved compared to the previous year. Consequently, in the following year, the company slightly raised its business targets based on the previous year.
Half a year later, during the mid-year meeting, the current leaders exchanged views and reflected on a common issue: a lack of intermediate-level managers! The specific situation was as follows:
1. Vice presidents were still doing the work of directors or department managers. Several vice presidents promoted from the director positions were responsible for overseeing their respective business units, with some vice presidents also doubling as department managers under their business units. After a year, whether from the old employees or new employees within the business departments, there was still no suitable candidate who could take on the role of department manager independently. As a result, the already busy vice presidents had to personally delve into the minutiae of each business project.
2. Capable employees within the departments were unwilling to take on the role of department manager. One of the business units under Company S had a Business Department I with six people, five of whom were employees with more than two years of experience, including two who had been with the company for five years, both with rich project experience and strong business capabilities. After the previous department manager left, no one stepped up. In communicating with this department, it was found that these two individuals were recognized by others, but crucially, they themselves were unwilling to take on the responsibilities of a department manager. Their project management experience far exceeded their personnel management skills. On a personal level, these two seemed to have agreed that they were content being project managers or project executors, but they were hesitant when it came to the business targets assigned to department managers by the company. In reality, they almost always achieved or even exceeded the company's annual business targets.
During the external recruitment process, half a year passed without finding suitable candidates, for two reasons: the external recruits did not necessarily surpass the level of the company's existing excellent employees and would require a long period of adaptation; from the interview communication, the applicants' abilities were indeed good, but their salaries were too high, while those with suitable salaries lacked standout qualities.
Reluctantly, Company S decided to focus on internal development. As usual, comprehensive, large-scale training was conducted for all employees, covering business skills, project management, personnel management, and more. Some training courses were specifically designed for the company's outstanding employees and potential department managers. Trainers were sourced both internally and externally, including many renowned industry experts, in hopes of helping these outstanding employee representatives grow faster and better to shoulder relevant responsibilities.
For the lack of middle management and the reluctance of some excellent employees to step up, some company leaders even described them as "Liu A Dou" (a reference to someone incapable and unworthy). However, such excellent employees had to be relied upon, causing headaches. Regarding this group of people within the company, some leaders analyzed as follows:
First, the outstanding employees awaiting promotion indeed had commendable business capabilities, but the company's previous training focused mainly on the business level, with little emphasis on management training, leading many employees to focus solely on their business expertise. Additionally, with department managers consistently above them, these employees lacked the courage to take on responsibilities proactively, gradually losing their drive to excel.
Second, during the shake-up among middle and upper management, employees who stayed loyal to former leaders retained nostalgia for their previous leadership style, failing to adapt positively to the company's changes. Instead, they followed passively, relying on their business advantages, without fully exercising their initiative.
To enable those with potential to become middle managers and better promote the company's growth, a revolution in mindset was imperative. Currently, although the company's operations were still running normally, growth was quite slow; rumors among regular employees suggested that this year's targets might not be met...
What to do? Company S remains perplexed and hesitating.
Speaking of the "top-down" approach in enterprises
By Gao Hongmin, Consulting Advisor at Mingyuan Consulting
The senior management of an enterprise is the "heaven," setting long-term growth strategies and plans based on the company's mission and vision, guiding the overall direction and goals of the enterprise. The grassroots employees are the "earth," ensuring the smooth execution of their duties based on their professional skills and knowledge, making the company's goals a reality. Between "heaven" and "earth," however, lies an indispensable link: the middle management. They must "connect heaven and earth," translating organizational goals into language understandable by departmental experts (i.e., departmental responsibilities and goals), integrating expert outputs, and ensuring that each department's results align with the company's overall growth objectives.
Let us use traditional Chinese medicine methods to diagnose S Company, examining the underlying issues and implications beneath the apparent crisis in its middle management.
1. Observation, Auscultation, Inquiry, and Palpation – What's really going on with this company?
The problem seems straightforward: the departure and instability of senior management led to the promotion of original middle managers, directly causing a gap in middle management. Complicating matters further, it's difficult for the company to hire externally at a reasonable price and find qualified candidates, while internal promotions face challenges due to insufficient managerial skills among top performers and a lack of motivation and willingness to advance. Some leaders at S Company attribute the problem to a lack of managerial training among business personnel, their own laziness, or even the legacy of problems left by previous senior management. The author does not entirely agree.
Problem 1: Lack of macro and systematic human resources planning
Human resources planning involves forecasting future organizational tasks and environmental demands based on the organization's growth strategies, goals, and internal/external environmental changes, and providing corresponding human resources management processes. Key outputs include succession and promotion plans, staffing plans, and competency enhancement programs.
Problem 2: Lack of successor talent management and development mechanisms
Successor talent management and development mechanisms are essential for continuous leadership growth and enhancing talent competitiveness. In fact, over 78% of Fortune 500 companies have implemented successor talent management systems. Particularly for middle and senior management successors, these mechanisms can effectively buffer against sudden senior management instability and reduce losses caused by personnel turnover.
Problem 3: Incomplete personnel training and development systems
On the surface, S Company appears to value training, with extensive and systematic content, some of which is highly targeted, and bringing in many renowned trainers from outside. However, in terms of effectiveness, do these trainings truly enhance employee capabilities, especially the urgently needed management skills?
A key point is that personnel training and development are not equivalent to training courses. As Drucker said, "Management is a practice; its essence lies not in knowing, but in doing." Management training and development begin with specific "work practices" and ultimately apply to "work practices." Training courses are merely auxiliary tools.
2. Prescribing Solutions – How should this company proceed?
Solution 1: Immediate solutions
Addressing the gap in middle management is an urgent issue for S Company. It is recommended to start with the following:
First, assess the capabilities of existing personnel to identify potential middle managers. This assessment should not be based solely on employees' business capabilities and project experience but rather on the responsibilities and duties of middle managers — "connecting heaven and earth" — and reassess accordingly. These assessments should include not only business proficiency but more importantly, understanding of the company strategy, insight, communication skills, analytical skills, and the ability to empathize with and understand others.
Second, provide management training and development for these candidates. Management training is essentially about employee "self-development," where the motivation must come from the employees themselves. Otherwise, relying solely on company training courses, urging, and guidance will be ineffective. Therefore, fundamentally, those without "self-development" motivation can be excluded.
In the specific training and development process, these candidates should be fully authorized and held accountable, allowing them to learn through practical work experiences, permitting room for trial and error, and providing appropriate incentives, guidance, and support.
Solution 2: Long-term solutions
For the company to achieve "longevity," solving immediate problems alone is far from enough. Similar issues may recur if there are further upheavals in senior management or other external problems arise. Therefore, the company should gradually improve its human resources planning system and successor talent management system, as prevention is the highest form of medical art.
Middle-level cultivation requires both nurturing and utilization
In conversations with hundreds of corporate bosses, the most frequent topic I hear is complaints about middle managers: poor execution, inadequate communication, lack of responsibility, insufficient initiative... Yet, while complaints abound, most bosses fail to realize that effective middle management team cultivation requires systematic planning. Many bosses think that cultivating middle managers simply means watching a few sets of DVDs or attending a few lectures.
GE's Chief Education Officer and President of the Management Development Institute, Bob Coughlan, summarized GE's middle management cultivation philosophy in "GE: How We Develop Managers": First, recruit outstanding talents; second, create a strong performance culture emphasizing business results; third, emphasize shared values, educating people so they understand and embrace them; fourth, provide opportunities for excellent performance. The company offers challenging job positions, pushing limits and giving people chances to take on more important work, opportunities they never imagined possible. The company establishes accountability, meaning if you're responsible for a task, you're fully accountable for it. The company gives young people opportunities to rise, allowing them to interact with GE's senior leaders; fifth, establish a talent development system. Through structured procedures, conduct performance evaluations and promotion prospect assessments, rewarding the best and eliminating the worst, rewarding top-performing employees and asking the lowest-performing ones to leave.
From GE's middle management cultivation philosophy, it is evident that establishing an effective talent development program is crucial. Only by perfecting the middle management cultivation process at the institutional and procedural levels can a company ensure its talent cultivation remains consistent regardless of shifts in senior management focus. With such effective systems and procedures in place, GE has never worried about a lack of talent.
Secondly, the middle management project should consider methodological scientificity. A forward-thinking company should identify a group of high-potential middle and senior managers through competency assessments and design individualized development plans for each, focusing on intensive cultivation. During the cultivation process, various forms should be systematically considered, including basic training, mentoring, rotational assignments, action learning (learning through problem-solving), off-the-job training, special position appointments (such as overseas assignments), etc. Additionally, during the talent cultivation process, regular tracking evaluations of backup members should be conducted, adjusting development plans and cultivation methods as needed to effectively cultivate these future managers.
Thirdly, while cultivating middle management is important, it is even more critical to boldly utilize them. Examining successful entrepreneurs or professional managers at home and abroad, they often aren't cultivated but rather honed through market challenges. If middle managers are not intentionally trained during regular times, then lacking capable leaders in emergencies becomes inevitable. History provides cautionary tales: General Zhao She was a brilliant military leader, yet his son, though well-versed in military tactics, lacked experience, resulting in his quiet demeanor leading to his death by arrow, and the massacre of over 400,000 Zhao soldiers. If a company merely stores people statically in a "warehouse," talent will deteriorate over time, leading to tragedy for the company and nightmares for individuals.
A private enterprise I consulted with invested heavily in hiring a large number of talented individuals with advanced degrees and expertise in management and technology, increasing its fame and image significantly. However, in actual work, the company left these Ph.D.s and Masters idle, utilizing only a small portion of their talents, eventually causing all these "reserve talents" to leave. Therefore, companies must change the traditional practice of overemphasizing reserve and neglecting cultivation. Let talents showcase their intelligence and achieve remarkable feats on broad practical stages, benefiting both the company and individuals. Companies should create an excellent environment and a platform for talent development, giving everyone the opportunity to display their abilities.
Finally, the key to the success of middle management cultivation lies in all levels of management taking responsibility. Let these managers become the "responsible parties" for talent selection, use, cultivation, and retention, holding them accountable for guiding, constraining, assisting, and motivating their subordinates. If managers cannot cultivate talent, they are derelict in their duty. As Welch stated in "Winning": "Before you become a leader, success is about your own growth. After you become a leader, success is about others' growth."
Middle management revolution need not be frightening
The causes of S Company's middle management talent shortage can be summarized as an overly strong "business-first" corporate culture, a governance mechanism emphasizing personal rule, and an unscientific human resources system—common ailments in many rapidly growing companies. To fundamentally solve S Company's problems, it is necessary to establish a balanced corporate culture at the strategic level, form a rule-of-law governance mechanism at the tactical level, and continuously optimize the human resources system, ultimately promoting the healthy and sustainable growth of the enterprise.
Cultivating a Balanced Corporate Culture
A healthy corporate culture is a crucial component in strengthening the foundation of a company. It must be comprehensively designed at the strategic level and permeate all levels of the organization through organizational structure, process systems, functional management, and more. Ultimately, it should reflect in the continuous improvement of company performance and internal management standards. For S Company, building a dual-balanced corporate culture of "internal management + business growth" and evaluating enterprise growth from financial, business growth, organizational growth, and internal management perspectives is paramount. By using phased dissemination and step-by-step implementation strategies, the overly strong "business-first" corporate culture should be gradually diluted.
Certainly, constructing corporate culture is a long and continuous process whose effects will not fully manifest in the short term. However, its strategic significance will undoubtedly provide continuous energy for S Company's future growth. In the short term, dissemination will influence the entire workforce, particularly the middle management, gradually improving awareness. This will reduce resistance to short-term improvements in governance mechanisms and human resource reforms, while conversely, the reform of governance mechanisms and human resource systems will gradually foster a balanced corporate culture within S Company.
Establishing a Rule-of-Law Governance Mechanism
S Company exhibits prominent characteristics of personal rule, with some middle managers nostalgic for the personal charm and working styles of former leaders, affecting their initiative. Therefore, continuous optimization in three areas—job responsibilities, management authority and span, and process systems—is very important. Specifically, first, clarify the responsibilities of middle and senior positions further, especially adding project executor and project manager roles to gradually promote self-motivation among project executors. Second, moderately increase the span of senior management, delegate authority reasonably, empower sufficiently, and release middle management rights fully. This helps minimize the phenomenon of vice presidents handling everything personally and cultivates middle-level leaders' management abilities in real-world work. Lastly, continuously clarify and optimize control points in processes, department interfaces, and coordination departments, reducing the company's excessive reliance on certain leaders and enabling autonomous operation, minimizing the impact of high-level shocks on the company and reducing the influence of leaders' personal charm on the company.
Optimizing Human Resource Management Systems
Establishing a rule-of-law governance mechanism must be accompanied by optimizing human resource management systems to be effective, especially in areas like employee career planning, compensation systems, performance evaluation, and training mechanisms, which directly promote the optimization of rule-of-law governance mechanisms. Overall, S Company needs to redesign its human resource management system holistically, involving human resource planning to guide future talent identification and utilization and promote organizational continuous growth.
Specifically, first, accelerate the improvement of a multi-channel promotion mechanism based on qualification standards, forming positive interactions between technical and management sequences. This supports promotions within the same sequence and encourages cross-sequence transfers, facilitating talent mobility and accelerating the development of versatile talents, thereby promoting more technical talents to become excellent management talents. Second, within a controllable cost range, improve the compensation system to enhance external competitiveness, reduce external recruitment difficulty, attract external elite talent, and optimize the compensation structure of management and technical positions. While ensuring the incentivizing nature of technical positions' compensation, increase the variable part of management positions' compensation to enhance flexibility and thus improve the incentive effect on middle management positions. Third, in conjunction with the compensation system, improve the evaluation mechanism, designing indicators for assessing the management abilities of senior, middle, and junior levels, strongly promoting the cultivation of management skills and awareness throughout the organization. Through matching rights, responsibilities, and benefits, quickly develop and encourage middle-level teams. Fourth, based on a scientific qualification standard system, select middle-level backbone personnel with cultivation potential, strengthen emotional marketing, stimulate their subjective initiative, and intensify training to steadily enhance their management abilities, making them excellent versatile talents.