Four steps to improved company performance: it’s about talented managers and happy employees

In: BlogDate: Aug 05, 2015By: Elinor Jansen

Guest blogger Elinor Jansen updates us with a summary of Gallup’s latest (2015) study on the relationship between firm performance, organisational structures and employee engagement.

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Decision-makers understand there is a link between how well they manage their employees and overall firm productivity. The 2015 Gallup study State of the American Manager cuts through the clutter to explain what matters most. Based on studies of 2.5 million manager-led teams, this global study found that there are irrefutable links between employee engagement and key performance indicators such as increased productivity, profitability and quality.

When a company raises employee engagement levels consistently across every business unit, everything gets better – p.11

Moreover, their study showed that managers are responsible for at least 70% of the variance in reported levels of employee engagement. Now, a solution is nearer – have the right manager in place, and you will consequently see higher levels of employee engagement and in turn your company will perform better.

Four Steps for Improving Firm Performance

1) Implement new structures for rewarding and promoting employees
The study reported that managers are the largest influencing factor when it comes to employee engagement. This is also where it most often goes wrong: one in two people who leave their jobs do so because of a poor manager. The reason why individuals have people management roles although lacking the necessary skills is because of how they were promoted. The two main reasons why people are promoted are (1) they were high achievers in previous non-managerial roles and (2) they were considered as experienced or impressive in their company or field. This approach is wrong since it has nothing to do with people management. There are many other ways to reward high achievers that do not include managing people: bonuses, salary increases, non-monetary perks and benefits, and promotions to new roles that do not include employee responsibilities.

2) Find the right managers
The study defines managerial talent as “the naturally recurring patterns in the ways they think, feel and behave” (p.12). It states that the best managers “are gifted with the ability to inspire employees, drive outcomes, overcome adversity, hold people accountable, build strong relationships and make tough decisions based on performance rather than politics”. If existing employees do not possess these talents, the company should look for them elsewhere. The talents can be detected through personality tests and interviews. Through having clear systems and structures, companies can find the right people for management positions and, according to the study, earn on average 27% higher revenue.

3) Engage existing managers
The Gallup Study is clear on the importance of engagement of managers: “managers’ engagement has a direct impact on employees’ engagement. Employees who are supervised by highly engaged managers are 59% more likely to be engaged than those supervised by actively disengaged managers” (p.8). Here, the study has found three critical actions in order to ensure managers’ engagement: (1) clearly and consistently communicate where the organisation is going, (2) make learning and development a priority and (3) utilize and emphasize managers’ strengths.

4) Train existing managers
Communication. Consistent communication is linked to higher employee engagement. All forms are effective but the combination of regular face-to-face, phone and electrical communication has shown to be the most successful way of engaging employees. Moreover, employees who feel that their managers care about them on a personal level (for example through asking non-work related questions) also report feeling more engaged about their jobs.

Performance management. The most engaged employees report that their managers are helpful when it comes to setting work priorities and performance goals. 66% of the respondents who agreed fully with the statement “My managers helps me set priorities” were engaged employees. Moreover, these employees also reported getting continuous feedback, rather than getting all the critique at once during performance appraisals.

Focus on strengths rather than weaknesses. The study showed clear correlations between a managerial focus on employees’ strengths (as compared to strengths and weaknesses or only weaknesees): 67% of the respondents who said that their manager used a strengths-based approach were engaged at work.

The study has estimated that managers who are not engaged or actively disengaged cost the US economy roughly $360 billion. By taking a structured and systematic approach to the management of managers, companies can instead see revenues jump and productivity surge.


Gallup, 2015. State of the American Manager. Available online from

The author: Elinor Jansen is studying for an MSc in Management at Imperial College. She is spending this month at Happy and will write a series of posts through August 2015.

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Elinor Jansen

Elinor Jansen is studying for an MSc in Management at Imperial College. She is spending this month at Happy and will write a series of posts through August 2015.

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