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Almost every company has them. They may number six or 6,000 and they all share the same job category middle managers. They are often referred to as the "glue" that holds companies together, bridging the gap between the top management team and lower level workers. They implement strategy and organizational changes, keeping workers engaged during both good and bad economic cycles. However, middle managers also can be a challenging group of employees to develop and retain.

According to a 2007 Accenture survey of middle managers around the world, 20% reported dissatisfaction with their current organization and that same percentage reported that they were looking for another job. One of the top reasons cited was lack of prospects for advancement.


"Many companies are seeing significant turnover in middle management ranks, and with significant turnover, they don`t have the ability to execute strategy," says vice dean of Wharton Executive Education Thomas Colligan. "Top management can spend all their time creating strategy, but without someone there to implement it, where are you at the end of the day?"

In addition to strategy implementation issues, the cost of turnover is extremely high for companies. Colligan noted that one large partnership facing a 20% turnover rate did a calculation in which it concluded that for each 1% it could reduce turnover, it would increase partner earnings by $80,000. "Middle managers are very important to attract, develop and retain, and some companies are becoming painfully aware of that."

These observations are even truer in a down economy that is struggling with higher gas and food prices, reduced consumer spending, downsizing and a degree of uncertainty that is affecting industries across the board.

David Sirota, co-author of The Enthusiastic Employee: How Companies Profit by Giving Workers What They Want, predicts that middle managers will "again bear a significant part of the pain that the current economic conditions will bring." After the last downsizings in the 1980s and 1990s, many of the middle management positions that were eliminated have reappeared. These could be likely targets again, he notes.

Joe Ryan, who teaches in Wharton Executive Education, agrees. As companies go through economic cycles like the current one, middle managers get hit with the elimination of rewards and incentives and, in some cases, layoffs. This is particularly true now in the financial services industry, he says. "In cost-cutting times, knee-jerk reactions happen. There is a paradox where middle managers are essential, but end up sacked when restructuring occurs. It`s a rough situation because the people needed to run the most important projects are in the middle."

If companies don`t manage change well, they will confront a "frozen" middle management and "vicious cycles of low morale and low engagement," Ryan says. "Regardless of the economic climate, companies need to build a resilient workforce and engage the middle to go forward, because this is where change occurs."

Middle managers are essential in organizations, in part because they link senior management and the rest of the company. Sirota describes them as "the glue across upper and lower levels as well as horizontally with other departments."

According to Jane Farran, a senior fellow in Wharton Executive Education and managing partner of the consulting firm C4, with the economy under siege these days, "a lot of belt tightening is occurring. Many companies are nipping and tucking to make their numbers." That`s not a good strategy, she suggests. Indeed, when companies have tried flattening their hierarchies in the past thinking that middle managers are extraneous and a few layers of them could be eliminated the result was not what they expected.

"These intermediaries have a very important role," she says. "The middle managers translate strategy and the big picture so that it makes sense and is applicable for the day-to-day workers." At the same time, middle managers are taking note of workers` needs, making their own observations of client interfaces and shop floor activity, and relaying that information up to the senior managers. In addition, "they are a buffer between the top managers" and lower-level employees.

If middle managers are so valuable, why would they report dissatisfaction and leave their companies? A primary reason is lack of advancement opportunity, says Sirota. "When companies downsize, they will often cut middle management ranks. But even if companies just stagnate, advancement opportunities are limited. This hits people very hard, particularly people in their late 30s and 40s."