The Macro Effects of Micromanaging
Does having more management really result in higher performance?
For most junior employees, the culture in which they work is defined by their managers. We previously covered how Toxic Corporate Culture was a main driver of The Great Resignation and how Gen Z is redefining work culture as we know it today. Today, we look at whether excess management has a negative effect on company culture. And if so, what is the business impact of being a top-heavy company?
First off, we compare employee sentiment at the most top-heavy companies – those with the largest share of senior employees, adjusting for the industry standard – to hierarchically flatter companies with lower shares of senior employees. Employees are more satisfied in all metrics in flatter companies. Unsurprisingly, the biggest difference is in their Work-Life Balance and Culture & Values ratings.
Contrasting between the most commonly mentioned pros and cons of working in these companies, we can also see that top-heavy companies have more employee complaints about management. On the flip side, flatter companies get praised for their environment, culture, and work-life balance.
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The gaps in employee sentiment between top-heavy and flat companies are sizable. Lower employee satisfaction has concrete business impacts: Top-heavy companies have consistently higher attrition rates compared to their counterparts with less upper management. Work-life balance might be the driving factor behind higher attrition rates.
The effects of having excess upper management are clear, so which companies are the biggest culprits? Among companies with the highest shares of high seniority employees, we see that some recognizable names like Salesforce, Adobe, and Accenture have the most to worry about.
- Employees at top-heavy companies are less satisfied with their jobs and have higher attrition rates.
- These effects may be driven by complaints about management, culture, and work-life balance.
- Consulting companies are the most susceptible to these effects, as they tend to have the highest shares of senior workers.