The benefits accrued to companies that mindfully screen for“talented” and “engaged” managers are myriad, according to a studyby Gallup — including a huge competitive advantage inprofitability.

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Gallup continues to venture far beyond mere pollstering, asexemplified by its analytical tome on managers, “Stateof the American Manager.” Among the extractions from thisreport are observations about the effect managers have on corporateperformance. Consider this:

  • Companies that hire managers based on talent report a 48 percentincrease in profitability;

  • Those companies report a 22 percent increase inproductivity;

  • They report a 30 percent increase in employee engagement;

  • They report a 17 percent increase in customerengagement;

  • And a 19 percent decrease in turnover.

The trick is finding these talented, engaged managers. Therecruiting and interviewing processes need to be completelyretooled to screen in the right people rather than screen out the“wrong” ones. And that’s noteasy, given that Gallup’s research shows that only 35 percent ofmanagers are engaged in their jobs.

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“Through their impact, Gallup estimates that managers who arenot engaged or who are actively disengaged cost the U.S. economy$319 billion to $398 billion annually,” Gallup said.

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Women managers tend to be more engaged than males, yet there arestill far more male than female managers in the Americanworkplace.

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“Individuals who work for a female manager are also sixpercentage points more engaged, on average, than those who work fora male manager,” Gallup reported. “Female employees working forfemale managers have the highest engagement (35 percent engaged),while male employees working for male managers have the lowestengagement (25 percent engaged).”

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What can companies do to try to shift their management team fromdisengaged to engaged? Gallup offers four critical suggestions:

  • Create a talent-driven human capital strategyby knowing “what success looks like in every manager role andstrategically think about how each hire fits into their short- andlong-term objectives.”

  • Grow talent, don’t just promote people, andunderstand that success at one level of performance does notnecessarily project success into the next one. “Businesses shouldbe highly conscientious in their succession planning. A greatfront-line employee is not necessarily going to be a great manager,and a great manager is not necessarily going to be a great leader.Each of these roles requires a different set of talents.”

  • Reward performance, not title. It’s okay for adirect report to earn more than one’s supervisor. “High-performingemployees are vital to a company's performance, which the companyshould compensate accordingly. Businesses back themselves into acorner when they tie pay to managerial status, creating anenvironment in which employees constantly compete for roles thatdon't suit them.”

  • Emphasize and support continuous improvement inmanagers. “Companies need to make an investment in theirmanagers and provide them with the resources, tools and supportthey need to refine and cultivate their strengths. Development isnot dependent on tenure, and managers at all stages of their careershould have opportunities to learn and grow.”

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Dan Cook

Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.