Middle Managers Carrying Companies Through Rocky Times

With companies increasingly looking outside their own ranks for top talent, the ability of the middle managers to quickly adapt during the transition is critical.

While the CEOs enjoy high profiles, big salaries and generous bonus packages, middle managers are often the forgotten heroes of big-business transformations. And CEOs who recognize this can themselves enjoy greater success.

The Wall Street Journal reported that dozens of CEOs have been ousted in the last 12 months. Looking for a proven track record, boards are turning to CEOs from other companies, creating an elite group of “job hoppers,” moving from one corner office to another.

The newspaper cited Boos Allen Hamilton statistics, which say that 12.2 percent of the CEOs who left their job at publicly traded companies last year had previously held a similar position. That rate is the highest in the seven years that the firm has tracked those numbers at the world's 2,500 largest companies.

Hiring a new CEO, a move often preceded by a shrinking bottom line or worse, presents opportunities for middle managers to show their leadership to smooth the bumps and keep the business operating.

CEOs who fail to recognize the middle-manager workhorses may regret it. Consider former Morgan Stanley Chairman and CEO Philip Purcell, who resigned in June after dissatisfied executives quit and called for his ouster.

Getting to know the concerns of middle managers and showing a willingness to understand all aspects of the business have proven to be good strategies for CEOs. The Journal cited the example of Jeffrey Rodek, chairman and former CEO of Hyperion Solutions, who would show up at tech and sales managers' offices unannounced to seek their opinions or to chat.

CEOs who move up the company ladder may be more easily accepted by middle managers, and Booz Allen's research shows that doing so may be good for business. The firm says that shareholder returns of companies worldwide where the CEO was promoted from within tend to outperform those that hired from outside.

A CEO who is part insider and part outsider is Howard Stringer, who started in June as Sony Corp.'s new chief executive officer. He ran Sony's U.S. business for eight years, but in n Japan, Stringer is considered a relative outsider because he is new to electronics. The Japanese corporate culture has long relied on “hand-picked insiders – operations experts who grew up in the company culture, wearing the company badge and singing the company song,” as described by the Journal.

He has decided to take a hands-on approach. He moved his office downstairs so he can mix with upper-level strategists and managers. Experts say that kind of networking can help outsiders find acceptance among corporate veterans.

"I am a foreigner," Stringer told shareholders in June. "But I am first and foremost a Sony warrior."

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