Futureproof Your Organization with These 8 Manager Effectiveness Metrics

Ian Cook - Visier - Tucana Global

By Ian Cook - Head of Workforce Solutions, Visier Analytics

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As global markets push businesses to become more agile and responsive, it’s tempting to predict that management roles will virtually disappear from progressive companies.

But even Holacracy (a self-management structure made famous by online shoe retailer Zappos) has some hierarchy: Instead of “managers,” there are “lead links” who carry leadership functions and oversee new teams as they form and disband with each project cycle.

While widespread adoption of Holacracy is not likely in the near future, many organizations are shifting towards more flat structures where teams are gaining in importance. Among 10,000 business and HR leaders, 94 per cent report that agility and collaboration are key to their organization’s success, and 32 percent say that they are designing their organization to be more adaptable and team-centric, according to Deloitte’s 2017 Global Human Capital Trends report.

These kind of fluid, team-centric operating models require formal structure. As Deloitte’s experts emphasize, structures of teams are enabled by a management model that draws clear distinctions between “two necessary roles and types of management: the administrative or talent manager (reflecting the traditional, formal structure) and the mission or project manager (representing the new, team-based structure).”

Measuring the Effectiveness of Administrative and Mission Managers

If your business is moving towards a dual management structure system, gaining clarity around hiring, compensation, and performance will become even more important. With fluidity comes a certain degree of murkiness, and thus objectively measuring manager effectiveness will become even more complex.

Because the two types of managers serve two very different roles, they need to be measured in very different ways.

A mission manager’s primary function is to get the project delivered on target, while an administrative manager is more focused on an employee’s skills and career development.

Knowing how to measure the different types of leaders will put you in a position to guide your organization through success as it strives to become more responsive to market pressures. Here are two distinct sets of metrics for each type of manager.

5 Manager Effectiveness Metrics for Administrative Managers

The old adage is true: “people quit their bosses, not their jobs.”  Because time with a project or mission manager is relatively short — six months or less — employees will gauge their relationship with the organization through their traditional people manager.

This means that for administrative managers, it’s important to use metrics that will help you answer questions like: Which managers retain the most top performers? Which managers grow the best employees? From there, you can look to groom more managers like them, have conversations with those who need improvement, and make sure your best managers are guiding your most critical employees.

Must-have administrative manager effectiveness metric #1: Engagement score

Why you need it:

Managers are not the only factor influencing employee engagement, however they are pivotal because of their opportunity to understand and support employee engagement at an individual level. Most engagement survey processes have a specific series of questions that look at how employees view their supervisor. Understanding and using this score to build a complete view of manager effectiveness is important.

How to get it:

The most common way this score is generated is by calculating the mean scores for a series of survey items related to the supervisor relationship.

Red flags to act on:

When a manager’s engagement score is significantly lower than similar work groups in the organization, this is an indication that the manager is falling short. Analyzing this score alongside high performer turnover or absence rates will give you a good idea of how big an impact the manager is having on the team. Low engagement coupled with high resignation and/or high absence rates means that action is required to improve the dynamics of that work group. It is also worth doing some investigation based solely on low engagement, as this may be the first sign that resignations and absences will follow.

Must-have administrative manager effectiveness metric #2: High performer resignation rate

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Why you need it:

A general turnover metric — which also incorporates the turnover of poor performing employees — is too broad to support good quality decisions about management skills. Instead, examine the resignation rate of high performers to see if specific managers or work units are losing more high performers than others.

How to get it:

  1. Chose a time frame (e.g. previous 12 months).
  2. Count all the high performing employees who resigned.
  3. Calculate the average headcount for high performing employees.
  4. Divide the number of high performers who resigned by the average high performer headcount.

Red flags to act on:

Whenever the high performer resignation rate is greater than the overall resignation rate, it signals a problem that needs to be addressed. If you are losing high performers more quickly than your general employee base, this means your overall talent quality is reducing, which is likely to lead to productivity and quality challenges some time in the future.

If the rates for certain managers are substantially higher than other managers, this is an indication that all is not well in that work group. Although it would be too simplistic to assume the manager is the sole cause, it is an indicator that further investigation and insight is needed.

Must-have administrative manager effectiveness metric #3: Promotions actioned

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Why you need it:

Classic promotion metrics simply look at how many people in a group have received a promotion. This does nothing to indicate whether or not they were promoted within the group or came to the group from somewhere else. When trying to understand whether a manager is good at growing talent or not, you need to understand how many of their people were promoted  — both within their team and externally to another team.

For this purpose, look at your promotions actioned, which calculates the number of people who were promoted from a specific work group and gives a true picture of the manager’s ability to develop promotable staff.

By looking at promotions actioned across your organization, you can see from which work units and managers more people than average are being promoted. This indicates which managers are more effective at growing talent.

How to get it:

  1. Chose a time frame.
  2. Identify all of the people who had a promotion within that timeframe.
  3. Allocate that promotion event to their location / work unit at the start of the time frame – (where they were promoted from, not where they were promoted to).
  4. Divide the number of promotions by the average headcount in the workgroup to create a rate.

Red flags to act on:

Managers who consistently have a low or zero promotions actioned rate may be talent hogs. These people hold back team members to make sure their results get delivered, at the expense of the employee and the organization overall. A rate that is low compared to others, or zero, should be a reason to investigate further and clearly identify why this manager is not able to build staff who can progress through the organization.

Must-have administrative manager effectiveness metric #4: Direct compensation variance from plan

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Why you need it:

The amount that an organization spends on people in professional services or technology companies ranges from 60 to 80 cents of every dollar. Even with the best financial controls in place, managers play a key role in managing the ad-hoc, off-cycle increases to base pay, as well as the use of variable or supplemental pay to incentivize employees or cover peaks in demand.

The primary job of a manager is to get the work done with the resources provided — whether these are financial resources or human resources. Understanding how closely the people costs of a work unit match the plan provides insight into how well a manager is doing at stewarding resources.

How to get it:

This analysis requires the ability to integrate and align your planning and analytics work. Here is how to calculate the direct compensation variance from plan:

  1. Align your planning and analytics to use the same basis for modelling people costs (e.g. direct compensation for both includes base pay, variable pay, supplemental pay, etc.).
  2. Publish your planned direct compensation for each work unit.
  3. Calculate your actual direct compensation from pay data.
  4. Subtract your actuals from your plan.
  5. Convert the sum of the difference into a percentage variance (e.g $10 over a $100 plan costs is 10% variance).

Red flags to act on:

Managers should not be expected to constantly hit their plan targets precisely.  This level of accuracy suggests too high a focus on costs. However, if there is a variance above plan for several months, or if the variance is higher than 2-3 percent, then it indicates the need to do some more detailed analysis into what is causing the variance (for example, is the variance due to big increases in base pay due to new hires, or is it due to high supplemental pay payouts as the result of increased work volumes?). A variance does not always indicate a negative situation, but it does indicate the need for investigation.

Must-have traditional manager effectiveness metric #5: Absence days per full-time equivalent (FTE)

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Why you need it:

Absenteeism is often a “sleeper” issue that, when monitored, can provide great insight into which managers are demanding too much of their people or have an engagement problem. There is a level of absence which is “normal”  — everyone gets sick sometime. Monitoring this metric is about identifying patterns that do not fit with what is expected and understanding what is causing this abnormal behavior.

How to get it:

  1. Chose a time frame.
  2. Count the number of days absent during the time frame.
  3. Calculate the number of Full Time Equivalents working in each work group.
  4. Divide the number of days absent by the number of FTEs (this gives you a “normalized” or common score that can be compared across work groups).

Red flags to act on:

There are two clear indicators that the behavior of a work group is not effective and that further investigation is required. The first is a consistent level of absence above the average for similar work groups. Absence rates do increase with age, so you need to check if one group is substantially older than another. But in general, absence patterns should be consistent across groups doing similar work with similar demographic make ups.

The second red flag is an increase in absence. Month-to-month there are likely to be fluctuations, however, a steadily rising trend is an indicator of a work group that may be over-worked or may be disengaged, looking to leave the organization. (The most common way to get time for an interview is to fake a day of sickness.)

3 Manager Effectiveness Metrics for Mission Managers

The mission manager is essentially a project leader who is task-focused. Successful mission managers are strong communicators who can motivate people and coordinate many moving parts at once to meet project goals. Once you understand who the top performing mission managers are, you can then be strategic about who gets assigned to lead the most critical or complex projects.

Must-have mission manager effectiveness metric #1: Engagement score

Why you need it:

A project manager who drives people to hit mission objectives without consideration for the team’s general well-being can create widespread burnout within the organization. This kind of “all or nothing” attitude can hamper engagement, drive up absenteeism rates, and have a negative impact on retention. Therefore, a mission manager’s engagement score needs to be considered as part of the bigger picture.

How to get it: 

If your organization typically only evaluates traditional managers who are tied to functional departments, you may need to change the way you capture your engagement data to include mission managers. Add questions to engagement surveys about the employee’s relationship with the mission manager specifically. To create a rolling score over time,  include an assessment of the manager at the end of each mission.

Red flags to act on:

One bad engagement score related to a specific mission may simply mean the mission manager was learning something new, and is not necessarily reflective of overall performance. However, when a team leader’s score is consistently low — and particularly when this is coupled with high absence rates — it is an indication that he or she could be burning out employees.

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Must-have mission manager effectiveness metric #1: Engagement score

Why you need it:

Most organizations move towards a more mission-focused structure so they can deliver specific outcomes (such as new software releases) within shorter cycles. This means that getting projects completed on time and within a specific scope is paramount. The on-target delivery metric to help you evaluate how the mission manager is hitting these two objectives.

How to get it:

  1. Identify the scope and deadline for the current “mission”
  2. Identify volume of work complete and amount of time that has passed
  3. Calculate percentage completion by due date e.g. 80% complete on due date

Red flags to act on:

A common theme of project over-runs indicates that a manager may be having difficulty getting team members to rally around a delivery date. Also, if you see that the team is not on target but that employees are working overtime, you need to drill further by having a conversation with the manager and the team members, as there are many factors that could be contributing to the problem.

You also need to consider the difficulty level of the mission; some are more complex because they have an undefined scope. If the different missions are rated by difficulty when the data is inputted into the project management system, your insight will be that much richer.

Must-have mission manager effectiveness metric #3: Labor utilization variance

Why you need it:

Skilled mission managers who can organize projects and run teams are tremendous assets. They can evaluate interdependencies of tasks and skills and ensure they are lined up to deliver on the project objectives. The labor utilization variance will help you evaluate whether the manager was efficient in how he or she deployed people.

How to get it:

  1. Identify the total person hours allocated to the mission
  2. Identify the person hours that have currently been delivered to the project
  3. Calculate the percentage variance between actual hours and allocated hours e.g. 110 actual hours vs 100 allocated hours = +10% variance.

(Note: The same calculation can be run based on days if that is easier to track than hours)

Red flags to act on:

If you see that team members have to put in more hours than expected on a regular basis, it could be an indication that the mission manager is struggling to assign people the right tasks, or has difficulty planning complex projects.

Bringing it All Together

The role that managers play is crucial to the output of the organization. More often than not, businesses rely heavily on the knowledge and commitment of employees. The administrative manager plays a pivotal role in bringing out the best in people long-term, while effective mission managers can skillfully lead a team through challenging, complex projects on tight deadlines.

Whenever you perform an analysis of manager effectiveness — whether it’s for an administrative or mission manager — it is important to use metrics to narrow down areas of focus and potential issues. At the same time, remember the metric is not the answer, it is the guide towards a deeper understanding of how the human dynamics in your organization either drive or hinder organizational success.

By monitoring and analyzing manager effectiveness, you will be in a good position to identify where your management team is strong and where further insight is required. When this is combined with recruitment optimization, you can drive strategy and better business outcomes through talented, engaged people.

This article was originally posted on Visier.com. Reposted with permission.

Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author(s) and do not necessarily reflect the views of Tucana.

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