Episode #44: Middle Managers Are Your Firms Lifeblood

Middle Managers are going to be the leadership group most directly interacting with the younger generation of employees. We are on the cusp of entering the first ever free agent era of workers in Japanese history, as the population decline ensures that the young are in super demand. The people who are going to ensure they stay with you rather than leave for the rival’s firm will be your middle managers. I hope these Middle Managers understand what this demographic shift will mean for the way they lead others?

Before we get into this week’s topic, here is what caught my attention lately.

There has been a fifty percent rise in the number of single mother households in Japan from 1992 to 2016, to seven hundred and twelve thousand. The child poverty rate is fifty six percent for working single parent households in japan, the highest in the OECD and compared to thirty two percent in the US. One in every seven children in Japan experiences poverty. These children of single mothers are on average poorer, less educated and have fewer prospects. Japan is one of the ten wealthiest countries in the world, so how can this be possible?

This is episode number 44 and we are talking about Middle Managers Are Your Firm’s Lifeblood. Soredewa ikimasho, so let's get going.

“They are looking for a place where they are highly valued, feel they are needed, and are praised for being useful to others”. Professor of Social Psychology at Rissho University in Tokyo, Kimiaki Nishida was quoted in the local media commenting on why young people join terrorist groups like Aum Shinrikyo or the Islamic State. I was struck by the similarities to the problems confronting Middle Managers in Japan dealing with Millennials.

Japan is facing a crisis with succession planning. This is driven by a demographic pivot where the number of young people entering the workforce will decline faster than demand for their services. The social and political debate about immigration to curb this demographic spiral downwards hasn’t even begun yet. Anti-Korean groups paraded through areas in Tokyo and Osaka, populated with a high concentration of Koreans, promulgating hate-speech and screaming for these Koreans, mostly second, third and fourth generation locals to leave. Immigration is not an option yet to reverse current trends. The Japanese birthrate is in no danger of improving either, as family sizes stay small and couples become parents much later. McKinsey’s late 1990’s “war for talent” ring a bell with anyone?

Middle Managers are often the direct reporting line for these Millennials and yet the generation gap is vast. This is the fax and PC generation sitting across grey metal desks from their app and iPhone successors. One generation remembers basking in the warm embrace of the bubble hedonistic extravaganza. The other has only known shivering in the cold turmoil of the bubble burst, the Lehman Shock and the triple whammy of earthquake, massive tsunami and nuclear reactor core meltdowns, spewing radioactive fallout over the Tohoku and Kanto regions.

The Millennial’s emotional mix is about to become even more complex. There will slowly take place one of the greatest wealth transfers in history, as the older generation of Japanese, who are massively cashed up compared to previous generations of retirees, pass their wealth on to their kids. The Japanese tax office is salivating, already expanding inheritance tax brackets so they can harvest this wealth migration.

Ironically, this wealth transfer will gradually dial down some of the career progression concerns previous generations confronted. The increasing affordability of housing will be driven by population decline, gradually providing a greater sense of security to this younger generation. So a bigger cash buffer, a greater sense of security, instant digital access to information, diminished worker supply and so less career urgency, produces confronting new attitudes.

Paraphrasing Professor Nishida, the young want love not tough love. The “highly valued” component certainly conforms with our global research validated in Japan, that “feeling valued” was the key emotional trigger to becoming more engaged about your work. If you feel more engaged, you are more motivated, loyal and likely to be innovative.

Crunch time! Are your Middle Management tuned in to these critical messages? Are they having boss-subordinate conversations, performance reviews and coaching interactions, which genuinely communicate “we value you here”, “we need you”, “we really appreciate you”?

Sounds a bit fluffy to you? Official statistics tell us that in thirty percent of workplaces that is not happening sufficiently to stop Millennials, in their third and four years of work, from walking out the door to supposed greener pastures. The cost of their departure to the organization is huge. After three or four years of investment, the company should be reaping the productivity dividend from the efforts to educate them about the business. That investment is out the window. There is the additional sting of the opportunity cost to replace them and train up their successor.

Ouch! and double ouch!, because it is only going to get worse. Hello to all the recruiters out there! Firms are foolish if they don’t do something now about better educating their leaders, especially front-line supervisors and Middle Managers. Highly inconveniently, Millennials are never on your timetable

Action Steps

1. Understand there is need to prepare now for a looming “war for talent”
2. Expect dealing with Millennials will become more difficult, as there are fewer levers available to influence them
3. Educate Supervisors and Middle Managers about the need to communicate “You are Valued” to Millennials