Excellent leadership helps to make a successful company. Here are strategies for measuring a manager’s effectiveness.
Here's what you need to know:
- The measure of a successful business often lies with managers
- A manager’s success is partially determined by the success of their team, and their team’s turnover rate
- Companies should routinely conduct employee engagement surveys and get anonymous feedback from employees
- Organizations must have managers who effectively recruit and interview job candidates
- Good managers also train people to be leaders themselves and advance within the company
Good management makes a job tolerable. Excellent management makes a job enjoyable. The measure of a successful business often lies with the managers. Managers make a measurable difference in a team’s effectiveness and the business’s performance overall.
Businesses and other organizations strive to develop strong leadership. The issue is knowing what a great leader is. The company’s goals determine how effective its management team is. Here are tips for measuring a manager’s effectiveness.
How does the manager’s team perform?
Regardless of the industry, results drive business metrics. Performance is significant in measuring a manager’s effectiveness. It isn’t the only metric that should determine a manager’s effectiveness, but it is important.
Marketing managers are measured by the amount and quality of the leads a team generates. The sales team’s success is measured by the team’s overall contribution to the company. Manufacturing teams measure success by cycle times or reject ratios.
Most companies already measure the manager’s success. These metrics show how employee engagement and morale can influence the bottom line.
Leadership programs aim to improve overall performance through improved leadership. Tying improved performance solely to learning is difficult, if not impossible.
However, if managers who participate in the leadership program consistently outperform those who don’t participate, those numbers are worth sharing.
Looking strictly at performance would be a mistake. Focusing only on performance can lead to a burnout culture where short-term wins outweigh long-term success.
Conduct anonymous employee surveys
Organizations should routinely get anonymous feedback from their employees. These surveys should be the employee’s honest assessment of the company.
Companies who don’t do this are making a mistake. It’s like allowing problems to continue while they pretend nothing is amiss.
Employee engagement surveys help to indicate how effective a management team is. The surveys allow businesses to see whether managers have implemented company-provided management training.
If a company values transparency, these surveys can indicate how transparent the manager is with their employees. The surveys also indicate how managers are improving over time in specified areas.
What is their team’s turnover rate?
Turnover rate metrics are reactive. A great manager builds a team of engaged employees who don’t want to leave the company. Waiting for a turnover rate to increase may be waiting too long to act.
HR should keep track of each team’s turnover rates. If turnover rates spike, the company should address that immediately. There could be factors at play that a manager can’t control, but high turnover rates on 1 team raise a red flag.
The correct way for companies to view high turnover rates on a team is as an organizational failure rather than the manager’s failure. It isn’t just the manager’s fault if people eagerly leave a specific team. The manager’s supervisors are also at fault for not intervening and correcting issues.
Conduct job candidate surveys
An important skill for managers to have is the ability to recruit job candidates effectively. A manager should exhibit respect for potential candidates. Their interview style should be that of an honest conversation rather than a 1-way interrogation.
Interviews with the manager are often the moment that makes or breaks the opinion of a job candidate regarding a company. If a prospective employee respects the manager, they will likely accept an offer of employment from the company.
If they don’t respect the manager, or if they don’t feel respected, they will be more likely to continue looking for work elsewhere.
Organizations must have managers who effectively recruit and interview job candidates for the organization to continue bringing in strong talent. Organizations should conduct surveys of potential job candidates; those not offered positions can help HR improve future recruitment efforts.
Do the manager’s employees advance within the company?
Tracking whether a manager’s employees get promoted within the company is another way to measure how well that manager is doing their job. Good managers train people to be leaders themselves.
Businesses need to balance the desire for employee retention with the passion for excellent leaders. Managers who effectively train their people to be leaders may have a higher turnover rate than other managers.
This is because as employees grow and prepare to take on leadership roles, they may find nowhere within the company to advance their careers. That leads them to seek leadership roles elsewhere.
Good managers train people to be leaders themselves.
When employees move to another company to seek leadership roles, companies shouldn’t fault managers for that turnover. There are a couple of reasons why the manager isn’t at fault. First, the ideal promotion is within the company.
However, if there is nowhere to go up the corporate ladder in that business, it means that the company already has a strong leadership hierarchy.
Former employees will have positive feelings toward the company
Second, someone who learned and grew within a company will advocate for that company even after moving to another. They won’t forget where they were allowed to grow and learn.
Former employees will refer to the previous company in a positive manner. They will recommend the company and sing the praises of its management.
One instance the praises of a former employee are beneficial to a company is when they need to hire someone new to work for the business.
The former employee will tell potential employees what the company climate was like and about how they grew within the company. Potential employees could come to apply for a job with a company simply on the word of that former employee.
Word of mouth is one of the best ways for companies to build a positive reputation. A great manager facilitates growth and advancement in the people below them in the hierarchy. Ideally, the company will provide opportunities for advancement within the organization.
However, that isn’t always possible, so businesses may have to be satisfied with a worker who has changed companies and sent new recruits to their previous employer.
How can managers measure their own success?
There are 2 ways to broadly measure success. One is a qualitative measurement, and the other is a quantitative measurement.
Qualitative measures are difficult to measure precisely using numbers. Quantitative measurements, on the other hand, use precise metrics and data points to indicate how well the manager is meeting predefined goals.
5 qualitative (more subjective) ways to measure business success
Here are 5 ways to measure how successful a manager is on a qualitative level — look at these things:
- How creative the company is: Companies often have goals for creativity and innovation. A manager who facilitates that creativity is deemed successful.
- Customer satisfaction ratings: A company with returning customers likely has management that ensures customer satisfaction.
- Team efficiency ratings: A team that quickly completes daily and weekly goals makes a manager feel successful.
- Employee satisfaction data: When managers perceive their employees enjoy their jobs and are eager to complete tasks, they view it as a personal success.
- Personal satisfaction information: When a manager measures their own success, they often consider how they feel about their own performance within the company. If a manager feels personally successful, they will also see their team as a success.
5 quantitative (more concrete) ways to measure business success
More concrete measurements of success are quantitative. Here are 5 ways to quantitatively measure success —review these things:
- Customer retention metrics: Managers can use sales data to verify how many customers have been retained over a set period to measure the success of that period.
- Key performance indicators (KPIs): Managers can create a key performance indicator for the desired outcome of their choosing, such as how long it takes a specific employee to perform a particular task.
- Market share data: Using market share data allows management to see what percentage of the market the business is controlling. The management team can then devise a plan to increase such aspects as productivity to improve their market share.
- Profitability data: The standby benchmark of whether a business is a success is whether it’s being profitable. Profitability is determined by the amount of revenue being brought in versus the amount of money being spent on costs. Knowing profitability information helps the management team and investors know what changes they should make for the next fiscal cycle.
- Data regarding the turnover rate: A direct correlation to management success is how many people remain in their jobs. The turnover rate is measured by how many people have left the company or been hired within a specified time frame.
Employee satisfaction is a key indicator of manager success
People can measure management success either qualitatively or quantitatively. Primary metrics that should be considered when measuring management success are those that apply most directly to the satisfaction of other people.