The Manager Effect: How Leadership Can Make or Break Team Performance
A certain type of employee seems to appear in every company. These are the people who never seem to meet deadlines, who always have to be pushed to get their work done, who make the same mistakes over and over again, who don’t seem to do much on their own, and who never seem to try very hard.
At some point, it seems, every manager has decided, “Well, this employee just isn’t performing,” and sometimes, they may well be right. This begs the question, though: How much of this poor performance was actually caused by the manager?
This has the potential to be a wildly uncomfortable question, since managers are, by definition, responsible for judging performance. They set standards, determine who is doing the best and worst jobs, decide who gets promoted and who gets fired. They evaluate and judge. They decide what’s acceptable and what isn’t.
Yet here’s the thing: management comes before performance.
Managers decide what’s important, what gets done and what doesn’t, what gets approved and what gets dismissed, what gets rewarded and what gets punished. Managers decide how much autonomy employees have, how much freedom they have, how much leeway is allowed, how quickly problems are solved, and how much employees understand what they’re supposed to be doing.
In short, managers don’t just evaluate performance; they have tremendous influence over it. They may be standing in the control room, but they’re also often the ones pushing all the buttons.
The Employee & Manager Slices of the Problem Pie
- A 2024 NBER study sought to identify the causal effect of managers on their teams’ performance.
The paper’s authors experimented with repeated reallocations of managers, controlling for differences in the skill sets of the teams. The purpose of the experiment was to quantify the effect of a simple managerial change, and the results were astounding.
The study found that good managers improved their teams’ performance by approximately double the number of “good workers” would have. The paper uses the phrase “good manager” to denote someone who consistently drove better-than-expected results from their team.
N.B.: The cited results do not mean managers are twice as productive as employees. Far from it – both the phrasing and the findings suggest the opposite.
The findings suggest that if you hire a good manager, you cannot simply lay off half your staff in favour of the manager and expect double the performance. Neither do they suggest that employees are fungible or that an outstanding manager would be able to extract twice the performance from any arbitrary set of subordinates.
What the study does suggest is that the people managing your team can affect your team’s performance by a surprisingly wide margin. It suggests that both your employees and your managers matter, and that the combination of the two matters even more.
- Another NBER study of transfers between stores in two large retail chains found that, given the consistency of management practices across the businesses, studying how individual managers affected the performance of their new teams gave a less distorted view of the contribution to productivity that a manager can reasonably be expected to provide.
Both these studies suggest not that employees are unimportant, but that “the team is underperforming” is a dangerously incomplete diagnosis. Your team may be underperforming because your employees lack the experience, skill, or commitment to do the job well. It may be that your employees are entirely appropriate for the task, but they are, in fact, being managed poorly – either at the level of individual contributors or individual executives. It may also be that your employees are being managed by an ineffective manager, an ineffective system, or a combination of the two.
Consider the following scenario:
- Your manager changed your team’s priorities on Monday.
- You spent all of Tuesday prioritizing the newly prioritized project.
- On Wednesday, an emergency cropped up, and you had to change priorities again.
- On Thursday, your manager asked you why the first project wasn’t getting done.
- On Friday, you found out the delivery date for the first project had slipped because of something that happened in another department.
When you go into your performance review, your manager tells you that you need to be more organized, take more ownership, and all the usuals. Maybe you do need to be more organized, but have you considered that it may not be your responsibility to rearrange your entire workload when priorities change?
This is why management should not be considered an optional part of the performance system – because it is an integral part of the performance system. It has to be. Research on role ambiguity shows that when there is insufficient clarity about what’s expected of you, your performance tends to suffer.
This does not mean that every underperforming employee is necessarily being managed badly. However, it does mean that we can no longer think of clarity of expectations as an employee competency. That kind of clarity is frequently the responsibility of managers, which, again, puts it squarely in the realm of managerial responsibility. Using this framework to understand performance issues can help you recognize some “bad” behaviours as the result of years of poor management.
- An employee who is afraid to make decisions may have learned that decisions are rarely wrong.
- An employee who asks permission constantly may have learned that acting without permission makes them look foolish.
- An employee who is disengaged and cynical may have learned that no matter how hard they try, nothing changes.
- An employee who misses priorities may have been given too many changing priorities.
- An employee who always works right up to a deadline may have learned that nothing gets done before one.
- An employee who can’t do anything without their manager may, in fact, have been taught that by their manager.
This brings us to one of the most damaging management practices: managerial interference.
When managers interfere with the day-to-day responsibilities of their direct reports, they train those direct reports to deal with everything at a level two steps below their actual level of responsibility. It doesn’t matter whether they are “helping,” “teaching,” “managing,” or “holding accountable.” Interference creates inconsistency, confusion, and the impression that the manager can’t handle anything without stepping in. Employees managed this way may always present problems at the executive level.
- They may be unable to own problems or solutions.
- They may always need their manager’s help or approval.
- They may fear making mistakes without knowing their manager’s input.
- They may have become unreasonably rigid in their approach to their responsibilities.
Micromanagement Can Manufacture the Dependence It Complains About
Micromanagement is typically defined as a practice that is detrimental to employees because it limits their freedom of action. This is partially true, but it is also a consequence of a much larger effect. Micromanagement can actually cause behavioural changes in people.
🔄 For example, suppose that you have hired a competent person to do a competent job. They make a decision you wouldn’t have made. You tell them they’re wrong. The next time they’re faced with a similar decision, they ask you what to do. You tell them, they do it, and you correct them again. The next time they’re faced with a similar decision, they ask you what to do. You tell them, they do it, and you correct them again. The next time they’re faced with a similar decision, they ask you what to do. You tell them, they do it, and you correct them again. 🔄
See where this loop is going? Eventually, they stop making decisions and simply ask you for instructions. You give them more detailed instructions. They ask you for more detailed instructions. You decide that they simply don’t have the initiative to do their job, and you start watching them more carefully.
🎉 Congratulations! You’ve just created the employee you were originally complaining about! 🎉
For those scoffing at this example, this is not just theory. A meta-study of 72 studies, 83 samples, and more than 32000 people found that employees who perceived their leaders as acting in an autonomy-supportive manner had more positive work outcomes. This includes positive associations with work performance, engagement and proactive work behaviours, and negative associations with turnover intentions.
Autonomy-supportive leadership is not being completely uninvolved. It provides freedom in action and decision-making, takes their input into account, and encourages self-initiative without hindering them, which is an extremely important difference.
Good management is not telling people to do whatever they want, or to do exactly what you would do; rather, it is telling them what you want them to accomplish and letting them do it, while intervening when they cannot accomplish their goals without assistance and helping them when they can. This results in much more competent employees, who are much less reliant on their managers.
This is especially important because a manager’s job is not to process every single decision that their employees make. If you have to answer every question they have, you’re not managing effectively, and you’ll likely end up with a queue of people waiting to hear from you, rather than competent employees who can handle most things on their own.
The irony is that managers often fall into this trap precisely because they want to be effective. They feel like they are doing their job by answering every question, but they are actually defeating their purpose.
Managers are accountable for their team’s performance, so it can be tempting to take responsibility for everything they do, but it is far more effective to let them handle things on their own and intervene only when absolutely necessary.
This is the difference between a manager who is simply a bottleneck for decision-making, and a manager who actually manages.
This is also where the myth of the manager as a performance evaluator falls apart: a manager does not simply determine whether someone can perform; they determine how much opportunity they have to perform.
That is not to say that a manager is not accountable for performance; it means that they have much less opportunity to affect performance, and much more opportunity to create poor performance by failing to provide the resources, freedom, and feedback necessary to actually perform.
If someone is consistently underperforming, even when given the resources, freedom, opportunities, and feedback they need, then they are likely to be a poor performer, but if they are not, then they may not be the problem, and it may be the system that is failing them.
Right now, ten thousand manager voices cried out in agony, objecting virulently because they are often expected to be the ones who determine whether or not someone can perform, and therefore they feel like they need to control everything in order to make that determination.
The Meaning of Management
A manager should not try to determine whether someone can perform; they should create an environment in which they can perform, then evaluate whether they are performing, rather than trying to determine whether they can perform.
This is also the point where many managers will start to see the flaws in their own management practices. The manager who is constantly changing priorities, rewarding the wrong people, avoiding difficult conversations, and putting out fires is not doing so out of malice or incompetence, but rather out of a desire to manage effectively.
They are trying to create an environment in which their employees can perform, but they are failing to do so; as a result, they constantly have to intervene to prevent employees from failing. Such a method is not an effective way to manage, and it is a sign that the manager is not administering matters effectively.
It is important to remember that management is a process, and that there are many different ways to achieve its goals. Some managers are better at it than others, and some managers are simply better at certain aspects of it than others.
However, there are some fundamental principles that all managers should follow, and one of them is providing their employees with the freedom of action and decision-making, taking their input into account, and encouraging self-initiative, while not hindering them.
The Behaviours You Reward Become the Behaviours You Get
One of the easiest ways for a manager to destroy performance is to reward the wrong thing, and this is rarely because they are evil. They are usually just rewarding the most obvious things.
- Someone stayed up late to finish a project – that’s dedication. 10 points for Gryffindor!
- Someone dropped everything at 7 pm to help out with an urgent customer problem – that’s heroism. 20 points for Gryffindor!
- Someone responds to my Slack messages within 30 seconds – they are committed. 30 points for Gryffindor!
- Someone worked over the weekend to meet a deadline – let’s give them a round of applause. 40 points for Gryffindor!
Meanwhile, someone quietly fixed the processes that would have stopped the weekend crisis from happening in the first place, but they have gone unnoticed. No points for Ravenclaw!
Alas, that is how companies end up rewarding people for making fires rather than putting them out.
One of the most interesting things about organizational performance is that the market value of various workplace behaviours often bears little relation to what the company says it values.
A company can say that it values planning, quality and sustainable performance, but if the people being promoted are the ones who work the longest hours and save the day at the last minute, the rest of the company will quickly learn that last-minute heroics are the most important thing. They are not dim in any way whatsoever; they simply observe their colleagues’ behaviours and learn from them.
A manager’s actions are effectively a set of behavioural coaching cues for the whole team.
- If you reward people for being available to your team at all times, you can expect availability to become a key performance indicator.
- If you reward speed of response regardless of errors, you’ll get speed of response.
- If you reward people for taking all decisions up the chain of command, you’ll get a company that cannot make decisions.
- If you reward people for preventing problems, you’ll get people who prevent problems.
- If you reward people for being “a bit of a pain but getting things done”, you’ll get people who get things done but are “a bit of a pain”.
That is why recognition is such a powerful tool. Beyond making people feel good, it sends market-value signals to the team about what is and isn’t important.
Studies on management practices have found that goals, monitoring and feedback can have a major impact on productivity. In field experiments on airline captains, management practices such as performance monitoring, feedback, target-setting and prosocial incentives all led to significant improvements in targeted fuel-saving behaviours and, in some cases, increases in overall job satisfaction.
Now, this does not mean that managers should monitor everything. That would simply proliferate the very thing we want to see less of. What it does mean is that monitoring is part of the feedback loop. What you measure, discuss, and reward affects performance. So does what you allow to continue without correction, and most importantly, what you repeatedly rescue.
If a manager has a team that misses every deadline and responds to every problem by throwing the manager into the fray to “sort it out”, they should ask themselves what they have taught the team. They may believe they have taught the team to do better, but the team has actually learned that the manager will always rescue them when things go wrong. They learn to avoid responsibility and expect the manager to take over when things get tough. Meanwhile, the manager learns that the best way to deal with recurring problems is to rescue people rather than fix systems.
They have all been conditioned to act that way, without anyone intending to, and that is one of the fundamental problems with management.
Managers are powerful role models, and everything they do sends behavioural signals to the team. When it comes to busyness, managers don’t have to tell people to work long hours; they model it.
- If they work 12-hour days, people will notice.
- They will also notice if someone leaves at 5 pm every day and quietly works from home in the evenings.
- They will notice if someone is praised for working 80-hour weeks and taking no breaks.
- They will notice if working from home is seen as a perk and taking holidays is presented as selfish.
They will all learn different lessons about busyness and productivity, adjusting their actions and becoming incredibly busy without actually doing much useful work.
The difference between busyness and productivity is often invisible to the people involved.
- Preventing problems before they occur rarely seems as important as putting out fires.
- Processes and procedures are often seen as less exciting than dramatic actions.
- Careful decision-making seems less impressive than “thinking on your feet”.
- A team that learns to solve its own problems without constantly escalating them to the manager will make the manager feel less important.
It can make the manager feel redundant, which is why effective managers often feel their contributions are less valued by executives than they should be. They are busy people, making important decisions, solving problems, and rescuing the company from disasters, but those actions do not have the same impact on the bottom line as preventing those disasters from happening in the first place.
That is the real value of a good manager: they make the company less reliant on them, which makes the company more successful. It also makes the manager less valued by the people at the top.
Avoiding Problems Doesn’t Keep the Peace – It Changes the Team
There is a certain kind of management mistake that feels reasonable in the moment:
- There is a certain employee who doesn’t perform.
- You think to yourself, “Well, I’ll give them a little time. Maybe they are just having a rough week. I’ll bring it up at their next review. It’s probably not worth creating a scene over.“
A year later, everyone except the person in charge understands that the employee isn’t performing, but no one has addressed it because, really…who has the time?
This mistake is often called avoidance, but it can also be seen as a type of management decision. You’re deciding that this behavior is acceptable, and the rest of your team sees it. You should care because if they are not performing, it impacts the performance of others. It affects your own performance and your team’s culture.
A team’s culture is not defined by the individuals that make it up, but by the standards they share. People look around and think about what it means to be a good member of their team. What does it mean to miss a deadline, to be rude to a coworker, to be chronically underperforming, to do consistently incredible work?
Answers to these questions aren’t written anywhere, but they can be found in managers’ actions. If you tolerate one employee who routinely misses deadlines, conscientious employees will start to ask themselves why they are putting in extra effort. They might not think, “Oh, I’m so glad that [slacker] has more flexibility with their schedule,” but they might think, “Maybe I’m working too hard.” This is an example of a single performance issue affecting others’ performance.
Such instances are why it’s not that difficult actually to have a good conversation and why such conversations should be actively encouraged. A good manager does not have to enjoy difficult conversations, but they should be willing to have them. You don’t have to shame employees or turn every minor performance issue into a morality play, but you should be willing to address issues clearly and directly. You should hold people to standards, because they hold you to standards.
The research on manager-employee relationships also points to the importance of strong working relationships. In particular, a huge meta-analysis on Leader-Member Exchange Theory highlights the value of positive, supportive relationships between managers and employees. Trust, empowerment, and motivation all lead to positive behaviours like increased performance and citizenship behaviours.
This isn’t suggesting that managers should be best friends with their reports, but it does highlight the importance of working relationships. You can’t have trust without mutual respect and the feeling that each party is acting in good faith. That applies to both sides of the relationship. Employees have to trust that their manager will support them, but managers also have to trust that their employee will deliver. Neither side gets to demand loyalty or goodwill from the other. They have to earn it by showing up reliably and doing the right thing.
That’s why inconsistent standards from one employee to the next are so corrosive.
- If you promise flexibility to one person because you like them, but deny the same flexibility to another employee who asked, you create distrust on your team.
- If you hold one person to consistently lower standards than everyone else, you’re creating similar distrust.
- If you tell people that the priorities are one thing, but you change them when it’s convenient for whoever is asking, you’re creating a toxic workplace.
It’s easy to dismiss these issues as unfair, but they shouldn’t be dismissed as unimportant. They effectively erode the trust between manager and employee, and once that trust is gone, you can lose your ability to manage effectively.
Management has a responsibility to set standards. If you’re not enforcing standards, it becomes much harder to enforce standards later. It’s one reason why management is so much harder than employees think.
You aren’t walking into a clean slate each morning. You are always working with an existing culture that you help shape, and that helps shape you.
- You can make it easier or harder depending on the decisions you make.
- You can make problems more visible or more hidden.
- You can make employees self-thinking or dependent on you.
- You can make excellent performance commonplace, or you can make extraordinary acts the norm.
Then, after all is done, when you get caught in the middle of it all, you can think, “Why is my team underperforming?“
Who knows, maybe you’re right, but maybe you’re not. They might be underperforming, but it might stem from a source or reason where they are giving you honest feedback on your management system.
So, if you’re thinking about firing them, consider whether firing them would actually solve the problem.
Final Thoughts
Sometimes the issue really is the person. Some people are just slovenly, consistently underperforming, and then failing to meet expectations despite your help, guidance, opportunity, and clear communication.
Managers aren’t superheroes, and your employees are adults. However, managers bear responsibility for the conditions in which their people work.
Before moving on to judgment, consider asking yourself a few tough questions:
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- Were expectations clear?
- Did your reports have the information, authority, and resources they needed to fulfill the requirements of the position?
- Did you address issues before they became problems?
- Did you allow failures to dominate conversations, or withhold feedback and opportunities for advancement?
- Did you fail to delegate, and take over tasks that were rightfully the responsibility of your people?
- Would this person be a different performer under a different manager?
This is not an indictment, but an assessment, since research on managerial impact shows a clear conclusion: managers are often powerful predictors of the performance of the people they lead.
So when we find ourselves thinking about firing one of our reports, it’s worth remembering that we may not have maximized the conditions for their success to begin with.
This is not to suggest that we can turn poor performers into strong ones by simply changing their managers or through sheer willpower. Nor is anyone arguing that the solution to every personnel problem is to replace the manager. What matters for memory is that people are often products of their circumstances.
This reframes the conversation from “how do I get more out of these people?” to “what is getting in the way of their success?“
- Maybe the issue is unclear priorities.
- Perchance the real root problem is an unhealthy dependency on approvals.
- Perhaps your people have been rewarded for putting out fires, and are consequently avoiding the larger issues.
- Mayhaps conversations are consistently put off until after months of mounting tension.
- Possibly you’re not delegating enough and are always solving problems for people who need to learn how to handle them on their own.
These are the sorts of things good management can address: removing roadblocks and creating conditions for success.
The most effective managers aren’t the ones who provide the most resources or information, but the ones who create an environment where their people feel empowered and supported. They promote autonomy, mastery, a sense of purpose, and belonging.
To the untrained eye, the result may often look like the manager isn’t doing much of anything at all. When done well, management is a gruelingly difficult job that is completely invisible, because their role is to ensure everyone else’s role runs smoothly. When done correctly, management creates the conditions for performance rather than extracting performance through brute force of will.
Often the most important questions aren’t about who is to blame for poor performance, but about who is most responsible for improvement. That doesn’t always make it the manager’s fault, but it does mean there’s always a right answer.
