An Overlooked Risk: 3 Causes of Managerial Ineffectiveness

Welcome back to the Mid Market Insider!

Today, we’re diving into why managerial effectiveness matters more than you think.

In lower middle-market businesses, managerial effectiveness might be the single biggest driver of whether the company scales or stalls.

The key question:

Are the people leading your teams actually good at leading?

Because in $10M–$50M companies, managers aren’t just approving PTO or running one-on-ones.

They’re often the ones holding the company together across departments and leadership transitions.

A great manager in a $30M company might be able to fix cross-functional chaos, improve margins, and retain top talent.

A poor one can quietly unravel everything.

Why It Matters in the Middle Market

Big companies have institutional muscle.

They can afford mediocre managers because they have systems that work around them.

Middle-market businesses often don’t have that luxury.

In our experience, if you want to spot potential risk in a $20M business, you have to look outside of just the P&L.

It’s wise to also look at managers.

• How do they lead?

• Who follows them?

• What decisions do they own (and which ones get deferred up the chain)?

But What If Managers Aren’t Good?

Let’s assume managerial effectiveness is key.

What’s undermining it?

Here are three reasons why managers might be ineffective:

1. Lack of Engagement

According to Gallup, only 27% of managers globally feel engaged at work.

Disengaged managers create disengaged teams. That hurts performance, productivity, and retention.

It’s like a baseball game of 1st graders.

Half the kids are playing in the dirt, one’s staring at the sky, and maybe two are following the play.

That’s what it’s like to have disengaged team members and managers.

But in business, no one’s laughing.

2. Adverse Selection

Most managers are promoted because they were good individual contributors or stuck around long enough.

That doesn’t mean they’re built to lead.

A great salesperson isn’t always a great sales manager.

Leadership is a different skill set entirely.

3. Lack of Training

Even those with potential are rarely developed.

According to Gallup, fewer than half of managers have ever received training on how to manage.

And when they do, it’s usually administrative, not developmental.

It’s no surprise that many default to firefighting or checking out.

What’s the Fix?

If you’re an owner or operator, here’s what actually helps:

• Give managers real reps + feedback. Leadership skills develop during experience, not by reminding them about the employee handbook.

• Clarify what they own. Decision rights, expectations, accountability… all things that need to be clear.

• Support them beyond the admin. If the only training you offer is how to fill out a timesheet, that’s not a path to developing real leadership skills.

Final Thought

Middle market companies often succeed despite their systems, not because of them.

Managerial effectiveness can be a multiplier or a silent killer of middle-market businesses.

And if you’re buying a business, running one, or trying to scale one, you need to look past margins and into the org chart.

That’s all for today’s newsletter! Thanks for reading!

📅 Next Week:

Next week, I’ll be sharing the key to retaining your best employees, and how it starts with asking them a few simple questions.

Keep building,
Nick

P.S. 

If you want to discuss your business goals in greater detail, book a discovery call: