Meta, Twitter, and Alphabet all targeted middle managers in recent layoffs. In an effort to “flatten” its organizational structure, Meta went as far as to ask some managers to accept roles as individual contributors or leave the company—a demotion of sorts.

It’s a tough time for middle managers, who are held responsible for their team’s performance yet have no real self-derived power. And when it comes to performance reviews, the often-maligned middle manager is usually evaluated on how well they execute functional duties—like coding or developing a marketing plan—rather than their leadership capabilities.

“Let’s evaluate leaders on how they lead,” says Bill Schaninger, McKinsey senior partner and coauthor of the forthcoming book Power to the Middle: Why Managers Hold the Keys to the Future of Work. “We’ve had [middle managers] doing everything but that.” 

Strong leadership among middle management is especially crucial because an employee’s relationship with their boss affects their engagement, motivation, and ability to deliver on required goals at work. In its absence, companies risk losing out on their human capital investment. Namely, the financial value employees add to the company through productivity, innovative thinking, and the like. “The conduit for that is not the senior most leaders. It’s the person [employees] work for,” Schaninger says. 

A straightforward way to assess a middle manager’s leadership ability is by how well they develop top performers on their team. Middle managers who gain a reputation as talent factories within an organization create a ripple effect throughout the company as their former direct reports become influential leaders in their own right. To do this, the best middle managers make a concerted effort to step away from supervising the minutia of their subordinates’ work and instead ensure they’re getting new experiences, says Joseph Fuller, a management professor at Harvard Business School. 

Enabling the development of reports requires middle managers to be fast learners who stay abreast of organizational changes and priorities and pivot accordingly. 

Middle managers must also exercise keen judgment on what to elevate to higher-ups. It’s precisely that judgment that defines their value, according to Fuller. “There’s a pretty fine distinction between someone who is able to discern when something’s an exception they should kick upstairs versus someone who’s maybe being a little bit risk-averse or indecisive,” he says. 

Companies that fail to give managers the room to lead, and assess their ability and willingness to do so, could make the mistake of laying them off or see self-motivated managers depart the company, taking institutional knowledge with them. “In the absence of adequate leadership in the middle, you have what we have now, which is hemorrhaging good, quality employees,” Schaninger says.

Paolo Confino
paolo.confino@fortune.com
@paolo1000_

Reporter's Notebook

The most compelling data, quotes, and insights from the field.

Slack released its latest Future Forum pulse survey examining employee workplace trends and the state of flexible work. The report finds that employee access to flexible work is closely linked with perceived levels of burnout. 

“Employees who are dissatisfied with their level of flexibility at work are 43% more likely to say they feel burned out at work than those who are satisfied with their level of flexibility."

Around the Table

A round-up of the most important HR headlines, studies, podcasts, and long-reads.

- Laid-off tech employees are hiring lawyers to negotiate the terms of their severance. Wall Street Journal

- UC Berkeley’s Haas School of Business will offer a new course on managing unionized workplaces. Quartz

- Zoom CEO Eric Yuan cut his $301,731 salary after laying off 1,300 employees. He still owns 13% of company shares and is worth $5 billion. Bloomberg

- KPMG announced layoffs of about 700 employees, becoming the first Big Four consulting firm to do so. Financial Times

- Amazon CEO Andy Jassy urged employees to band together and “redefine” the company while cautioning that many changes will be “misunderstood.” Insider

Watercooler

Everything you need to know from Fortune.

Boss skills. The top two most in-demand skills for 2023 are leadership and management, according to LinkedIn. The trend speaks to leadership development efforts to help retain employees. —Megan Leonhardt

Job killer or thriller? ChatGPT’s creator Sam Altman says ChatGPT won't be a job killer, but rather, a source of “economic empowerment.” —Christiaan Hetzner

The new pay cut. The staggering rise in inflation makes many U.S. workers feel that they're falling behind financially. Employees who haven’t seen a pay increase since 2019 have essentially taken a pay cut, say economists. —Alena Botros