The empty chair on stage was more than symbolic when The Banking and Finance Oath (BFO) was hosting a panel discussion on who holds the responsibility of culture within an organisation. In months of preparation, I had not found one middle manager who was willing or able to contribute to the discussion.

A chairman, director, CEO, HR specialist and a professor settled into their places, ready to give their opinions on the role they played in developing culture. The empty space at this event, three years ago, spoke volumes about the invisibility and voicelessness of those who have been promoted to manage others, but have little actual decision-making power.

Middle managers are often in the crossfire when it comes to apportioning blame for the failure to transform an organisation’s culture or to enact strategy. I have heard them derisively called “permafrost”, as if they are frozen into position and will only move with the application of a blowtorch.

“Culture Blockers” is another well-used epithet.

Middle managers are typically those people who head departments, business units, or who are project managers. It is their responsibility to implement the strategy that is imposed from above them and may have two management levels below them.

Over the past 20 years, the ranks of the middle managers have been slashed as organisations cut out unnecessary costs and aim towards flatter hierarchies. Those occupying the surviving positions may be characterised like this:

• They are often managing people for the first time and offered little training to deal with professional development, project management, time management and conflict resolution
• They may have been promoted because of their technical competence, rather than management ability
• Their management responsibilities may be added on top of what they were already doing before being promoted
• They have responsibility, but little formal authority
• They may have limited budget
• They are charged with enacting policy and embedding values, but may not be given the context or the “why”
• They have little autonomy or flexibility and may lack a sense of purpose.

All these characteristics make middle management a highly stressful position. Two large US studies found that people who work at this level are more likely to suffer depression (18 per cent of supervisors and managers) and had the lowest levels of job satisfaction.

“I don’t know any middle manager that feels like they’re doing a good job”, a middle manager recently told me.

However, the reason we need to pay attention to our middle managers is more than just concern for their welfare. Strategies and cultural change will fail if they are not supported and motivated. They are the custodians of culture and some would argue the creators, as people observe their behaviour as guidance for their own.

“We know what good looks like, but we’re not set up for success”, confided another middle manager.

Stanford University professor, Behnam Tabrizi, studied large-scale change and innovation efforts in 56 randomly selected companies and found that the 32 per cent that succeeded in their efforts could thank the involvement of their middle managers.

“In those cases, mid-level managers weren’t merely managing incremental change; they were leading it by working levers of power up, across and down in their organisations,” he wrote in the Harvard Business Review in 2016.

As more evidence that middle managers are intrinsic to a business’ success, Google founders Larry Page and Sergey Brin decided they could do without managers in the early days of the company in 2002. However, their experiment with a manager-less organisation only lasted a few months.

“They relented when too many people went directly to Page with questions about expense reports, interpersonal conflicts, and other nitty-gritty issues. And as the company grew, the founders soon realized that managers contributed in many other, important ways—for instance, by communicating strategy, helping employees prioritise projects, facilitating collaboration, supporting career development, and ensuring that processes and systems aligned with company goals,” wrote David Garvin, the C. Roland Christensen Professor at Harvard Business School.

With all of this in mind, you may think business leaders would now be seeking the views of their middle managers, to engage them in the cultural change required to regain public trust after the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and other recent scandals. But sadly, no.

Just this month at The BFO conference, I was again presenting a panel discussion on the plight of middle managers. Prior to the day, two of the middle management participants – despite one being nominated by a senior leader – were pulled and additionally, the discussion was ruled Chatham House with journalists being asked to leave the room. Although I saw a glimpse of positivity, my research leading up to the discussion would suggest very little has changed and this issue is not limited to financial services.

While senior leaders are working tirelessly to overcome challenges in this transitional time, part of the answer is right in front of them (well, below them) – their hard-working middle managers. But first, they have to make the effort to engage them with appreciation, seek their views with empathy, and involve them in the formulation of strategy.

Kat Dunn had a big life, but it wasn’t fulfilling. She was the youngest executive to serve on the senior leadership team of fund manager Perpetual Limited, but she went home each night feeling empty.

The former mergers and acquisitions lawyer tossed in the job two years ago and found her way into the non-profit sector, as CEO of the charity and social business promoter Grameen Australia.

Grameen Australia aims to take Social Business mainstream in Australia by scaling and starting up social businesses and advising socially-minded institutions on how to do the same.

Dunn says Millennials are more interested in “purpose” than money and security. She was speaking at the Crossroads: The 2019 Banking and Finance Oath Conference in Sydney in August.

Dunn said Perpetual tried to talk her out of leaving the fund manager. “I think they thought that I was going through some sort of early-onset midlife crisis.

“Because, after all, what sane person would give up a prestigious job, good money at the age of 33 when my priority should have been financial security, even more status, and chasing those last two rungs to get to be CEO of a listed company?”

‘I was living the dream’

Dunn said she was conditioned to believe she should want to climb the corporate ladder and make a lot of money.

“At 32 years old, I was appointed to be the youngest senior executive on the senior leadership team. The year before, I had just done $3 billion worth of deals in 18 months. I was, as some would say, living the dream,” said Dunn.

“So, you can imagine how disillusioned I felt when I went home every night feeling like I was a fraud. I was wondering how I could possibly reconcile my career with my identity of myself as an ethical person”.

Dunn had been put in charge of building the company’s continuous improvement program, but the move proved a disappointment. “I was so green because I thought [the role] meant I had the privilege of actually making things better for my colleagues.

“Later, I realised that it was just code for riskless cost-cutting … and impossible-to-achieve growth targets.”

Dunn said she had childhood aspirations to help create a sustainable future. “But, instead, I found myself perpetuating the very system of greed that I had vowed to change.”

“My whole career, I was told I had to make a choice between making a living or making a difference. I couldn’t do both and I found that deeply unsettling. I had cognitive dissonance.”

A desire to do work that matters

Dunn made the point that her motivations are shared by many – and not just be Millennials (she just scrapes over the line into Generation X).

By 2025, 75 per cent of the workforce will be Millennials (born between 1980 and 2000) and only 13 per cent of millennials say that their career goal involves climbing the corporate ladder, 60 per cent have aspirations to leave their companies in the next three years.

Moreover, 66 per cent of Millennials say their career goals involve starting their own business, according to a study by Bentley University.

“A steady paycheque and self-interest are not the primary drivers for many Millennials any more. The desire to do work that matters is,” said Dunn.

“Growing up poor, I thought that money would make me happy. I thought it would give me

security and social standing. I thought that if I ticked all of the boxes, that I would be free.

“At the height of my corporate career, though, I was anything but. I felt that making profits for profit’s sake was just deeply unfulfilling. For me, it was just the opposite of fulfilling – it caused me fear, distress and this stinging sense of isolation.

“What was strange is that no one else seemed to be outwardly admitting to feeling the same.”

The vision was impaired

Dunn recalled talking to a peer about strategy at the time and saying to him ‘I think our vision is wrong’.

She told him: “Our vision is to be Australia’s largest and most trusted independent wealth manager.  I think it’s wrong. It’s not actually a vision. It’s a metric on some imaginary league table and it’s all about us.

“It doesn’t say anything about creating anything of value for anyone else.”

Her colleague retorted: “Kat, we have bigger fish to fry than our vision”.

She knew, at that point, she would not realise her potential in that environment.

Aaron Hurst, the author of the book, The Purpose Economy, predicts that purpose is going to be the primary organising principle for the fourth [entrepreneurial] economy.

He defines “purpose” as the experience of three things: personal growth, connection and impact.

“When he wrote the book, five years ago, Hurst said that by 2020, CEOs expected

demands for purpose in the consumer marketplace would increase by 300 per cent,” said Dunn.

“Now, what that means is that consumers deprioritise cost, convenience and function and make decisions based on their need to increase meaning in their lives.”

Dunn says that, as Millennials take on more leadership roles, this trend will become more evident in the job market.

“When you talk about how hard it is to find top talent to work in the industry, it is worthwhile knowing that for the top talent – the future leaders of the industry, of our country, our planet – work isn’t just about money.

“It is a vehicle to self-actualisation. They don’t just want to work nine-to-five for a secure income, they actually want to run through brick walls if it means they get to do work that they believe in, within a culture of integrity, for a purpose that leaves the world in a better place than they found it,

And they want to work in a place that develops not only their skills, but sharpens their character.”

Dunn said that when she left her corporate job, she would not have believed that the financial services industry could build a better society and a sustainable future.

However, she changed her mind when she learned about Grameen Bank, microfinance and social business.