The hidden costs of neglecting middle management
“The path to high performance starts at the top—and the risks of failing to act have never been greater.”
(Alex Christou, Monash Business School)
Middle managers - 2-5 levels below the CEO - sit at the most pressured point in organisations: stuck between strategy and execution (and needing to do both), expected to deliver results without always having the authority, autonomy, or investment to succeed. When this layer falters, the entire work system suffers. To make it worse, this challenging role is often derided as ‘not real leadership’, as in this recent article by Simon Sinek’s Optimism Company. If we accepted this as fact, we’d be ignoring the fact that leadership and management utilise many of the same skills - good managers lead, and good leaders manage.
In Australia, PwC estimates poor leadership costs $10 billion annually, with disengaged teams 37% less productive and nearly 50% more likely to quit. The 2024 B-Suite Benchmarks Report adds that one in three middle managers report burnout as their biggest challenge, and only 6.5% performing at the top standard of middle management - that is - with any kind of influence over what gets done, not just how. It states that talented middle managers are, unsustainably, leaving faster than they can be replaced. The primary driver of all of these things? According to Alex Christou, it’s poor leadership.
Why middle management matters
It’s a mistake to underestimate the importance of the tactical middle. Middle managers are not failed leaders—they are the engine room of execution. Their roles include:
Translating strategy into on-ground action.
Leading people and teams through change.
Building culture and psychological safety.
Establishing, maintaining and improving work systems and processes.
Connecting employees to purpose.
Identifying risks, removing roadblocks, and keeping operations aligned to strategy.
To neglect this function is to neglect the day-to-day health of the organisation through all of the tasks it performs.
The cost of inaction
Let’s look at the impacts:
In the short term (12–18 months):
Lost momentum – unclear priorities lead to disengagement, rework, and inefficiency.
Inconsistent leadership – managers without support default to micromanagement or avoidance, leading to staff turnover and higher recruitment and knowledge loss costs.
Talent drain – skilled employees leave when managers can’t develop them.
Cultural erosion – silos, mistrust, and reduced psychological and psychosocial safety.
In the long term (18 months–plus):
Leadership pipeline breakdown – no strong bench for future executives.
Strategic execution gaps – vision stalls at the middle layer and confusion reigns below.
Organisational rigidity – inability to adapt to disruption or market change.
Erosion of psychosocial safety – increased burnout, reduced job control.
Financial underperformance – turnover, disengagement, and missed opportunities compound.
The opportunity
Developing middle management is not a cost—it’s a high-return investment. ROI of 528–788% from coaching alone (American University, 2024, cited by The Optimism Company). Beyond financials, it builds loyalty, strengthens culture, and secures long-term competitiveness.
As Christou notes:
“Without strong, empathetic leaders, no amount of wellness initiatives can address the systemic issues plaguing Australian workplaces.”
The choice is very clear: we can watch the leadership pipeline deteriorate, and continue bleeding talent, culture, and dollars - or we can invest in the layer that holds your organisation together.
Davina Jones is the Director of, and Leadership Coach at, and Life and Career Coaching. She works to make leadership work for middle-managers through individual and team coaching, and professional development. Book in for an obligation free chat.
