At RainTree we continually support our clients to strengthen their middle management teams because, When Middle Management Works, Business Works. 

Dr. Tomas Chamorro Premuzic (author of Why do so many Incompetent Men become Leaders? And, how to fix it – Harvard Business Review Press, March 2019) completed extensive research to identify what makes leaders successful.  He coined the “leadership capital” phrase.  He describes three kinds of leadership capital that are used to identify, select, and develop future successful leaders.   These are Intellectual, Social and Psychological Capital.  He defines these as:

• Intellectual Capital – knowledge, expertise, and experience.  The stuff that you might report on your resume or on your LinkedIn profile.  This includes your titles, capabilities, languages etc.
• Social Capital – The people you know that support your success.  This is a complex capital as it can imply nepotism and privilege as success comes not from capability but from connections and relationships.  Despite this, the people you know and how well you engage, build relationships, and represent yourself is a key “capital” in being appointed as a leader.
• Psychological Capital – This capital includes learning ability, curiosity, grit, resilience, self-control, EQ, empathy, and integrity.  This is the capital that enables self-management that provides the intrinsic motivation and drive that supports engaging with others in an influential way and the self-discipline to achieve goals and learn new skills. 

Dr Tomas Chamorro-Premuzic’s research reveals that the predominant selection methods currently used by business have allowed intellectual and social capital to outweigh (and even dismiss) psychological capital.  At RainTree, we believe all three are critical for middle managers to lead with confidence.  We also believe that psychological capital is the capital that will enable a leader to recognize where their capital is lacking and close gaps that they may have. 

To demonstrate what we mean, we have shared some of the key risks we have observed from managers that have intellectual or social capital but have not developed their psychological capital to ideal levels. 

Firstly, we have unpacked what we have noticed with managers who only rely on their intellectual capital:

• A comfort in doing the work which leads to limited handing over to more junior staff and managing them to deliver the work. 
• The greater risk of burnout because the manager either micromanages or will not release the work and then struggles to cope with being the manager and fulfilling the daily job demands; and
• A disempowered team who are employed to fulfil technical and operational tasks but do not have them delegated to them or aren’t trusted when they are handed over.  These staff either become disengaged or they leave to find a manager who has greater psychological capital and helps them to contribute, grow and thrive.  Either scenario is costly for the business as a disengaged employee delivers significantly less than is their potential and replacing staff is time-consuming and costly.

Secondly, we have unpacked what we have noticed with managers with only rely on their social capital:

• They have been appointed to a role where they do not have the technical skills, competence, and confidence to lead the delivery of quality outputs.  The team knows they are not skilled, which often creates a barrier to leadership. 
• Operationally, the lack of intellectual capital can be a quality risk as flaws may not be identified and opportunities to improve how the work is done may not be recognized. 
• The risk of abdication of responsibility and reliance on relationships to solve problems can also manifest as naming and blaming.  The team then feels unsupported and unsafe, and this leads to disengagement and even leaving the business.  As discussed above, both disengagement and staff churn are costly for the business.

Thirdly, we have unpacked what we have noticed with managers that have low psychological capital:

• They become resistant to feedback and change.  When areas for development are identified, they are defensive, resistant and may even be seen to be arrogant or aggressive.  This gets in the way of growth.  They are not willing to explore how they can be a better leader. 
• They can become inflexible and unwilling to receive ideas and insights from team members.  There is no collaboration or acceptance of mistakes as it is seen to be too vulnerable and may reveal their weaknesses.  This can lead to a psychologically unsafe environment with no innovation or suggested improvements. 
• Staff do not feel considered, understood or trusted.  Psychologically unsafe work environments are rich with fear of making mistakes.  Staff do not feel valued or consulted which, once again leads to disengagement and even leaving the business. 

The three Leadership Capitals are equally important.  No business can flourish without Intellectual, Social AND Psychological Capital.  When middle managers are appointed or promoted, it is important to test all three leadership capitals. 

Fortunately, managers can strengthen their Leadership Capitals, including Psychological Capital.  As with any new skill, the manager needs to recognize and choose their areas for development.  Specifically, business needs to hold managers accountable for becoming psychologically healthy leaders committed to learning, open to feedback, becoming more self-managed, supportive and empathetic to their staff.  Businesses can support strengthening their Leadership Capital by measuring, reporting on and introducing Leadership Capital topics to be debated, discussed, and invested in.  When Executive Leaders lead these types of conversations and role-model the learning process, middle and senior middle managers start to prioritize strengthening their Leadership Capital.   A business with strong Leadership Capital is a safe environment for managers and staff to take ownership and responsibility for their leadership development and learning.