Why Managers Are the Critical Lever for Business Success

Managers aren’t just middle layers—they’re the lever that makes or breaks SME success. Discover why investing in them is urgent and how to unlock their full impact.

Small and mid-sized enterprises (SMEs) often focus on strategy, innovation, or executive vision as the drivers of growth. But new research from Insperity shows that the real engine of organizational success lies elsewhere: managers.

This research comes from a 45-question survey of 1,000 U.S.-based employees working in companies with 25+ employees across industries including healthcare, manufacturing, finance, technology, retail, professional services, education, and real estate. Conducted in January 2025, it provides a robust snapshot of how managers are perceived today.

Managers sit at the center of the employee experience, translating executive priorities into day-to-day actions and supporting the frontline workforce. Yet, despite their importance, many SMEs are underestimating the demands of management and underinvesting in the support managers need to succeed.

Managers Have the Greatest Impact

The survey makes one thing clear: managers sit at the fulcrum of organizational performance. They’re the ones translating executive priorities into daily action, supporting the frontline, and shaping culture in real time. Yet, the data shows just how fragile this role really is.

Frontline employees rated manager effectiveness at 20% or lower across all key areas—a sobering signal that the people managers are supposed to support don’t feel they’re getting what they need. Managers themselves admitted the gap: they rated their own effectiveness slightly higher, but acknowledged they have “much room for improvement” and are crying out for help.

The disconnect goes deeper up the chain. Executives often have little visibility into what’s happening inside teams, while HR tends to be more aligned with managers’ realities. This misalignment creates a dangerous blind spot: the group with the most day-to-day influence over employees is also the least supported. Without strengthening this layer, even the best strategies risk falling apart before they reach the frontline.

A Confidence Gap in Leadership Readiness

Despite their importance, many managers feel ill-prepared for the responsibilities of people leadership. Among those who have been in their roles at least three years, one-third admit they still don’t feel completely ready to manage others. And it’s not just current managers—frontline employees also express low confidence in their ability to step into management roles in the future.

This readiness gap suggests that SMEs are promoting high performers into management without equipping them with the skills required to succeed as leaders. The result is managers who feel overwhelmed, uncertain, and under-supported.

Barriers That Hold Managers Back

Managers are facing an uphill battle. When asked what prevents them from being more effective, one barrier stood far above the rest: overwhelming workloads.

With so much focus on task completion, managers struggle to find time for coaching, development, and relationship-building—the very activities that build stronger teams.

Employees also cited a lack of clear direction and inconsistent messaging as issues that undermine their managers’ effectiveness. Without clarity, managers are left navigating competing priorities and reactive demands, which only compounds the pressure.

Misaligned Views on Support

When asked what would help them most, managers overwhelmingly pointed to leadership development programs as the single biggest factor that could improve their performance. They want tools, training, and structured pathways to become better leaders.

But executives, looking through a different lens, emphasized technology adoption as the main lever to drive managerial success. They believe investing in systems and tools will solve performance issues. Meanwhile, frontline employees voiced yet another perspective: they want managers to build job-specific skills that directly improve team performance.

This misalignment exposes a gap: leaders across different levels are not aligned on what managers need to thrive. Executives think in terms of systems, employees think in terms of technical expertise, and managers themselves know they need better leadership skills. Each group sees the issue differently, leaving managers caught in the middle.

Why SMEs Feel the Strain More

In large enterprises, poor management can sometimes be absorbed by additional layers of leadership or organizational slack. But SMEs don’t have that luxury. With fewer people, tighter margins, and less buffer, ineffective managers create ripple effects quickly: disengaged employees, missed targets, and cultural drift.

For SMEs, investing in managers isn’t optional—it’s urgent.

A Blueprint for Supporting Managers

Insperity’s North Star Network survey highlights several areas where organizations can better support managers, and for SMEs, these lessons take on added urgency because weak management ripples through smaller organizations faster and deeper.

Based on the survey findings and additional insights drawn from the study’s earlier analysis, here are five recommendations SMEs can act on quickly to protect engagement and performance.:

1. Invest in Leadership Development
   Leadership development programs were the #1 need across the board, cited by 38% of managers and strongly supported by HR (37%). Structured, role-relevant training builds confidence and equips managers to lead with clarity.

2. Provide Job-Specific Skills Training

   Frontline employees (32%) and HR (32%) see role-specific training as critical. SMEs can differentiate themselves by tailoring learning directly to the work realities their managers face.

3. Expand Team-Building and Collaboration Support

   Executives (31%) prioritized team-building to improve collaboration. Creating space for managers to strengthen collaboration skills can close the trust gap between leadership levels.

4. Lighten the Load
   The research highlights workload as one of the biggest barriers managers face, with many reporting that the sheer volume of tasks keeps them from focusing on leading people. For SMEs, this is especially risky because a single overstretched manager can impact an entire team’s engagement. Streamlining workloads and freeing up capacity ensures managers have the time to coach, mentor, and build culture, not just complete tasks.

5. Close the Support Gaps Across Levels
   The survey revealed clear differences in what each level values most: managers point to leadership development (38%), executives lean toward advanced technology (26%), and frontline employees emphasize job-specific training (32%). For SMEs, this means leaders need to recognize these gaps and build support strategies that reflect the perspectives of all levels, avoiding wasted investment and ensuring managers receive the support that truly drives performance and culture.

Unlike large enterprises, SMEs can often move faster. While this wasn’t a focus of the survey, their smaller size typically gives them the agility to adapt leadership training, rebalance workloads, and introduce new performance tools without the friction of bureaucracy. That nimbleness can turn manager support from a cost into a competitive advantage.

The Bottom Line

Managers aren’t just middle layers in an org chart. They are the pivotal link between strategy and execution, culture and performance.

For SMEs, building a strong managerial layer is one of the highest-leverage moves leaders can make. By addressing workload barriers, investing in leadership development, and aligning across all levels of the business, SMEs can transform managers into confident, capable leaders who drive performance and culture forward.

When managers thrive, so do their teams. And when teams thrive, SMEs unlock growth, resilience, and long-term success.

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Do you know the most important factor in your company’s success? It’s your people. They’re the heart of your business. So, how do you harness this potential?

Insperity can help. From recruiting and onboarding to employee development and retention, they’ll help you build a stronger, more resilient organization. See the difference the right approach to human resources can make – because how you HR matters. Find out more at Insperity.com/hrmatters.