The Wall Street Journal

IN THE LEAD

By Carol Hymowitz

Middle Managers
Are Unsung Heroes
On Corporate Stage
September 19, 2005; Page B1

Middle managers have gotten a bum rap in recent years. They've been dismissed as the boring foot soldiers of business and taken for granted, while chief executives have gained fame and fortune.

These days, many middle managers are handling more work with leaner staffs -- but they aren't necessarily getting paid more. CEOs in office at least two years received a median salary and bonus increase of 14.5% in 2004, while salary raises for middle managers on average were stuck below 4% and are about the same this year, according to compensation consultants.

At many companies, the revolving door in the corner office has exposed performance failures. Dozens of CEOs have been ousted in the past 12 months either because they couldn't improve the bottom line and retain talent or because they were accused of malfeasance.

In many of those cases, the middle managers are the ones who stepped forward to show their superior leadership qualities. They steadfastly got products and services to customers, and became their companies' standard bearers for good ethics.

Middle managers at PeopleSoft kept the company running while their CEO bitterly fought Oracle's hostile bid for 18 months. The $10.6 billion acquisition was completed in January. Some PeopleSoft staff jumped to other companies then, but those who stayed with Oracle stayed productive. When Oracle reported higher-than-expected fiscal fourth quarter earnings this June, it rebutted concerns about employee turmoil after the takeover.

At Office Depot, managers didn't let the lack of a permanent CEO for five months slow their efforts. They quickly adjusted to reporting to Neil Austrian, a director who served as interim CEO until the board named Steve Odland permanent CEO in March.

The heavy lifting done by middle managers during the response to Hurricane Katrina, solidified their new status. At scores of companies, they crafted complex post-storm strategies, mobilized employees and successfully executed plans. In the process, they've shown how employees who are wanted and trusted to be useful perform amazing feats.

Jeff McCracken, a chief engineer at Norfolk Southern, led the job of rescuing five miles of railroad tracks that had ripped off a bridge connecting New Orleans and Slidell, La. Without the tracks, which fell into Lake Pontchartrain, Norfolk Southern couldn't transport products from the East Coast to the Pacific.

Before the storm hit, Mr. McCracken, based in Atlanta, traveled to Birmingham with repair equipment he thought he might need. He then headed to Slidell with about 100 employees, removing about 5,000 trees that had fallen across roads along the way.

He conferred with dozens of engineers from Norfolk Southern and three bridge companies, and decided to try to rescue the miles of tracks from the lake. The other choice -- to rebuild the tracks -- would have taken several weeks at least. "It was worth a try, even though it was something we'd never before done," he said.

He gathered 365 engineers, machine operators and other workers, who slept in campers and worked in shifts around the clock.

Last Monday, the workers lined up eight huge cranes, and over the course of many hours, lifted the five miles of track in one piece and then bolted it back on the bridge.

Everyone cheered when a train crossed the reset tracks early the next morning. "It was a colossal job that took more than 400 moves with heavy equipment," says Mr. McCracken. But what pleased him most was "working with people from all parts of the company -- and getting the job done without anyone getting hurt."

CEOs who feel under particular pressure from investors these days need to relinquish their imperious status or they'll end up having power taken away from them. By allowing more participation from managers, they stand a better chance of avoiding the fate of chiefs like former Morgan Stanley Chairman and CEO Philip Purcell, who resigned in June after dissident executives quit and called for his ouster.

Corporate chiefs who want accurate information about how their companies are and are not succeeding should speak frankly with middle managers who deal daily with employees, suppliers and customers.

Jeffrey Rodek, chairman and former CEO of Hyperion Solutions, got to know managers two and three levels below his direct reports when he was named to head the company in 1999. He would show up unannounced and without an entourage at tech and sales managers' offices and ask them what they thought he should know.

CEOs who don't want upheaval among their rank and file should take note of one big change in the job market. Ambitious and talented middle managers have more opportunities to land new positions now than they've had in the past five years. Retaining them may require giving up some big corner-office compensation increases to improve their salaries.

Chief executives also need to offer the same autonomy to make decisions that enabled Norfolk's Mr. McCracken to perform so well.