Ask the Experts: Answers to Managing Management

On Jul 8, 2022

In the latest installment of New Jersey Business Magazine’s Ask the Experts column, an HR professional working with the New Jersey Business & Industry Association responds to an executive’s inquiries:

How do we know if our managers are performing well?

Managers are doing a good job when both the teams they lead and the individuals they manage are thriving.

Simply stated, teams thrive when they consistently deliver quality products or services while staying within budget. Individual team members thrive when they’re advancing in their careers, learning new skills, showing initiative, taking on additional responsibilities, getting promoted, and adding value to the company.

If a team is getting its work done, but the individuals on that team are not developing professionally, then the manager in charge of that team may not be managing as well as they could be. Perhaps they aren’t coaching employees, clearly outlining expectations, or addressing under-performance when it arises. That’s worth bringing up with them when discussing their performance.

Keep in mind that managers can only be as good as their resources and support, though. If a team has no time or budget for professional development, the manager may not be to blame when their employees seem to be stagnating in their careers.

A manager we hired is not performing to our expectations, and we’d like to move them to a non-management role and reduce their pay. Is this allowed?

In most cases, yes. As long as you don’t have a contract with the employee guaranteeing them a certain position or rate of pay, you can transfer them to a different position and payrate for which they’re better qualified. Such employment decisions are up to your discretion.

That said, demotions aren’t always the best course of action. You’re out the money you invested in hiring this individual and preparing them for the management role, and they’re likely to feel embarrassed and possibly resentful. If the employee could perform better with training or coaching, a little additional investment here might save you money in the long run and earn you good will from employees.

If a job transfer is the right move, however, it’s a good idea to document the performance issues, skills gaps, and knowledge deficiencies ahead of time – plus any measures you took to help the employee improve. That way you can show the legitimate basis for the employment decision if you were ever challenged on it.

Do managers need to be classified as exempt under the Fair Labor Standards Act?

No, it’s fine to classify managers as non-exempt. You are under no obligation to classify any employees as exempt, even if they meet the criteria under the Fair Labor Standards Act. You could have an entire workforce of nonexempt employees, right up to the CEO. The important thing is to follow all wage and hour laws applicable to nonexempt employees, including paying them for overtime.

Having said that, there are advantages to classifying employees as exempt if they meet all the criteria. It’s administratively easier for you as the employer – no need to track hours for calculating overtime – and many employees prefer to be paid a salary that doesn’t change from week to week.

You can learn more about the criteria for classifying employees as exempt, such as the duties tests and salary thresholds, on the platform (njbia.org/help). 

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