Manager effectiveness during economic uncertainty: the ultimate guide for 2025

Managers can make or break your organization, especially as they’ve become more critical to organizational success and overall employee satisfaction. Gartner research shows that employees with ineffective managers are 15 times more likely to be low performers, 13% less engaged, and three times more likely to quit (1). 

However, the manager role has grown more challenging. The same Gartner report indicates that since the pandemic, managerial responsibilities have doubled, with increased focus on learning to manage hybrid teams, providing more work flexibility, and ensuring employee well-being.

In this turbulent economy, organizations are asking more of managers than ever before — often  with fewer resources and without reducing their workloads or creating more streamlined processes for them to excel. As a result, managers are so stretched that 79% of them say they’re at risk of burnout (2). Leapsome’s Workforce Trends Report shows that many managers are ready to head out the door — 37% say they have plans to change their jobs within the year (3).

So what does all this mean? 

It’s time for organizational leaders to direct their attention and energy to manager effectiveness with renewed vigor. People-first organizations need to empower managers with leadership skills while giving them the support they need to offset overwhelm.

Managers deserve high job satisfaction as much as their direct reports, which is why we explore:

• What manager effectiveness looks like in 2025
• Why it matters to your people and business
• The unique challenges managers are up against
• How you can support managers to do great work and enjoy the pivotal role they play

As Leapsome Co-CEO Jenny von Podewils puts it, “it was always part of the VP People or CPO’s job to ensure managers were supported, but this task is now far higher up the list of priorities for organizations. Why? Because of the added complexities in the manager role today. The speed and volatility of market changes, the accelerated pace of tech innovation. There is more change that needs to be orchestrated and managed. This, combined with a workforce that has higher expectations of their employer and an increase in mental health issues triggered by COVID, adds pressure in the workplace. Managers are the joints where the pressure is most felt.”
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1. Gartner, 2023
2. The Predictive Index, 2023
3. Leapsome Workforce Trends Report, 2023
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What is manager effectiveness?

Manager effectiveness refers to a manager’s ability to positively influence employee and organizational performance. Effective managers are able to utilize the tools at their disposal and the skillsets of their direct reports to achieve business-critical outcomes.

High-performing managers recognize that leadership is a skill that can be continually improved. They know it takes talent, time, and training to create a positive work environment and prioritize coaching and helping employees grow as professionals. 

In an ever-changing business landscape, effective managers are those who can:

• Communicate clearly and compassionately, recognizing that a diverse team also means that every employee is up against different challenges.
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• Adapt to changes quickly and help reports do the same, leveraging tools, supports, and AI to make work more efficient.
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• Inspire, motivate, and enable team members to collaborate toward shared team and company goals.
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• Set clear expectations and delegate at the right time to encourage more team member autonomy and improve team efficacy as a whole.
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Why is manager effectiveness important?

Manager effectiveness matters because the role of the manager is shifting. Organizations need high-performing managers to drive company values and champion the company mission.

Managers are also crucial in building great workplace cultures and enabling employees to do great work. Having a manager who understands how to conduct effective performance evaluations and give constructive feedback is 4x more important to team members’ engagement and well-being than the place where they work as a whole.

What’s more, team members rely on manager feedback to grow. 73% of employees appreciate their input and would like to receive it more often, not only during performance evaluations. 

Now more than ever, manager enablement is a highly strategic, value-driving function that directly impacts business performance. Overall, effective managers are the key to unlocking employee alignment, engagement, and development in 2025. 
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“Good leaders have always been around and will continue to be around — people who care about their employees. It's arming those people with clear expectations and the right training, and then giving them the time and space to practice. At the end of the day, it's HR and the frontline manager who can help employees feel good at work, and it’s the role of HR to be a thought partner and coach for managers in order to empower them to be effective.”

— Luck Dookchitra, VP People at Leapsome

Top challenges managers face in 2025

Unprecedented organizational and economic challenges have changed managers’ roles within their companies. Here are some of the most pressing issues they’re facing in 2025. As Leapsome Co-CEO Jenny von Podewils states, “The pandemic, as well as recent and current macroeconomic challenges, have been the backdrop of a significant evolution observed over the past few years: The shift toward more coaching, enabling, and people-centric leadership styles, rapid technological change that necessitates an agile working culture, and the complexity of managing a remote and hybrid workforce gave rise to an environment where companies have to expand their toolkit.”

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Navigating tighter budgets & focusing on profitability

In 2025, many organizations expect managers to do more with less. When asked what changes their company made in 2023, 42% reported budget cuts, and 51% mentioned team restructuring. It’s no shock that 70% of managers would love to be independent contributors again if they could do so at their current pay band.

At the same time, companies are investing less in employee experience and more in financial initiatives, trying to maintain and even improve profitability with leaner teams. This shift in priorities puts additional pressure on undertrained and overworked managers to upskill their equally stressed direct reports.
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Adapting to rapidly changing work environments

According to research from the World Economic Forum, generative AI has brought about incredible boosts in team productivity for many technical and professional industries, and digital jobs are expected to grow to around 92 million by 2030. At the same time, 46% of employee job applications are for remote or hybrid roles, which means that a manager’s effectiveness will also be determined by how well they can coordinate a distributed team. As Leapsome’s Co-CEO Jenny von Podewils puts it, “Managing in a hybrid setup requires heightened skills, especially in picking up cues in a digital environment. While the principles of good management remain, the challenges of remote work make it essential to enable people to become good managers intentionally.”

These advances are exciting, but they also mean that more organizations are asking managers to address novel challenges on top of their regular responsibilities, often with little support from above.

However, as Leapsome VP People Luck Dookchitra points out, “the field of HR, too, has transformed tremendously in the last 15-20 years. It’s not just back office and administrative work anymore. It’s really thoughtful partnering with leadership to help drive success. It’s learning, training, manager enablement, all of these things that are really important — and this partnership and understanding is the key to supporting front-line leaders.”

Managing a diverse workforce

Managers face another aspect of modern work never before seen in history: they’re leading five generations in the workplace, including The Silent Generation, Baby Boomers, Generation X, Millennials, and Gen-Z. These groups might have different, sometimes conflicting, values about workplace culture and leadership.

We’re also seeing growing gender, ethnic, and racial diversity in the workforce, likely owing to the fact that many companies recognize the importance of diversity, equity, and inclusion. After all, 75% of organizations with diverse and inclusive decision-making teams are more likely to exceed their financial objectives. While this is a good thing, it also means that team leads need more inclusivity training to support their diverse teams.

“No one generation can solve the problem by themselves,” says Dane Cruz, Professor in Organizational Development and Effectiveness at Cornell University. “It’s going to take all of us to figure it out. It’s a complex time that we’re living in for everybody. We may experience it differently, but it doesn’t mean it’s easier for one generation over another. It’s about understanding our similarities and starting there to move forward.”
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Insufficient resources & time

The eight-hour workday no longer provides managers enough time to be highly effective or productive. Based on data from the Predictive Index, 58% percent of middle managers agree that a lack of time is the main factor preventing them from taking advantage of training and development opportunities. Another 55% percent say that an overly heavy workload is the most significant barrier to being more productive. 

At Leapsome, VP People Luck Dookchitra is managing a similar struggle: “Our managers were finding it difficult to do so many reviews with so many people joining at different times of year. So we’re innovating and establishing more centralized processes that allow everyone to clear their meetings and just focus reviews for a few days, and then the managers have a couple of days where they can focus on looking at all that feedback. We did this because it gives people a concentrated time to reflect, for efficiency purposes, but also to show that we believe in the importance of feedback, and we want to make time for it.”

Fortunately, there are also solutions like Leapsome AI, which can help managers speed up the creation of employee development goals, quickly analyze survey responses, generate more constructive feedback based on performance data, and even create a complete competency matrix in minutes.

“Tools like Leapsome can help a manager get through their day better,” says Luck Dookchitra. “How great when there’s AI that helps you write your reviews, how great when you have analytics that help you pull the report together. Plus, now you've got a platform that collects all this, has the historic knowledge, and can even now start thinking with you as a manager. It helps managers get all the information they need to lead effectively — and it also makes our job as HR people easier.”
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Inadequate leadership training

Another issue hampering manager effectiveness is the need for more relevant skills training. Sadly, only 48% of managers strongly agree they have the skills to be exceptional at their jobs. Compounding this, more employees are calling for additional support from their managers as leaders. Before the pandemic, only 23% of employees said they wanted more managerial guidance. Compare that to 2023, when 77% of team members report feeling this way.

Increases in remote work have also led 70% of managers to report they have no training to manage hybrid teams, which can lead to decreases in employee engagement.

Platforms like Leapsome Learning can better equip you to tackle this challenge and support and develop your managers — we’ll cover this in more detail later on.
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Difficulty retaining top talent and supporting them in doing their best work

Lack of manager support only intensifies turnover issues. Our 2023 State of People Enablement report found that 27% of employees want to leave their jobs because of their manager. Another 35% of team members rated manager-led processes like performance reviews as ‘bad,’ and 25% gave a low score to their company’s approach to feedback.

When you also consider that, according to recent data, more employees are staying put than in recent years, and the external talent pipeline is thinning, more companies should invest in manager enablement as an initiative to develop their employees and retain their best talent.

Retention is especially important in difficult times as teams are often far leaner, meaning that the impact of losing a high performer is felt strongly. However, there are many tactics to retain high-performers during moments of crisis. HR teams can bring a fresh perspective and help managers work through the many challenges commonly experienced by overstretched teams. 
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6 top strategies to improve manager effectiveness during economic uncertainty

Although times are tough, there are solutions to the current problem. Organizations that apply the right strategies and meaningfully invest in manager enablement can drive real impact, especially if they have powerful solutions like Leapsome in their toolkit.

“An effective manager is authentic, consistent, and empathetic, fostering an environment of trust. They prioritize feedback, accountability, and tough conversations.”

— Jenny von Podewils 

1. Stay on target with effective meetings

Meetings are a primary way managers listen to and coordinate their teams, so it’s ideal when team leads make the most of them. However, When we asked employees how they rated their company’s procedures for meetings, 25% of respondents said they considered them bad, and 37% scored them as only okay. What’s more, data from Atlassian reveals that meetings cost up to $37 billion in salaries per year, although 73% of team members said they did other work during their meetings, and 47% complained that meetings were the most significant misuse of their time. 

Meetings are also a crucial channel for effective communication during turbulent times. “In times of economic uncertainty or crises, managers are critical in ensuring communication lines stay open and that we, at a leadership level, stay in sync with what’s happening on the frontline,” says Jenny. “There are early signs of issues in the market, of a strategy not working — we need to make sure managers understand what’s going on at that level, in their team, and there’s an effective channel and means for them to communicate this and raise this back into the organization up the chain of leadership. Effective communication channels and early intervention can, sometimes, mitigate the need for layoffs.” 

In an increasingly virtual-first world, many managers need better preparation and tools to make meetings more focused and action-driven. Company leadership can help them accomplish this by:

• Training managers to lead better meetings — Meetings are not intuitive for everyone, so you should provide courses that team leads can take to make their meetings more structured, efficient, and impactful.
  
  
• Implementing the right tools — Leapsome Meetings allows managers to easily bring dispersed teams together with shared agendas, notes on key meeting points, and action items.
  
  
• Creating company-wide expectations for meeting agendas — Ensure every employee knows your company’s meeting protocols and team leads always comes prepared with an agenda, which makes meetings more productive, according to 90% of employees. For example, you can recommend that every meeting invite should include an agenda to keep things on track and that discussions end with clear action items for follow-up.

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2. Close team skill gaps with custom learning paths & engaging training

Good managers can identify what skills direct reports may be missing to better collaborate with their team members, move projects forward, and advance professionally. 

However, overworked managers don’t always have adequate capacity to spot team skills gaps. They need the right technology and cross-functional backing to determine where their employees need to upskill. 

That’s why it’s best to follow best practices for continuous performance management, which provides more touchpoints for employee development and team member input than the traditional review cycle. These practices include:

• Competency frameworks, which companies create to give people clear, professional roadmaps for growth within the organization.
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• 360° reviews, which draw on multiple sources of feedback to make evaluations more holistic.
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• Self-assessments, which require employees to identify their personal strengths and areas for improvement.
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• Customized, self-led learning paths for employees, which saves HR time as they don’t need to individually lead training and can still ensure that managers give their teams the right, individualized development courses. Moreover, when companies leverage tools like Leapsome Learning, managers can follow up with their direct reports to offer guidance throughout the training experience. 

Managers themselves also need manager-specific training to help them step into their roles with self-assurance. Platforms like Leapsome Learning make it simpler to create personalized learning paths specifically for team leads who need to build leadership skills like communicating expectations clearly, confident decision-making, and conflict resolution. Additionally, Leapsome’s Learning Marketplace gives you access to an integrated course catalogue with high-quality compliance and development content from GoodHabitz, lawpilots, and Ethena. 
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3. Keep teams aligned & connected with realistic goals & metrics

Your team leads may spend much of their time translating cascading goals into relevant team goals and tracking them to keep the team on target, but that may be more challenging if your company is working with fewer resources due to a fluctuating economy. 

Collaborate with managers to set reasonable goals and metrics, but also bear current constraints and challenges in mind to avoid demoralizing your teams. 

While we don’t suggest relying on these metrics to punish managers or hold them accountable for low scores, they can indicate areas for growth and improvement where your manager needs more support. These can include metrics like:

• Employee engagement scores — These reveal how committed employees are to their work on a mental, emotional, and physical level, and can indicate when a team leader needs additional support. 
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• Goal achievement rates — If your manager and their direct reports consistently struggle to hit a 70% completion rate with objectives, it may be time to re-examine your company’s goal-setting processes.
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• Employee turnover rates — Organizations that invest in manager enablement and effectiveness saw 47% less turnover. That’s no surprise when you consider that four in ten employees experience workplace stress and consider leaving due to an underdeveloped manager.

4. Stay attuned to team members’ needs with active listening

Great managers rely on active listening to make employees feel heard and to collaborate on possible solutions to issues. That matters even more during a time when 76% of employees experience moderate-to-high stress, and 37% cite financial pressure due to the recession as their top cause of stress outside of work.    

That’s why senior leadership and HR teams should proactively support managers with tools for surveys and anonymous suggestion boxes where employees can be honest about their experience with the company. 

As Jenny shares “Receiving regular, actionable feedback is crucial for employees’ growth and development. But it doesn’t just benefit the employee. In my opinion, the most important driver of a feedback culture is managers regularly asking and acting upon feedback, as this makes feedback a lot less scary, and a role model is much stronger than lip service on the importance of feedback.

Delivered in the right way, it can positively impact your company through improved performance, increased employee engagement, and greater levels of trust."

Help managers become better active listeners with tools and processes that:

• Measure and interpret feedback from employees — For example, Leapsome’s manager dashboard allows managers to review engagement survey results, employee progress with goals, and historical review scores so team leads can offer better solutions and guidance to their direct reports.
  
  
• Give managers a glimpse into the feedback and praise team members give each other — That way they can learn what skills and values matter most to their direct reports.
  
  
• Encourage employees to be open and honest during performance review discussions —  Give team members the space to advocate for themselves and be open about their personal goals for professional development.

5. Build more opportunities for feedback into your workflows

It may seem surprising, but employees genuinely appreciate manager input — and a staggering 73% of them want feedback from their manager more often. This need for more guidance doesn’t have to mean an extra investment of time that managers don’t have. 

Set up regular workflows for continuous, constructive feedback to help managers create deeper team alignment with organizational objectives that may be unclear to direct reports. Doing so can also make the performance review experience more positive and reduce meeting time. 

Support managers by instituting continuous feedback systems like:

• Weekly or bi-weekly check-ins or 1:1 meetings — Building these into the manager’s schedule means they don’t have to set up ad hoc discussions and can follow the same agenda weekly to discuss employee progress with goals and development.
  
  
• Quarterly surveys — Conducting frequent engagement surveys provides managers with up-to-date, actionable data on how their employees feel about leadership and their roles. This way, they can give team members feedback more relevant to their goals and experience.
  
  
• Regular praise and recognition — Team members also need positive feedback to know they’re moving in the right direction. Indeed, those who feel recognized are 2.2 times more likely to introduce new and innovative ideas, highlighting how essential appreciation is for managers to practice. 

6. Leverage AI for data-driven decision-making

According to Leapsome research, nearly 100% of HR leaders and employees agree that people enablement software helps employees feel more engaged. 

Great software can take a lot off a team lead’s plate, but when you add the power of AI, you facilitate managers to become even more strategic players within your organization. Especially in a fluctuating economy and business landscape where many teams are being asked to ‘do more with less’, AI can help to alleviate workload and streamline processes. 

Take Leapsome’s application of AI, for example, to understand how it can improve manager effectiveness with:

• Faster goal-setting — Leapsome makes creating impactful OKRs easier by auto-generating robust initiatives and key results with one prompt and two clicks.
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• Better feedback — Managers can optimize their written input for performance reviews, making it more well-rounded, actionable, and aligned with best practices.
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• Minimal bias — Managers can utilize Leapsome AI to analyze employee sentiment in surveys, preventing them from skewing their analysis.

🎤 Hear more from Leapsome’s People experts 

Leapsome’s Luck Dookchitra, VP of People, and Jenny von Podewils, Co-founder & Co-CEO, joined the The Modern People Leader podcast to discuss manager effectiveness.

👉 Listen here

Empower your team & drive organizational success with Leapsome

Managers are experiencing major challenges as we chart our way through an unstable economy and labor market. With increasing demands from all sides, improving manager effectiveness is a matter of ensuring they have the right skills, tools, and support to enjoy what they do and get the job done.

With powerful tools for setting goals, gathering team member feedback, and developing employees, a solution like Leapsome equips managers to be better leaders and achieve better outcomes.

Our integrated Meetings, Surveys, Reviews, and Goals modules bolster managers with features and workflows for keeping employees aligned, engaged, and in collaboration, including AI-powered tools that summarize survey and review input and turn rough notes into actionable feedback. Moreover, our Learning module and Learning Marketplace allow team leads and direct reports to overcome skills gaps with relevant, customized courses to suit their needs.

By using Leapsome, you’ll be empowering your leaders with a comprehensive suite of tools and resources tailored to enhance employee engagement, alignment, and collaboration.
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“You cannot build a successful company without a really strong focus on people and manager enablement.”

— Jenny von Podewils, CEO & Co-Founder of Leapsome 

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Leapsome’s integrated Meetings, Goals, Reviews, and Learning modules facilitate manager success so they can help team members do their best work.

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