Submitted by Anthony Brunson P.A. Certified Public Accountants & Business Advisor
The corporate world is getting flatter. In recent years, companies have had to respond quickly to unanticipated major shifts in the marketplace, including a worldwide pandemic and tariff-driven cost increases. One popular strategy is to find greater efficiencies where you can, and the most vulnerable are middle managers. This is the group that is not directly responsible for generating revenue.
In 2022, Big Tech giants such as Amazon, Meta and Google began cutting tens of thousands of jobs with a clear focus on eliminating those in the middle layer. Flattening is not only a Big Tech phenomenon. According to a recent Korn Ferry study, 44% of American respondents reported that their company had “sliced away managerial levels.”
In the case of Meta, Wall Street reacted well to this aggressive cost-cutting restructuring, and the company stock soared. Meta also saved billions on operating costs just by sending these managers packing. While restructuring helped streamline the decision-making process on projects, it did have its downside. With a gap in the middle, employees were not sure to whom they reported and who was available to make decisions.
How it works
In theory, you would expect that with fewer layers, communications from the CEO to an analyst would flow faster and things would get done quicker. Take the example of the traditional organizational model with a middle manager coordinating between departments. In a flattened scenario without a central point person, it is easy for goals to be miscommunicated between groups, which can lead to confusion and flawed outcomes.
Some employees report a less-than-flattering picture of what it means to operate within this type of system, calling it directionless and ambiguous. Many would argue that middle managers play an important role in terms of employee morale and engagement. Without the benefit of experienced managers, employees may feel a lack of support and guidance, especially in carving their own career path. Without this layer, employees may struggle with direction, clarity and personal development. Employee turnover may be high if employees cannot see a way up the corporate ladder.
Companies that have eliminated middle management positions found they did not fare as well as expected. With decreased communication among departments, productivity faltered. Instead, firms have reinstated the role as a coaching position, providing employees with an immediate and accessible resource.
As one human resources executive put it, “Middle managers are leaders who translate strategy into action, provide mentorship, and foster alignment and engagement within teams. Removing this layer without careful consideration risks creating a void where employees may struggle with direction, clarity and development.” Eliminating middle managers may have immediate cost-cutting value, but in the long run, it may not be the best strategy.
