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How 2020 shone a light on the inefficiency burden of middle management
The coronavirus pandemic put work practices, efficiency, and structures under the microscope as firms navigated the unprecedented landscape of health crisis.
Businesses have had to relook at their costs and what can be done to survive the COVID-19 pandemic — which has no set end date — but also positioning companies to thrive in the long term.
When a world has been plunged into a crisis, that’s where the value of workers, teams, units, and organisations shine.
With diminished physical spaces for performative leadership, and laser-tight focus on operational efficiency and return on investment, it’s clear that one of the most burdensome element to any company is middle management.
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Over 2020, many of the world’s largest companies cut jobs, but several specifically canned middle management jobs in the thousands. Here are just a few:
Centrica (CNA.L): Axed 5,000 jobs with around half the job losses are expected to hit managers, including around 20 of the 40 current members of its senior leadership team.
Marks & Spencer (MKS.L): Cutting 7,000 jobs as it relooks store and management structures.
Macy’s (M): To cut 3,900 corporate and management jobs.
BP (BP.L): Axing 10,000 jobs, which will “significantly impact senior levels” of management in the business, with its top leadership roles to be cut by a third.
Shell (RDSA.L): Cutting up to 9,000 jobs with a large chunk coming from management. “We have too many layers in the company,” said Shell CEO.
Royal Mail (RMG.L): Cut 2,000 management jobs as part of its plan to save £330m a year.
Morrison’s (MRW.L): Slashing 3,000 manager roles.
HSBC (HSBA.L): Axing 35,000 jobs, with a bulk in management.
Arcadia: Cutting 500 roles from its 2,500-strong head office workforce.
Co-op Bank: To cut 350 jobs with middle management and head office roles among those affected.
The fundamental problems with bloated middle management
The coronavirus pandemic put those who do and those who don’t into scrutiny.
With companies having to adapt across the world, “low-skilled” workers were then rebranded as “key workers.” In a crisis, it showed who were creating results and doing things directly to help a company to achieve targets and who were the leaders who made it happen and were able to strategically adapt to the new landscape and get their hands dirty, if needed.
Middle management can be characterised in various ways but mostly it refers to managers in a company at a level between senior and junior.
For some firms there are seven or eight layers between C-suite and managers, turning organisational hierarchies into a bloated nightmare.
What can happen is that some managers don’t really do anything of tangible value — they just ferry messages to and from people, causing an arbitrary extra step in a chain. While some do get stuck in, the term middle management has become a lot more synonymous with not doing anything functional or strategic.
Elon Musk, CEO of Tesla (TSLA) famously squashed the management structure at the electric car-maker, detailing in a memo that it was needed in order to provide efficiency.
“People are forced to talk to their manager, who talks to their manager, who talks to the manager in the other department, who talks to someone on his team,” the memo read.
“Then the info has to flow back the other way again. This is incredibly dumb. Any manager who allows this to happen, let alone encourages it, will soon find themselves working at another company. No kidding.”
Recently, Shell CEO Ben van Beurden made sweeping changes to the company for the same reason: “We have looked closely at how we are organised and we feel that, in many places, we have too many layers in the company: too many levels between me, as the CEO, and the operators and technicians at our locations.”
And they’re not wrong, according to studies.
Research by famous economist Joseph Stiglitz, showed that having more decision-making layers can also increase the chance of good projects being rejected which may have benefited the business. In other words, it hurts business. It also increased the probability of the wrong people being in the job.
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