What do we make of the fact that so many companies are now cutting out management jobs that they struggled to fill just a year or so before—in some cases cutting entire levels of managers—and they are all doing it at the same time?
A recent story in the Wall Street Journal, Your Boss Doesn't Have Time to Talk to You, reports the result of this continued cutting of managers. It has increased the span of control or the number of direct reports per supervisor by three times since 2017, and it continues as one company after another is announcing cuts. Supervisors have also been given regular work assignments as well so the effective supervisory ratio is even greater than the current average of about 15 to one.
Employees and those who observe these companies know that they did not think they were bloated with managers, nor have they run any tests to see if things will work better with fewer managers. What drives this current push to cut management roles even further is not evidence but ideas, mainly ideas held by investors and board members who represent their interests. “Management” has become a synonym for bureaucracy, which in turn means waste and inefficiency. As Max Weber defines it, bureaucracy is a rational system of rules and procedures for governing any organization. If the rules keep me from doing something I want to do, though, then it’s waste. But if we don’t have a rational system of rules, what will govern our organizations?
Here we get into myths. A big one now is that without rules and managers to run them, employees will be motivated to find the best way to get work done. Just get out of their way.
Really? Presumably these aren’t the same leaders who believe that if employees are not being watched in the office, they will goof off. Do we really think supervisors were holding them back? One reason for that myth is the hagiographic view of entrepreneurs, most of whom fail, who often do work tirelessly without rules and supervisors. But they do so because they have no choice—they have no procedures yet—and because of the rich rewards if they succeed, something that is not going to happen for regular employees. If entrepreneurs “move fast and break things,” we don’t care because it is their things they are breaking. If they were breaking things in our company, they get fired.
A similar myth is that if we just hire the right players, they don’t need managing. One executive in the WSJ story gave the example of hiring Michael Jordan, that stars don’t need much supervision. Phil Jackson, Jordan’s most famous coach, likely disagrees. Getting superstars to fit in with a team and the team to fit with them is a huge management task. All players, including superstars, are managed by detailed rule books—rules governing the game itself, from the league, and from the team. General managers, coaches, and their staff are a huge support system that enforces those rules and manages even the stars. Those stars also demand huge salaries, which are not in the cards for any regular employees.
So, what do we get when we cut managers? We lose oversight. When supervisors have three times as many direct reports, they can’t pay attention to whether employees are lost, goofing off, having problems, and so forth. The ability to improve performance fades because we are slower to see problems, and supervisors lack the time to fix them. There is no “slack” time available for employee development, something that already faded when we stopped training managers themselves.
We lose cooperation. The best way for a team to get their problems solved may not be best for the organization. Grabbing internal resources, for example, helps but comes at the expense of other groups—the backroom fights, competing for them. We may all be pulling hard, but it won’t be in the same direction.
We also lose coordination. When each team finds their own solutions, often to the same problem, we get solutions that are incompatible with each other and frequently with rules that our leaders put in place or ones from accounting or legal that we cannot ignore.
We lose speed because every group has to figure things out on their own. When they need information, resources, or permission, they have to go to the various stakeholders themselves to get answers. With fewer low-level managers, employees will have to pester executives to get answers. My bet is the executives will not like that, so the employees will either give up or make big mistakes by not getting their questions answered.
The best argument for giving employees autonomy was with the “agile” project management practices of a decade ago. Agile project teams were empowered, but they were also surrounded by management support to get them what they needed as soon as they needed it. Arguably the most important rules that agile cut were financial control systems, where the teams had to argue for a budget, then justify the spending along the way. As far as I can tell from the current “cut managers” approach, financial control systems are not being cut because investors want them, and no one is pushing for agile project management.
So why is this cutting happening? It cuts payroll, which investors really like, and it cuts head count, which improves “per employee” performance measures immediately, something investors also like. We won’t see downsides reported because we aren’t looking to measure them and companies surely don’t want to talk about problems. But we will see a slow and inexorable increase in rules, and a return of management oversight along with more management jobs. Until investors howl again. We seem to see this pattern about every 10 years, so rinse and repeat.
Peter CappelliGeorge W. Taylor Professor of ManagementDirector - Center for Human Resources for the The Wharton School