Middle managers are at risk of being laid off when companies resort to layoffs to save money. According to Live Data Technologies, middle management layoffs rose from 19.7% in 2018 to 31.5% in 2023.
Citing an analysis by Morgan Stanley, Bloomberg reported that mentions of "operational efficiency" in the US hit the highest on record this earnings season, highlighting the trend.
Consequently, middle managers' trust in their companies has hit a record low, according to Glassdoor. United Parcel Service, Inc., and Citigroup, Inc. are cutting thousands of management jobs to conserve funds.
In the 1980s, General Electric Co. CEO Jack Welch popularized the "lean and mean" principle, which promoted leaner organizations. In recent years, tech giants like Meta Platforms and Twitter, headed by Mark Zuckerberg and Elon Musk, have gone all out to cut middle management.
Effects of Declining Number of Middle Manager Jobs
However, eliminating middle management has issues beyond cost reductions. Layoffs at Meta disrupted operations and increased employee uncertainty. Middle managers help and guide their teams, which are undermined without them.
However, former marketing team head Kendall Smith pointed out that the "middle layer is the most vulnerable because they can't quantify their impact quite as much."
Middle managers leaving cause organizations to lose experience and institutional knowledge. These managers frequently have the specialized and interpersonal skills needed for organizational success.
According to experts, as experienced middle managers in a company shrink, remaining workers have fewer chances to enhance their abilities and fill the gap.
Younger workers may also struggle with professional development, and early-career professionals may grow disillusioned or compete fiercely for the few remaining management posts.
Effective management is necessary despite attempts to simplify organizational structures. In emergencies, corporations may use "battlefield promotions," quickly promoting junior personnel to management positions.
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Warnings on Manager Layoffs
Experts cautioned that manager layoffs may relieve budgetary difficulties but might lower employee engagement and key knowledge.
Bill Castellano of Rutgers University emphasized the significance of good management for employee engagement and organizational effectiveness, noting that matching surviving workers' talents with corporate goals is still a theoretical ideal after layoffs.
According to a recent ResumeBuilder poll, 40% of company owners expect layoffs this year, while half plan to freeze recruiting. Around 900 executives from companies with more than 10 workers were surveyed, and half mentioned economic worries as a major cause, Business Insider reported.
Artificial intelligence (AI) is another major factor in hiring. About 4 in 10 respondents intend to lay off workers when companies use AI. Dropbox, Google, and IBM have cut AI-related jobs.
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