Table of Contents
- Big Tech’s latest cost cutting move is “flattening,” or removing middle management from the org chart.
- Amazon, Meta, Salesforce and others are flattening out, even as they lay off workers.
- This is likely to work in the short term, but removing middle management has long-term consequences.
Meta, Salesforce, and Amazon have more in common beyond their recent swath of far-reaching layoffs. They’re also the exemplars of a new cost-cutting trend in Silicon Valley: Removing the middle managers from their org charts, in a trend that’s been called “flattening” at each company.
As these companies prioritize efficiency over everything else, they’re moving many managers into roles that the industry often calls “individual contributors.” On paper, it means fewer “managers managing managers,” as Meta CEO Mark Zuckerberg put it, and more people coding, designing, or selling.
The move comes as the Big Tech companies reel from the consequences of overhiring, as the pandemic turned into an unexpected boon to their businesses. Critics have said that these companies hired people to do “fake work,” rather than anything meaningful to the bottom line.
Experts say that this kind of flattening makes sense in the short term — but is likely to carry negative consequences for those companies in the long term. Getting rid of middle managers can be a drag on company culture, even as it stymies career growth amid its workforce. Ultimately, it may result in lower overall company performance.
“Companies are looking at efficiencies and they’re seeing that not only the layers, but also these kinds of inefficient, subjective performance structures are no longer needed,” said Anna Tavis, a professor with New York University’s school of professional studies. “There are some human roadblocks along the way because there needs to be a mindset change.”
Big Tech moves to flatten organizations
One of Meta’s top priorities in its self-declared “year of efficiency” is to flatten the company’s corporate structure, and making many middle managers individual contributors, essentially demoting them, Insider’s Kali Hayes reported. CEO Mark Zuckerberg said he believes a less managerial hierarchy will make Meta “a more fun place to work,” Insider previously reported.
During his takeover of Twitter, Elon Musk said there seems to be “10 people ‘managing’ for every one person coding.” He soon after ordered Twitter’s engineering managers to write “a meaningful amount” of code themselves, in addition to their supervisory duties, Platformer’s Zoe Schiffer reported.
Amazon, for its part, has also been looking into its “span of control,” an industry term for the number of direct reports under each manager, Insider’s Eugene Kim reported.
More recently, Salesforce has started eliminating layers of management, in a bid to boost efficiency and appease activist investors, Insider’s Ashley Stewart reported.
Other, relatively smaller firms are following suit. Shopify, for example, is also making changes that will likely result in fewer middle managers.
Flat organizations do have some drawbacks that Big Tech will have to deal with
There are definitely some benefits to flattening, experts said. For one, it can free up many middle managers to focus on coaching employees, rather than supervising them, Tavis said. Less hierarchy also means products can get out to customers sooner, because it requires fewer levels of review.
While that all sounds good, experts warn removing middle management roles have other consequences that Big Tech will have to deal with.
One big example: There’s a perception among many young workers that rising to the level of management is the path to success, particularly if they have ambitions of being a C-Suite executive themselves one day. When companies are removing managers, it makes the career path forward not quite as clear.
“There’s gonna be a lot of pushback,” Tavis said. “I think it’s going to affect the longevity of the younger, up and coming professionals who are gonna be saying ‘when am I gonna manage people?'”
Middle managers set the tone and culture
Additionally, middle managers have more influence on shaping a company’s culture and can affect whether or not employees feel engaged in their jobs, as Insider’s Aki Ito reported. Analyses done by the Gallup on employee engagement found that what defines how employees feel about their jobs is team-specific dynamics, not organization-wide ones. In other words, middle managers set the pace and tone.
Removing too many layers of management risks burdening the managers who are left with too much work, and an inability to effectively coach and supervise their direct reports, Ito’s report found.
On the flip side, effective managers also can lead to higher performance from their teams, a recent report from McKinsey found.
“Good managers with strong team relationships can lead their teams to higher organizational performance, drive more effective organizational operations, and provide the link between organizational vision and execution,” the report said.
It’s also notable that all of this is happening as Big Tech pushes a return to offices. Without effective managers, maintaining company culture is even harder in a hybrid work environment, Tavis said.
“The majority of organizations have not really thought this through, and a lot of times these decisions are made at top, thinking about efficiency, productivity, and I’ve got the data now,” Tavis said. “That’s how they’re thinking and they can do that, but I think there will be some challenges because it’s not thought through entirely.”