Is the writing on the wall for middle managers? In its announcement last month summoning employees back to the office five days a week, Amazon also said it would cut the number of managers to “remove layers and flatten organisations”.
CEO Andy Jassy painted a picture that will be familiar to many office workers: More layers have led to “pre-meetings for the pre-meetings for the decision meetings” and “a longer line of managers feeling like they need to review a topic before it moves forward”.
While Amazon presented it as a move to streamline operations, the implications go beyond mere efficiency. It reflects a broader trend, particularly in tech, after rapid growth during the pandemic added managerial bloat.
Since last year, technology giants including Meta, X (formerly Twitter), and Spotify have conducted layoffs in a move towards leaner structures. According to an analysis for Bloomberg News, middle managers made up almost a third of layoffs in 2023.
This has been made worse by the advancements in generative AI sweeping through the technology marketplace, as companies restructure and shift focus.
It’s easy to see the appeal of leaner organisations: Faster decisions, more time for innovation and core business activities instead of getting bogged down with reporting, scheduling and other management tasks – and, of course, the enticing cost savings. According to a Morgan Stanley analyst, Amazon’s plan could cut about 14,000 manager positions and save up to US$3.6 billion.
But it’s crucial to examine the potential trade-offs.
Trade-offs of a flatter hierarchy
The latest moves give middle managers a bad rap. They’re easy to accuse of having little expertise, unlike individual contributors, or having little say in organisational change, unlike senior executives.
In today’s evolving work environment, managers play a crucial role in providing mentorship, fostering collaboration and driving employee engagement – if they are correctly resourced to do so and which consultancy studies suggest they are not.
The move toward flatter organisational structures could significantly impede these efforts, as fewer managers may have less time and capacity to support their teams effectively. Managers overseeing more team members may face increased workload and burnout as they shoulder a wider range of responsibilities. This might also lead to a decline in employee satisfaction, especially for those who value mentorship and professional guidance as a core aspect of their work experience.
Individual contributors may see challenges in their career progression with fewer jobs up the ladder. This can dampen morale and increase attrition rates, if employees feel their growth will stagnate.
A Randstad Singapore report released in May highlighted that nearly a third of respondents had resigned from a previous job due to a lack of advancement opportunities. About seven in 10 expressed a desire to take on managerial roles – 21 per cent higher than the global average.
If the tide is turning on middle managers, companies that limit upward mobility risk losing current and prospective talent.
Traditional work model is evolving
To be fair, Amazon isn’t acting in a vacuum. The inevitable rise of generative AI and automation must force a re-evaluation of traditional organisational structures.
Rather than rendering middle management obsolete, AI could enhance their roles by freeing time and precious bandwidth from tedious administrative tasks to focus on higher-value activities like strategic planning, fostering innovation, and developing their teams.
But this is only one piece of the puzzle of the future of work. The evolving expectations of employees are another.
Amazon’s insistence on a total return to the office – reverting to the pre-pandemic way of work – presents a significant challenge. It raises additional concerns about employee satisfaction and engagement at a time when many have enjoyed and desire the flexibility offered by hybrid work arrangements.
In countries where flexible work arrangement (FWA) laws have been implemented, this company policy could be scrutinised. For instance, implementing the Tripartite Guidelines on FWAs in Singapore, with effect from Dec 1, will require Amazon to handle employee requests for flexible work options more carefully. Organisations will be expected to justify denying such requests, which could lead to friction between management and employees and complicate the implementation process.
In the pursuit of efficiency and agility, companies must remember that their greatest strength lies in their people. By sacrificing middle management, they risk losing the vital human connections that foster innovation, collaboration and, ultimately, long-term success.
The future of work is not just about leaner structures; it’s about empowering individuals and cultivating a culture where everyone can thrive. Striking the right balance between streamlining and supporting its workforce will ensure short-term efficiency and long-term success.
The article first appeared in CNA.