The 42% That Never Recovered: Labor Market Data Reveals the Permanent Decline of Management
The following contribution comes from the Medium portal, which defines itself as follows: Medium is a space for human stories and ideas. Here, anyone can share knowledge and wisdom with the world, without needing to build an email list or followers. The internet is noisy and chaotic; Medium is quiet, but brimming with information. It’s simple, engaging, collaborative, and helps you find the right readers for what you have to say.
The author is Marc Bara, a member of the team.
Data from job postings, corporate announcements, and academic research confirm that the elimination of middle management is accelerating.
Last week, I presented The Great Reversal: the counterintuitive pattern where AI eliminates managerial coordination functions faster than physical warehouse work. I used Amazon’s October 29 announcement as a prime example: 14,000 corporate positions eliminated immediately, while leaked internal documents reveal plans to avoid hiring 600,000 warehouse workers by 2033.
But Amazon didn’t create this pattern. It revealed it.
Since then, I’ve analyzed broader evidence from August to November 2025: job posting data, corporate announcements, consulting firm research, and labor market analysis.
What emerges is unmistakable. The Big Turnaround isn’t a single-company restructuring.
It’s a systemic transformation across all sectors, and the data clearly demonstrates this.
What Job Postings Reveal About Who Is Really Being Eliminated
While corporate press releases emphasize culture and agility, the labor market tells a different story through job posting data.
The Great Decline
Revelio Labs, which tracks more than 100 million job profiles, found that job postings for mid-level managers fell 42% from their peak in April 2022 to October 2025. Postings for entry-level and operational positions reached a low of 14% at their worst point, before recovering. Postings for executive positions showed no recovery until November 2025.
This 42% decline has persisted for months with no sign of recovery.
This isn’t a hiring freeze affecting all positions equally. It’s the structural elimination of specific roles.
Live Data Technologies’ analysis of employment records showed that managerial positions declined by 6.1% between May 2022 and May 2025. Even more telling: middle management accounted for 32% of layoffs in 2023, compared to 20% in 2019, representing a 60% increase in management’s share of staff reductions.
Gusto’s analysis of 8,500 small and medium-sized businesses revealed that supervisors’ span of control doubled, from three direct reports in 2019 to six in 2025. Organizations are eliminating supervisory levels, not just temporarily freezing hiring.
The pattern is clear. Managerial positions are being structurally removed from organizational structures. Companies aren’t planning to fill these positions when conditions improve. They are redesigning their operations to function without them.
This validates what Amazon has shown: coordination roles are being eliminated now,
while operational roles face displacement over a longer period due to the development of robotics.
UPS’s Breakdown: When a Company Actually Shows the Numbers
Most companies announce total layoffs without revealing how many are managers and how many are operational workers. UPS provided the breakdown, and the numbers are striking.
Through October 2025, UPS eliminated 14,000 managerial positions and 34,000 operational positions. Management represented approximately 18% of the affected workforce, with roughly 78,000 managers in total in the pre-cut structure.
Do the math. Management accounted for 29% of the total cuts despite representing approximately 18% of the affected workforce categories. That’s 1.6 times their proportional representation.
Operational workers accounted for 71% of the cuts, despite representing approximately 82% of the workforce in those categories. This is 0.87 times their proportional representation.
Eliminating Management Positions
Management positions are being cut at nearly twice the rate expected if the impact were distributed evenly.
The Business Contraction Argument
Critics are right to point out that UPS’s cuts are closely tied to Amazon’s declining volume (down 5.4% year-over-year in the first half of 2025) and the closure of 93 facilities to eliminate excess capacity. When you lose a low-margin business, you generally need fewer people.
That’s true, but the distribution of the cuts is important. Traditional downsizing logic predicted that operational positions (drivers, sorters) would absorb most of the reductions. Instead, UPS cut management positions at a rate 1.6 times higher than its overall workforce (29% of total cuts versus 18% of the workforce), while preserving core physical capacity through voluntary buyouts and seasonal flexibility.
This reflects a calculation of which roles can now be replaced by automation tools like AI (coordination and reporting) and which still require human presence in unstructured environments. Even under the pressure of downsizing, investment is holding steady.
Moreover, UPS’s pattern is not isolated.
It is observed in companies facing very different business conditions: Amazon (rapidly growing), Target (stable), Microsoft (profitable), CVS (expanding), and hospitals (with staffing shortages). The common factor is not business downsizing, but rather the availability of AI for coordination work versus robotics that is too immature for physical labor.
This is the Big Investment quantified. Faced with the pressure to reduce costs, companies are now disproportionately cutting coordination roles because AI can replace them. Traditional automation patterns would have predicted the opposite.
The Pattern Spans All Sectors
The Big Investment is not limited to Amazon, UPS, or tech companies. It is transforming traditional sectors with a consistent pattern: protecting operational workers and eliminating layers of coordination.
Retail headquarters protect stores:
Target: 1,800 corporate positions cut (8% of headquarters staff), no store workers affected. Chief Operating Officer Michael Fiddelke: «Overstaffing and overlapping roles have slowed decision-making.»
CVS: 2,900 cuts with an explicit statement that «the reductions will NOT affect frontline positions in stores, pharmacies, and distribution centers.»
Walmart: 1,500 corporate and technology positions eliminated, maintaining all store operations.
Tech companies explicitly eliminate staff:
Microsoft: More than 15,000 positions (9,000 in July, 6,000 in May) focused on «reducing staff with fewer managers.» Security teams doubled their control, from 5.5 to 10 direct reports.
Amazon: 14,000 corporate cuts and a mandatory 15% increase in the IC-to-manager ratio by the first quarter of 2025. CEO Andy Jassy: “When you bring in a lot of people, you end up with a lot of middle managers who want to put their stamp on everything.” Healthcare administration faces targeted cuts:
Cleveland Clinic: 114 administrative positions
Main Line Health: 200 administrative and management positions
Tower Health: Cuts primarily targeting management positions
UCSF Health: 200 positions, primarily management and administrative
Clinical staff providing direct patient care remained largely intact across all systems
The banking sector is cutting back-office and management positions
JPMorgan: Multiple rounds of cuts to reduce management levels
Deutsche Bank: 3,500 cuts targeting back-office and senior management roles
The pattern is repeating itself across all sectors: corporate coordination is being eliminated, frontline operations are being protected.
What the consulting firms predicted
Leading research organizations detected the emergence of this pattern and published forecasts that align precisely with what is unfolding.
Gartner’s October 2024 prediction stated: «Through 2026, 20% of organizations will use AI to simplify their organizational structure, eliminating more than half of today’s middle management roles.»
Distinguished vice president and analyst Daryl Plummer explained that AI will automate scheduling, reporting, and performance monitoring—key functions of middle management. The remaining managers will oversee larger teams with greater control.
McKinsey’s «State of AI» report from March 2025
revealed that 58% of tasks related to applying expertise could be automated, and 49% of managerial work (creating job offers, integrating performance feedback, and basic coordination) is automatable.
Their analysis showed that less than 30% of managers’ time is spent on people leadership, with three-quarters dedicated to individual execution or administrative tasks, now vulnerable to automation.
Deloitte’s «Global Human Capital Trends 2025» survey
of 10,000 business and HR leaders in 93 countries revealed that managers spend 40% of their time on administrative and problem-solving tasks, and only 13% on people development. The report concluded that “the traditional role of managers is ripe for reinvention” as AI transforms work by “reducing entry-level positions” and creating a need to support the evolution of middle management.
The World Economic Forum’s Future of Jobs 2025 Report, which surveyed more than 1,000 employers representing over 14 million workers in 55 economies, included Business Services and Administration Managers among the 10 fastest-declining jobs. The report projected that 22% of current jobs would be affected by 2030 (170 million created, 92 million eliminated), with administrative assistants, executive secretaries, and bookkeepers topping the decline list.
Meanwhile, the fastest-growing jobs included agricultural workers (projected to create 35 million new jobs), delivery drivers, construction workers, and nursing professionals. Predominantly operational positions requiring physical presence and handling.
These were not speculative opinion pieces. They were systematic surveys of employers’ actual hiring and layoff plans.
AI dismantles middle management positions, the most affected since the crisis
The following contribution comes from the Ara media portal and is authored by Albert Rigol, a member of the team.
Workers’ salaries recover their pre-2007 purchasing power.
The exceptional salary growth of entry-level workers over the past year, especially those working in small companies, has allowed this group to gain purchasing power compared to 2007: while accumulated inflation over the last 19 years is 43.5%, the salaries of entry-level workers have increased by 45.89%, to 28%.
This is confirmed by the latest edition of the study «Salary Evolution 2007-2025». The report, presented this Wednesday at a press conference by the Eada business school and the human resources consultancy ICSA, is based on a survey of 80,000 workers.
The negative note is struck by workers in middle management positions, who have experienced the greatest cumulative loss of purchasing power. Their salaries, averaging €42,822 in 2025, have grown by 23.04% since 2007, well below the cumulative inflation rate of 4%. These positions have also suffered a «dismantling,» according to Ernesto Poveda, CEO of ICSA Group, largely due to the incorporation of artificial intelligence (AI) into the workplace, which is causing an «organizational flattening,» eliminating two other categories: managers and workers. The challenge of AI
«We see it in many positions: as a professor, in research, where it helps to write articles; we also see it in banking and in administrative and management positions. AI has played a fundamental role; it is our greatest ally or a competitor,» explained Anton-Giulio Manganelli, professor of strategy at EADA.
As for executives, who earn an average of €90,226, the cumulative increase is 31.35%. Historically, this segment has always seen the largest increases, but a shift occurred in 2025 because, according to the study, compensation models are based on linear increases and have favored entry-level workers, since middle and upper management positions are more closely tied to company performance. Manganelli also highlighted that salary increases across different categories, compared to GDP growth over the last 19 years, show that wages have not increased at the same rate as GDP per capita.
«This means that wealth is being created, but it is not being distributed equitably,» he stated. He also emphasized the level of absenteeism in the Spanish economy, with one million unemployed workers per day, as a worrying factor, representing an unacceptable cost for any organization. Upturn in Small Businesses
One of the most notable findings of the study, according to its authors, is the 8.72% increase in wages for entry-level workers in SMEs. They attributed this to the need for small businesses to raise wages to respond to the continued recruitment of workers by medium and large companies, as well as to increases in the national minimum wage (SMI), collective bargaining agreements partially indexed to the Consumer Price Index (CPI), and greater technological advancements in operational positions.
The wage increase for entry-level workers in medium and large companies was 3.1% and 4.2%, respectively, significantly higher than that of any other category (entry-level, middle management, or executives) in any of the three types of companies. Training and new compensation models.
To address current labor market challenges, such as the application of AI, the study concludes that it is necessary to invest in continuous training, especially for middle management, and to redesign total compensation models by linking them to productivity. «It is necessary to move towards more flexible and sustainable compensation schemes, aligned with the actual contribution of each position,» the study states. Another proposal is to promote non-monetary compensation as a non-competitive advantage, through teleworking, flexible hours, work-life balance initiatives, and continuous training.
Agility is the new competitive advantage
The following contribution comes from the Sandvik website, which describes itself as follows: The company was founded in 1862 by Göran Fredrik Göransson, a global pioneer in successfully implementing the Bessemer process for industrial-scale steel production. From its inception, operations focused on high quality and added value, investment in R&D, close customer relationships, and exports. This strategy has remained unchanged throughout the years.
As early as the 1860s, the product range included rock drilling steel. The company began trading on the Stockholm Stock Exchange in 1901. Stainless steel production began in 1921, and cemented carbide production in 1942. Production of cemented carbide tools began in the 1950s in Gimo, Sweden.
In 1972, the company changed its name to Sandvik AB, and in 1984, a new type of organization was introduced, with a parent company and independent business areas.
Authorship by the team.
The pandemic changed the perspective on business agility, and adapting to market fluctuations is now more important than ever. Being agile throughout the cycle is a strategic objective of Sandvik’s “Make the Shift” strategy.
In his landmark book “On the Origin of Species,” Charles Darwin wrote that it is not the strongest or the most intelligent species that survive, but those that are most adaptable to change. In our turbulent world, this agility could be the key to why some companies persevere and even thrive in challenging times.
Rising inflation, recession concerns, and geopolitical nervousness combine to create a difficult environment for businesses worldwide. And with this challenging environment, a new focus on business agility has emerged, not only to address recurring cyclical fluctuations but also to adapt to unprecedented events such as the COVID-19 pandemic and the resulting market upheaval and supply chain disruptions.
Managing the ups and downs of a fluctuating economy is essential.
A benefit for the entire organization.
«The pandemic helped change the perception of business agility,» Forbes magazine wrote earlier this year. «Being adaptable, fast, and forward-thinking is no longer just about gaining a competitive edge in your industry. Business agility is now tied to resilience in the face of drastic external changes.»
The ability to adapt and anticipate future opportunities has driven companies to create new technologies and solutions that meet the unique needs of a digital workforce. According to the Forbes article, agility is no longer just an internal business differentiator. It is an essential capability for resisting and prevailing against major external forces such as global pandemics, climate change, and international supply chain shortages. Agility has become an indispensable factor for business survival and success, enabling companies to emerge smarter and more resourceful.
In today’s digital age, organizations must be prepared and equipped to adapt to rapid changes in virtually everything.
While agility has different meanings for each company, there is a general consensus that greater flexibility benefits the entire organization. And the rapid pace of digitalization certainly supports an agile approach. IndustryWeek magazine (opens in a new window), in its January 2022 issue, wrote that agility is the new competitive advantage. “In today’s digital age, organizations must be prepared and equipped to adapt to rapid changes in virtually everything: what products they make, who is on their teams, locations, supply chains, quantities, shortages, costs, and more.” To achieve this, they must have the right technologies and processes to collaborate and innovate in real time.
There is a general consensus that greater flexibility benefits the entire organization.
A Flexible Approach
For manufacturing companies, Industry 4.0 itself is a catalyst for greater agility. Engineering firms of all sizes are harnessing the power of digital technology to increase their agility and adapt to the needs of employees who learned to embrace hybrid ways of working during the pandemic. “Many engineers embraced modern design platforms and evolved their product design process into what we might call ‘all agile,’” writes IndustryWeek, describing how Dixie Iron Works, a manufacturer of flow control equipment, provided each engineer with a 3D printer at home so they could use collaborative design software to print tangible items, quickly evaluate ideas, and ultimately bring their products to market faster.
To address chip shortages, Tesla engineers developed new firmware that allowed them to source new chips from different suppliers.
There is no single model for agile transformation, nor a standardized framework to apply.
“The pursuit of business agility is not new for organizations, but the pandemic has made the ability to adapt quickly to market and environmental fluctuations in a productive and profitable way crucial for business,” notes the analysis firm Capgemini (Opens in new window) in its report “Business Agility: How It’s Not Just Another Buzzword” (2022). It warns that most companies still have a long way to go: “Before the pandemic, we analyzed the maturity of organizations in their agile transformation and saw a clear need to accelerate the transformation: only 20.4% reported having established agile working methods across the organization. Now, with the catalytic urgency generated by COVID-19, organizations that had not taken their agile transformation seriously enough are under pressure.”
Organization-wide agility is not a goal, but an ongoing commitment to delivering customer value faster and adapting better to changing conditions, Capgemini states. “There is no single model for agile transformation, nor a standardized framework to apply,” the report states.
“A much more flexible approach is needed.”
Embracing Change Proactively
The following contribution comes from the Arthur D. Little website, which describes itself as follows: Making a Difference for 140 Years
As the world’s first management consulting firm, we have been connecting people, technology, and strategy for 140 years. Learn more about our illustrious history of innovation and some of the transformative projects we have worked on over the years.
The authors are Francesco Marsella
Italy • Managing Partner
Ralf Baron
Germany • Partner
Petter Kilefors
Sweden • Managing Partner
Maximilian Scherr
Austria • Partner
Global CEOs Feel Prepared for the Unexpected in a Volatile World
Focused on growth, innovation, and embracing disruption. That is the key message from today’s global CEOs, according to the latest “CEO Insights” study by Arthur D. Little (ADL). The CEOs of the world’s largest companies feel more prepared than ever to address and benefit from today’s economic, technological, and geopolitical challenges, and are proactively seizing the opportunities created by continuous and unprecedented change, regardless of their industry or location.
2025 marks the third year of ADL’s flagship global study, CEO Insights, which included interviews with more than 300 CEOs of companies worldwide with revenues exceeding US$1 billion. These CEOs lead organizations across eight sectors: telecommunications, energy and utilities, automotive, manufacturing, travel and transportation, healthcare and life sciences, financial services, and high-tech and digital, and operate in Europe, Asia, the Middle East/India, Africa, and North and South America.
In a time of unprecedented change, CEOs are confident in the future business outlook, with 97% expecting the medium-term global economic outlook to improve or remain stable over the next three to five years. Three-quarters (75%) believe they will improve, compared to just 22% two years ago. With a positive outlook for the future, all CEOs are investing to drive growth.
CEO Strategies
CEOs understand that markets are volatile, but they are future-proofing their businesses by incorporating volatility into their business planning and adopting more agile, short-term strategies that allow them to capitalize on change.
Today’s CEOs see geopolitics as a market driver that they must incorporate into their strategies. They understand that they must take steps to address the potential consequences of the US elections, along with a willingness to adapt and a desire to collaborate more closely with governments to gain support.
Among those who anticipate future changes, nearly three-quarters (72%) of companies with budgets between $1 billion and $10 billion expect significant changes. Governments are playing an increasingly active role in the business environment, and nearly seven out of ten CEOs view government intervention as a helpful support for growth.
Chief executives are taking bold steps and focusing on the positive aspects of change and increased government intervention, while also adopting techniques such as scenario planning to predict possible futures.
CEO Strategies
Growth is central to CEO strategies, and all respondents plan for their companies to grow at the same rate or faster than the market, with more than two-thirds increasing their investment year-over-year.
When asked how they plan to generate growth, the results show significant differences between top- and middle-quartile companies, where leaders adopt a more balanced approach that utilizes a broader range of internal and external levers, in addition to focusing on the core business. Analyzing the best-performing growth strategies, CEOs remain more satisfied with investments in organic growth than with mergers and acquisitions (M&A). Ninety-eight percent say these strategies meet or exceed expectations, compared to 70% for M&A. The imperative is clear: companies must optimize their internal growth engines and use M&A selectively to complement, rather than replace, internal growth.
CEOs see a critical need to improve performance to boost productivity, and the most optimistic are investing more and expecting higher returns.
Across all sectors, geographies, and company sizes, CEOs aim to invest 1% to 2% of their revenue in performance initiatives to achieve annual productivity improvements of around 8% over the next three years. The most optimistic CEOs about future global economic growth are investing the most, but they also have the highest expectations, seeking performance improvements exceeding 9%.
CEOs understand the importance of improving the performance of existing assets, processes, and people. They must be bold and adopt large-scale, transformative programs that go beyond top-down cost reduction to more comprehensively address process improvement and redesign using AI and other technologies.
AI has the potential to transform how businesses operate, both tactically and strategically. Organizations must move beyond pilot projects and focus on efficiency to fully leverage AI’s potential.
As a sign of the AI boom, a growing number of companies (29%) report having a compelling enterprise-wide AI strategy, rather than focusing on technology at the departmental or business unit level—double the number projected for 2024. CEOs are adopting a portfolio approach that allows them to test AI across a wide range of use cases, from data analytics to supply chains.
The Four Waves of AI Adoption
Looking ahead, CEOs and their leadership teams must adopt a structured approach to AI adoption, moving beyond experimentation and pilot programs to integrate AI into long-term strategy and operations. This will enable them to realize its full transformative benefits and provide a true competitive advantage.
CEOs worldwide have integrated environmental, social, and governance (ESG) criteria into their strategies and are giving them a priority similar to other corporate initiatives.
ESG criteria have become central to corporate life, with 88% of CEOs giving them the same importance as other corporate initiatives. 94% of companies are integrating them fully across the organization, rather than treating them as an isolated initiative.
Economic and, in some cases, ideological considerations have led many governments to deprioritize ESG criteria. Looking ahead, CEOs should focus on ESG projects that generate social benefits and a business return on investment (ROI); for example, by reducing costs through the installation of renewable energy or creating new revenue streams through the circular economy.
CEOs believe their organizations are less prepared than a year ago, but still «good enough,» which could pose a problem going forward.
All CEOs surveyed believe their current organization is at least adequate to face a volatile world. However, the majority (51%) describe their organization as merely «good enough,» and only 4% consider it to be above the overall market. They also believe their staff has the right skills, and 90% describe the need for retraining as moderate or limited.
CEO Modal Assessments
Chief executives must recognize that even if their organizational structures are currently «good enough,» they may not be robust enough for the future. Now is the time to conduct critical, thorough, and measured assessments of their structures and capabilities, and act on the results to adapt and transform their organizations.
Along with insights from the CEOs leading the world’s largest companies and a comprehensive analysis of industry differences, the study offers detailed recommendations to help CEOs of all businesses successfully drive growth, improve performance, and thrive in an increasingly volatile world.
Why Acceptance Is the Most Ignored Factor in Business Growth
The following contribution comes from the LeadingNow portal, which defines itself as follows: At LeadershipNow™, we want to change your perspective on leadership. It’s not about a position. Leadership is everyone’s business. It’s for men, women, and children. It’s for families, businesses, and communities. It’s for you.
The Leadership Blog offers the latest insights on leadership and timeless principles to help you develop your leadership skills. More than book reviews, the commentaries highlight the fundamentals of leadership that will help you meet today’s challenges.
Our goal is to help us all transcend the limitations of our immediate thinking to think critically from a broader, long-term perspective. To lead beyond ourselves and our circumstances.
The author is Marcus Sheridan, an internationally renowned keynote speaker, author, and business strategist who has transformed the way companies build trust and drive sales. As a partner at IMPACT, Marcus and his team advise companies on implementing the principles in this book. This publication is an adaptation of «Endless Customers: A Proven System for Building Trust, Boosting Sales, and Becoming the Market Leader.»
Most business leaders assume that if they implement the right strategy, success will follow. But the truth is, even the best strategy will fail without full buy-in from your team.
Lack of buy-in is the silent killer of growth. It’s why so many marketing initiatives fail, why sales teams resist new processes, and why companies struggle to implement real change. If your employees aren’t aligned, your customers will notice. And if your customers sense it, they won’t trust you.
The Real Reason Strategies Fail
The biggest mistake CEOs make is assuming that once they decide on a direction, their team will automatically follow. But people don’t resist change out of laziness or a lack of willpower; they resist it because they don’t understand why it matters.
If your management team makes decisions behind closed doors and then announces them as mandates, don’t be surprised if your employees resist or, worse, disengage completely. Companies that thrive aren’t the ones with the best ideas, but the ones that get their teams to believe in them.
How to Get Your Team Fully Engaged
To build a company that performs at the highest level, buy-in can’t be an afterthought; it must be embedded in your culture. Here’s how:
Involve your team from the start: People support what they help create. Instead of implementing a pre-defined strategy, involve your team in the conversation from the beginning. When employees feel heard, they are much more likely to take ownership of the outcome.
Communicate the why, not just the what: Telling your team what to do isn’t enough. They need to understand why it matters. If they don’t see how a new initiative connects to their success, they won’t give it their all.
Eliminate the fear of change: Many employees resist new initiatives for fear of failure or an increased workload. Address these fears head-on by demonstrating how the changes will make their work easier, more impactful, and more rewarding.
Model buy-in from the top: Leaders set the tone. If the CEO and management team aren’t visibly committed to a new strategy, don’t expect the rest of the company to be. Buy-in starts at the top and flows down.
In short: Your strategy is only as strong as its buy-in.
A great strategy without buy-in is useless. The fastest-growing companies aren’t just those with bold ideas, but also those that get their entire team aligned, engaged, and committed to execution.
So, before you ask yourself, «Is this the right strategy?», ask yourself, «Does my team really believe in it?» Because if they don’t, nothing else matters.
Dehierarchy
The following contribution is from Medium and is authored by Jerry Grzegorzek, founder and editor-in-chief of SuperBusinessManager.com.
This article discusses the process of reorganizing the organizational structure, known as dehierarchy.
What is dehierarchy?
It is the process by which a company eliminates one or more hierarchical levels from its organizational structure.
Typically, eliminating one or more levels of middle management flattens the organizational structure.
Reducing the number of hierarchical levels in an organization reduces the number of middle management levels. Middle managers are typically comprised of managers who work in various departments, such as finance or marketing, or managers of different units or products within a company.
In recent years, the flattening of hierarchies has been driven by improvements in communication technologies.
This allows senior managers to communicate with and monitor the performance of subordinate staff, as well as those across widely dispersed departments.
Reasons for Flattening Hierarchies
There are several reasons why many large companies have chosen to flatten their organizations:
Reducing costs. Eliminating middle management positions can save organizations with tall structures costs, including expenses on salaries and benefits for managers.
Improving communication. Many companies eliminate entire management levels to create more horizontal structures. With fewer management levels, it is easier for information to flow up and down the organization.
Increasing motivation. Flattening hierarchies can help solve employee motivation problems, as it broadens the span of hierarchical control.
Improving efficiency. By reducing the number of management levels, organizations can make decisions and complete tasks more quickly. Increase employee autonomy. Flattening the hierarchy can give employees greater responsibility and authority to make decisions, which can lead to increased job satisfaction and motivation.
Flattening has been driven by the diminished importance of the middle manager role.
What does flattening look like?
What is the effect of flattening the hierarchy on a business organization?
In a five-level organizational structure (Level 1 at the top and Level 5 at the bottom), eliminating Levels 2 and 4 reduces the hierarchy from five to three. Levels 2, 3, and 4 correspond to middle management.
The organizational structure will no longer be described as tall as it was before flattening. Now there are only three levels: Level 1, Level 3, and Level 5.
Only one middle management level remains: Level 3. It sits between the directors at the top of Level 1 and the workers (operators) at the bottom of the Level 5 hierarchy.
After this streamlining, the company must be able to use its resources to create a product by organizing them into different functions. Let’s look at an example of how business organizations do this.
Case Study 1: A new councilor wants to cut the municipal budget. As a staunch advocate of combating waste, he prioritizes the local leisure center. Upon reviewing the center’s staff list, the politician has an idea: why not lay off all non-essential personnel to streamline the hierarchy and save money? He estimates that at least 75% of the employees fall into this category. He drafts a report to distribute to the city council’s sports and leisure committee. At the next meeting of the committee, the new councilor’s proposals are rejected. It is pointed out that the recommendations presented would prevent the leisure center from fulfilling its operational and legal obligations. In particular, the committee highlighted the vital role played by the following departments within the leisure center:
Administration: Reception, filing, preparing management reports, data entry, etc.
Marketing: Promoting the center’s activities to the community.
Technical: Maintaining the efficient operation of the center’s facilities, including health and safety, etc.
Finance: Recording all financial transactions. The new councilor was warned about the possibility of proposing such unfeasible ideas in the future.
Dehierarchy — Evaluation
The advantages of dehierarchy include:
Reduced business costs. This is due to the elimination of management levels, as costs are saved on salaries and benefits for middle management.
Improved speed of communication flows. Simplifying hierarchical structures shortens chains of command, which improves communication throughout the organization. Decision-making should be faster and, therefore, more effective.
Enhanced delegation opportunities. Greater control and empowerment encourage employees to take on more responsibility. This contributes to the development of employee skills, who gain greater trust from management. Senior managers are also more aware of what is happening in the company; therefore, they can delegate more thanks to the reduced distance from lower levels.
The disadvantages of flattening the hierarchy include:
Severance pay. This is a one-time cost associated with the departure of middle managers, who lose their positions without having made any mistakes.
Overburdening staff as their workload increases. Larger teams and longer decision-making processes can be counterproductive, negatively impacting the quality of work. Increased control following flattening will likely reduce the effectiveness of managing subordinates and create problems meeting deadlines. Furthermore, the increased workload for managers could lead to burnout and stress.
Decreased job security. Fear that layoffs will be used as a pretext for any cost-cutting measures by the company could generate fear of dismissal. Increased anxiety and insecurity among managers, worried about losing their jobs or being demoted, can damage morale and negatively impact the overall productivity of the company. Common Misconception About De-hierarchy
Many people confuse the terms de-hierarchy and downsizing. De-alignment is not the same as downsizing.
De-hierarchy means eliminating at least one management level in the hierarchical structure without anyone necessarily losing their job.
Whereas downsizing involves reducing the number of employees to downsize the company.
In general, de-hierarchy can be a powerful tool for improving organizational efficiency and effectiveness. However, it is important to carefully consider the potential downsides before implementing such a change.
Dehierarchy: Meaning, Benefits, and Challenges
The following contribution comes from the Taggd portal, which defines itself as follows: We believe that hiring well is not a matter of chance. It’s not just a belief; it’s how we work. By combining knowledge, experience, and technology, we achieve reliable, results-oriented recruitment, turning talent into a sustained competitive advantage for your business.
Authorship by the team.
Dehierarchy is the process of reducing the number of management levels in an organizational structure to create a more horizontal hierarchy. This method of organizational restructuring involves eliminating one or more hierarchical levels, often focusing on middle management positions, while maintaining essential operational functions.
The main objective of dehierarchy is to improve operational efficiency, increase organizational agility, and facilitate better communication between senior executives and frontline staff.
In practice, dehierarchy can be implemented through various approaches. Organizations can eliminate unnecessary managerial positions, consolidate similar functions and departments, or decentralize decision-making processes.
For example, many traditional banks no longer have individual branch managers but instead appoint single managers to oversee multiple branches. Similarly, some educational institutions employ principals who oversee several schools within a geographic area.
It does not imply job elimination.
It is important to note that flattening the hierarchy does not necessarily imply job elimination or staff reductions. Instead, it generally increases the average span of control for senior managers within the company. This restructuring can effectively reduce hierarchical levels without removing staff from the payroll, as the affected employees can be reassigned to other areas of the organization. However, flattening is increasingly considered a cost-cutting strategy, especially during economic downturns.
Implementing flattening offers several potential benefits. By shortening the distance between senior management and frontline employees, organizations can achieve faster decision-making processes. Furthermore, more horizontal structures tend to promote greater transparency and better communication throughout the company. Likewise, flatter organizations often demonstrate greater agility, enabling them to respond more quickly to external market changes and competitive pressures.
However, successful flattening requires careful planning and execution.
If poorly implemented, this restructuring approach can overburden remaining employees with additional responsibilities after the consolidation of roles. Human Resources departments play a crucial role in effective flattening, from identifying redundant management levels to managing change communication and adjusting compensation structures to align with the new organizational model.
Flattening hierarchies is particularly common in large organizations with complex hierarchical structures, where an excess of management levels can lead to inefficiencies, slow decision-making, and communication barriers. By optimizing these structures, companies seek to create more responsive and adaptable organizations, capable of meeting today’s business challenges.
Dehierarchical Structure vs. Downsizing
While both are organizational restructuring strategies, dehierarchical structure and downsizing differ fundamentally in their approach, implementation, and impact. Dehierarchical structure focuses specifically on reducing management levels to create a more horizontal organizational structure, while downsizing involves reducing the total workforce at all levels.
Definition and Focus
Dehierarchical structure focuses on eliminating management layers within an organizational hierarchy, primarily at the middle management level. In contrast, downsizing encompasses a broader approach that involves reducing the workforce at all levels, not just at the executive level. This distinction is crucial, as dehierarchical structure seeks to optimize the organizational structure, while downsizing focuses on reducing staff at multiple levels for financial and efficiency reasons.
Strategic Objectives
The main objectives of these strategies differ significantly:
Dehierarchical downsizing seeks to improve communication, accelerate decision-making processes, and increase organizational agility.
Workforce reduction primarily seeks cost savings, increased operational efficiency, and organizational survival in the face of financial difficulties.
Historical Context
Workforce reduction initially emerged as a strategy to streamline and reduce organizational structures in terms of the number of employees. As this approach gained popularity in the late 1980s, it evolved to encompass broader managerial efforts aimed at improving company performance. Consequently, restructuring and dehierarchical downsizing became commonplace during the 1990s as strategic initiatives, rather than simply reactions to economic crises.
Impact on Employees
Dehierarchical downsizing primarily affects middle management through job losses, departmental mergers, and the redistribution of responsibilities. On the other hand, downsizing affects employees at all levels of the organization through layoffs, voluntary resignations, and incentives for early retirement.
Potential Consequences
Both strategies carry significant risks:
De-hierarchy often results in a heavier workload for the remaining staff, less supervision, and fewer opportunities for professional development. Furthermore, it can compromise organizational knowledge, which is inevitably intertwined with the people who comprise it.
Downsizing frequently leads to negative financial, organizational, and human consequences. Despite anticipated benefits, such as lower overhead costs, less bureaucracy, and faster decision-making, most empirical findings suggest that restructuring and downsizing fall short of their objectives. Notably, downsizing can produce «survivor syndrome,» characterized by decreased morale, employee engagement, work productivity, and trust in management among the remaining employees. Implementation Approach
By implementing flattening, organizations typically save money on managerial salaries while expecting the same level of performance from the remaining staff. This approach can improve a company’s responsiveness to change by reducing the number of management levels. Conversely, downsizing occurs when companies close or merge parts of their operations, often resulting in a significant reduction in staff.
Ultimately, understanding these distinctions allows organizations to select the appropriate restructuring strategy based on their specific objectives, challenges, and organizational context.
Advantages and Disadvantages of Decluttering
Implementing a decluttering strategy involves weighing the numerous benefits against the potential challenges. Organizations must carefully evaluate whether simplifying their hierarchy aligns with their specific business needs and organizational culture.
Key Advantages of Decluttering
Cost reduction is one of the primary benefits of decluttering. By eliminating costly managerial positions, organizations can substantially reduce their overhead and compensation expenses. This approach improves profitability for employers and stakeholders while reducing managerial redundancy.
Faster decision-making emerges as another significant advantage. With fewer hierarchical levels, decisions flow more quickly through the organization, enabling greater responsiveness to market changes and competitive challenges. In fact, a study of more than 300 executives revealed that organizations with fewer hierarchical levels delivered new products and services to customers more quickly.
Improved communication is also a crucial benefit. Flat organizational structures create clearer communication channels, as information doesn’t need to pass through numerous levels before reaching frontline employees. This streamlined process minimizes information loss and gives subordinates more opportunities to be heard by decision-makers.
Employee empowerment increases significantly in organizations with fewer hierarchical levels. As authority flows downward, employees gain greater autonomy and responsibility, fostering increased motivation and commitment. This empowerment generally leads to higher productivity, as workers become more closely involved in the organization’s decision-making.
Innovation flourishes in flatter structures because employees have more opportunities to contribute ideas directly to leadership. As a result, organizations can respond more quickly to changing customer demands through improved teamwork and multitasking opportunities.
Common Disadvantages to Consider
Managerial overload is a serious concern in organizations that have undergone hierarchical deregulation. Managers who remain in their positions often face increased oversight and greater responsibilities, which can lead to burnout and reduced effectiveness. Essentially, these expanded responsibilities can exceed reasonable workloads, undermining the efficiency that deregulation aims to create.
Following deregulation, limitations on career progression often arise. With fewer hierarchical levels, employees’ opportunities to advance within the organization are more restricted. Research indicates that this issue is particularly relevant for younger workers, as 91% of millennials cite career progression potential as a top priority when job hunting.
Skills shortages can arise as organizations lose valuable expertise. Flattening can result in the departure of managers and staff with significant experience and institutional knowledge. Since this knowledge is intertwined with the people who make up the organization, its loss can create critical gaps.
Disruptions during transition periods occur as employees adapt to new roles and responsibilities. This adjustment phase typically results in a temporary reduction in productivity as the organization establishes new workflows and reporting structures.
Employee motivation can suffer, particularly when flattening is implemented primarily as a cost-cutting measure rather than a strategic organizational improvement. In these cases, employees who remain with the company may experience anxiety about job security and uncertainty about their future.
Not all organizations benefit equally from flattening. Certain industries, such as mass production with predominantly low-skilled workers, may struggle to adapt to flat hierarchies. Before implementation, companies should carefully assess whether their specific business model and workforce composition align with the requirements of a less hierarchical structure.
Real-World Examples of De-hierarchy
Large corporations have implemented de-hierarchy with diverse approaches and results. These real-world examples illustrate how organizations apply this restructuring method to achieve specific business objectives.
General Electric’s De-hierarchy Strategy
General Electric’s de-hierarchy initiative began under the leadership of its CEO, Jack Welch, in the late 1980s, becoming a landmark case of organizational restructuring. Upon assuming the role of CEO, Welch encountered a massive bureaucracy with over 500 senior managers, more than 100 vice presidents, and approximately 25,000 supervisors. This excessive structure motivated his aggressive de-hierarchy strategy.
Initially, GE had nearly a dozen levels between the CEO and the production floor. Through systematic de-hierarchy, Welch reduced this number to just four or five, breaking down the barriers that separated key functions such as marketing and manufacturing. This restructuring is estimated to have saved the company 3,375.22 million Indian rupees in administrative costs.
Welch’s implementation focused on eliminating redundant management positions while simultaneously expanding the responsibilities of the remaining managers. As a result, key business areas reported directly to Welch rather than through middle managers. This approach substantially increased the span of control of senior managers and broadened their responsibilities. Welch maintained that this restructuring improved decision-making, stating, «I believe people take more responsibility for their actions when they are the final signatory.»
Amazon’s Approach to Flattening the Hierarchy
Amazon’s flattening strategy reflects a more recent approach to organizational flattening. In 2023, CEO Andy Jassy announced an initiative to reduce the company’s management levels, aiming to increase the ratio of individual contributors to managers by at least 15% by the end of the first quarter of 2025.
Historically, Amazon began with an agile, horizontal structure when Jeff Bezos founded it in 1994. The original organizational design included few roles and management levels, enabling rapid communication and flexible innovation. However, as Amazon expanded, it gradually adopted a more hierarchical structure to manage its increasing complexity.
Jassy’s current flattening initiative seeks to recapture some elements of that initial organizational agility. His stated goal is for Amazon to “operate like the world’s largest startup.” Through this process, the company seeks to reduce bureaucracy, optimize decision-making, and ultimately improve the customer experience.
The implementation addresses specific organizational problems, such as excessive preliminary meetings and the large number of managers reviewing decisions. Furthermore, Jassy established a «bureaucracy mailbox» where employees can report unnecessary processes, emphasizing that while businesses need processes, «unnecessary and excessive processes or rules should be reported and eliminated.»
How to Implement Dehierarchy in a Company
Successful implementation of dehierarchy requires a systematic approach with proper planning and execution. Organizations must follow a structured methodology to ensure the transition generates value rather than disruption.
- Review the Current Structure
First and foremost, it is essential to conduct a thorough assessment of the existing organizational hierarchy. This assessment should identify redundancies, inefficiencies, and areas where levels could be eliminated without compromising functionality. Companies must define current roles, responsibilities, and spans of control to identify unnecessary management levels. This assessment should examine communication patterns, decision-making procedures, and overall efficiency to formulate an effective dehierarchy plan.
- Gain Leadership Buy-In
Obtaining senior management support is crucial for the success of dehierarchy. Leadership buy-in fosters transformational leadership that drives alignment, encourages commitment, and accelerates the achievement of the organizational vision. Without leadership support, even well-designed plans can fail. Effective strategies include communicating the vision clearly, involving leaders in decision-making, building credibility, and addressing resistance to change. Involving leaders in the early stages of the process generates momentum and ensures they feel connected to the project.
- Redefine Roles and Responsibilities
Once the levels to be eliminated have been identified, organizations must clearly define the new responsibilities and reporting structures. This crucial step avoids overlapping roles and accountability gaps. The redefinition process should emphasize new skill requirements and shift the focus from micromanagement to empowering team members.
- Train and Support Employees
With increased levels of control and greater responsibilities, managers and staff require appropriate training. Organizations should:
Develop specific training programs for expanded roles
Provide skills development resources to ensure a smooth transition
Support employees in adapting to new responsibilities
- Communicate Changes Clearly
Transparent communication throughout the de-hierarchy process reduces resistance and confusion. Organizations should inform all affected employees about the reasons for the changes and the implementation plans. Regular progress updates help maintain trust and commitment. Effective communication creates a shared source of accurate information, establishes a predictable cadence, and provides relevance at the role level.
- Monitor and Adjust
Post-implementation monitoring determines whether the flattening of hierarchies achieves the desired results. Organizations should track key metrics such as productivity, employee satisfaction, and communication effectiveness. Be prepared to adjust approaches if initial methods prove ineffective. Continuous monitoring until changes are integrated requires discipline but helps motivate those implementing them.
When is flattening the best option? Organizations should consider flattening in specific circumstances where simplifying the hierarchy offers clear strategic benefits. Flattening becomes an optimal option primarily when companies seek faster decision-making capabilities in competitive markets. Companies facing communication difficulties between senior management and frontline employees often benefit from eliminating middle management levels.
Flattening is often effective for organizations experiencing bureaucratic inefficiencies that hinder operational agility. Large corporations with complex structures often adopt this approach when an excess of management levels creates unnecessary approval processes that slow down their responsiveness to the market.
Economically, organizations facing financial pressures can implement flattening to reduce overhead costs without necessarily eliminating frontline positions. Companies seeking innovation advantages should consider this restructuring when hierarchical barriers impede the direct flow of creative ideas from operational staff to decision-makers.
Critically, flattening works best in knowledge-based industries, where employee autonomy improves performance. Conversely, mass-production industries with predominantly low-skilled workers may struggle to adapt to streamlined structures.
In short, flattening is appropriate for organizations where:
Organizational complexity hinders rapid adaptation to the market.
Communication inefficiencies create operational challenges. Customer feedback requires more direct channels to decision-makers.
The potential for innovation remains untapped due to hierarchical constraints.
Cost pressures demand structural efficiency without sacrificing operational capacity.
Successful implementation depends on careful planning, transparent communication, and adequate support systems for affected employees.
Key findings: Dehierarchy is a strategic organizational restructuring that eliminates management levels to create more horizontal hierarchies, improving communication and the speed of decision-making, while reducing costs.
- Dehierarchy differs from downsizing: it focuses specifically on management levels, not on a general reduction of staff at all levels.
- Implementation requires systematic planning: Success depends on reviewing the current structure, leadership buy-in, role redefinition, and appropriate training.
- Benefits include faster decision-making and cost savings: Organizations achieve greater market responsiveness, improved communication, and reduced administrative expenses.
- Carefully consider timing: Flattening works best in knowledge-based industries facing bureaucratic inefficiencies, not in mass-production environments with low-skilled workers.
- Be aware of potential drawbacks: Managerial overload, limited career progression, and a shortage of skilled personnel can undermine effectiveness if not properly managed.
When implemented intelligently with the right support systems, flattening transforms rigid hierarchies into agile organizations capable of adapting quickly to market changes and competitive pressures.
Frequently Asked Questions
What are the main benefits of flattening an organization? Flattening hierarchies can improve communication, streamline decision-making processes, reduce costs, and increase an organization’s agility and responsiveness to market changes. It also fosters better collaboration between senior management and frontline employees.
How does flattening differ from downsizing?
While both are restructuring strategies, flattening focuses specifically on reducing management levels to create a more horizontal organizational structure. Downsizing, on the other hand, involves reducing the overall workforce at various levels, not just at the executive level.
When should a company consider flattening hierarchies?
Companies should consider flattening hierarchies when facing bureaucratic inefficiencies, communication bottlenecks, or the need for faster decision-making in competitive markets. It is especially effective for knowledge-based industries and large corporations with complex structures.
What are the potential downsides of flattening the hierarchy?
Some potential downsides include manager overload due to increased responsibilities, limited professional development opportunities, the potential loss of valuable experience, and temporary disruption during the transition period. It can also reduce employee motivation if not implemented correctly.
How can an organization successfully implement flattening?
A successful implementation involves a systematic approach that includes reviewing the current structure, leadership buy-in, redefining roles and responsibilities, providing appropriate employee training and support, clear communication throughout the process, and ongoing monitoring and adjustments after implementation.
Interested in learning more about current HR terms such as interview-to-hire ratio, behavioral interviewing, sick leave, sick pay, relief letter, resignation letter, and more? Explore our HR glossary and get clear definitions of the terms driving modern HR.
The Middle Managers’ Bonfire
The following article comes from the website of the prestigious weekly magazine The Economist and is written by its staff.
Why Companies Are «De-escalating»
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Middle managers never have it easy. Their subordinates resent them for climbing the corporate ladder. Senior management blames them when the company’s strategy fails. In the popular mind, they personify corporate bloat; they are the object of satire rather than respect. Stress and burnout are their daily bread.
But lately, they have had it especially hard. Many of them are losing their jobs. In August, Google announced it had cut 35% of its managers who oversaw teams of fewer than three people. In September, Fiverr, a freelance work platform, announced it would cut managers to focus more on artificial intelligence (AI). Amazon has been cutting staff all year in its effort to improve efficiency; the most recent cut, in July, was in its cloud computing division. Mark Zuckerberg of Meta has been complaining that «managers are managing managers» since 2023.
And that’s just in the tech sector. So far this year, phrases related to «cutting management levels» have appeared 98 times in the earnings reports of companies in the S&P global stock index, double the number in all of 2022. The list includes UBS, a Swiss bank; Reckitt Benckiser, a British consumer goods company; and Air Liquide, a French industrial gas manufacturer. What’s behind this episode of «disavowal»?
One explanation is simply that, in an uncertain economic environment, companies are cutting costs.
Surveys of executives (for example, those conducted by the Federal Reserve Bank of Atlanta and the Bank of England) suggest that many plan to reduce hiring overall and invest less. Among other reasons, they are struggling to understand President Donald Trump’s constantly changing tariff regime.
Another reason stems from the pandemic. When COVID-19 first hit, companies furloughed their employees. This was followed by a hiring spree as businesses, especially in the tech sector, rushed to meet the demand for e-commerce and digital services. New managers were needed to oversee the new staff. At the same time, companies were promoting their employees excessively. In an attempt to retain good employees, they gave them management positions, even if they only had one or two subordinates, notes Bryan Hancock of the consulting firm McKinsey. The number of managers increased. The U.S. Bureau of Labor Statistics tracks 425 general occupational categories. Between 2019 and 2024, five of the ten fastest-growing categories were managerial positions.
Now companies are shedding excess staff.
Figures from Live Data Technologies, a research firm, show that since November 2022, when the COVID-19 hiring surge peaked, publicly traded U.S. companies have cut middle management positions by about 3% on average.
The number of non-managerial staff has declined similarly. But tech and healthcare companies, which ramped up hiring during the pandemic, have cut middle management at a faster rate than other employees. Other sectors hit hard by COVID-19, such as retail, have laid off a large proportion of their employees, as well as their supervisors.
What about the supposed new job eater, AI? Many companies, such as Amazon and Walmart, are promoting the use of the technology and laying off their executives. But this reduction seems to have little to do with ChatGPT. The Economist compared Live Data Technologies’ workforce figures by sector with data from the Business Trends and Outlook Survey, a survey conducted by the Census Bureau, a U.S. government agency. The survey asks companies, among other things, whether they have used AI in the past two weeks. The analysis revealed no relationship between AI use and flattening hierarchies.
AI as an ally of middle management
This could change over time. For a long time, technology has taken over some management tasks, from disseminating information to supervising workers. According to a McKinsey survey, managers spend roughly a quarter of their time on administrative tasks. These, too, appear to be subject to disruption. But in the meantime, AI could be an ally of middle management. Raffaella Sadun, of Harvard Business School, points out that effective middle managers can drive the adoption of corporate training, especially in companies trying to convince their staff to use new technology. If companies want their employees to become familiar with AI, they should retain their middle managers a little longer.
Flattening Hierarchies in Companies: A Viable Strategy or a Risky Bet?
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Iryna Krychun oversees HR operations, including policy development, employee relations, and performance management. She shares her expertise in organizational culture, employee engagement, talent management, and HR best practices through her articles.
Flattening hierarchies is the latest buzzword in boardrooms, but it is much more than a simple restructuring. As companies strive to reduce bureaucracy and remain competitive, many are eliminating management levels in the hope of becoming more efficient and agile. But is this bold change a smart strategy or a risky leap that could overwhelm teams and overburden leaders? That’s what we explore in this article.
What is De-hierarchy?
Before deciding whether de-hierarchy is the right path, it’s worth delving into its true meaning. De-hierarchy is the process of eliminating management levels within an organization to create a more horizontal and efficient structure. Instead of multiple levels of supervision (team leaders, managers, senior executives, directors), companies reduce the hierarchy so that decision-making flows more quickly and communication is more direct.
A comparison of a company’s structure before and after de-hierarchy.
The purpose of flattening is usually to:
Streamline decision-making
Reduce bureaucracy
Reduce costs
Give employees greater autonomy
Create clearer accountability
Flattening vs. Downsizing
Flattening is often confused with downsizing. The difference lies in the fact that, while downsizing focuses on reducing the workforce to cut costs, flattening specifically eliminates management levels to streamline decision-making and create a more agile organizational structure.
As with downsizing, flattening often involves layoffs, as organizations eliminate managerial positions or consolidate teams to maintain a more horizontal structure. However, it is important to understand that flattening is not simply about «cutting managers.» It fundamentally transforms how a company operates: who has authority, how teams collaborate, and how quickly ideas move from concept to action. Done right, it can drive agility and innovation. Done wrong, it can lead to confusion, burnout, and a loss of leadership support.
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Real-world example: How Amazon tackled flattening. Amazon offers one of the clearest modern examples of flattening on a large scale. As the company grew into a global behemoth, its once lean structure accumulated layers of management and processes that slowed decision-making. Under Andy Jassy’s leadership, Amazon undertook a deliberate effort to eliminate excess hierarchy and bring authority closer to the teams doing the work.
A significant part of this change involved reducing middle management levels and increasing the ratio of one-to-one contributors per manager. The goal was to streamline decision-making, reduce bureaucracy, and prevent the expanding organization from becoming sluggish and self-absorbed. Amazon also encouraged employees to report unnecessary processes through a «bureaucracy drop box,» which led to the simplification or elimination of hundreds of internal procedures.
This initiative aligned naturally with Amazon’s long-standing philosophy of small, self-governing teams, often described by the «two-pizza team» rule. These teams own products from start to finish and thrive in flatter, more agile structures. By reducing levels and broadening team ownership, Amazon aimed to maintain the urgency and flexibility of a startup, despite its enormous size.
However, this approach has not been without its challenges. Fewer management levels can mean a heavier workload for the leaders who remain, and flat structures reduce traditional career paths. Even so, Amazon’s example demonstrates how reducing levels can be used strategically, not just as a cost-cutting measure, but as a cultural shift designed to increase agility and innovation at scale.
How Downsizing Affects Employees and Culture
Downsizing doesn’t just transform the organizational chart; it also transforms how people feel, communicate, and work together. Its impact on employees and culture can be transformative, but also deeply challenging if the change isn’t managed with sensitivity and clarity.
Greater Autonomy, But More Pressure
Eliminating levels often gives employees more responsibility and decision-making power. For many, this is energizing and empowering. But autonomy comes with responsibility. Suddenly, employees are expected to make calls that managers used to handle, which can be stressful if they don’t receive training and support.
Stronger Direct Communication
Flatter structures tend to reduce the impact of the phone call. Employees have closer access to leaders, messages are clearer, and information flows more quickly. This can increase trust if leaders communicate openly and consistently.
Heavier Workload for Managers
Those who remain after downsizing often manage larger teams. While this can optimize leadership, it can also dilute attention, reduce coaching time, and overburden managers. Managers with little support can quickly become cultural weak points.
Changes in Identity and Motivation
In many organizations, hierarchy is tied to status, advancement, and a sense of belonging. Eliminating levels can disrupt this psychological architecture. Some employees may accept the change; others may feel their career paths have been erased or their roles have lost their meaning.
Risk of Uncertainty and Mistrust
If dehierarchy is associated with layoffs, it can increase anxiety. Employees may worry about job security, wonder who will be next, or question leadership’s motivations. Without transparent communication, uncertainty can spread, and morale can decline.
A More Adaptable and Collaborative Culture
If implemented correctly, dehierarchy fosters faster collaboration, fewer silos, and a more entrepreneurial mindset. Teams can become more agile, problem-solving becomes more collective, and innovation tends to increase.
Conclusion: Is flattening a viable long-term strategy?
Flattening can certainly be a viable long-term strategy, but only when it is driven by purpose, not panic. Organizations that use flattening intelligently, with a clear vision of empowerment, agility, and better decision-making, tend to emerge faster, more innovative, and more responsive to change. In these cases, a more horizontal structure becomes part of a healthy operating model, rather than a one-off cost-cutting exercise.
But flattening is not a panacea. When implemented too aggressively or without cultural support, it can overburden managers, unsettle employees, and create ambiguity around roles and advancement. While flattening often involves layoffs, companies that treat it simply as a downsizing tactic rarely see lasting improvements in performance.
In the long run, the success of flattening depends less on removing layers and more on what replaces them: clearer ownership, stronger communication, intentional leadership development, and a culture that fosters autonomy. Implemented correctly, flattening can create an organization that moves with clarity and confidence. Implemented poorly, it can weaken the very foundations on which companies rely to grow.