Major technology companies are restructuring their management structures by cutting middle management jobs in an effort to reduce bureaucracy and increase efficiency. Microsoft recently announced it would be slashing about 6,000 employees, with many of those cut being individual-contributor-level engineers. This move follows similar restructuring efforts by other tech giants such as Intel, Amazon, and Google.
The Trend of Flattening Management Structures
The practice of reducing management layers, known as “flattening,” aims to speed up decision-making processes and make companies more agile. Intel’s new CEO, Lip-Bu Tan, emphasized the importance of lean teams and fewer administrative tasks. Amazon has increased its “builder ratio,” or the ratio of individual contributors to managers, while Google cut vice president and manager roles by 10% as part of an efficiency push.
Experts say that while flattening can lead to faster decisions, there’s a risk of taking it too far. “You can’t go faster and be more connected to a larger ecosystem if you’re having to go up and down a hierarchy for every decision,” said Deborah Ancona, a professor of management at MIT. Companies are trying to remove layers and spread decision-making throughout the organization so that those closest to customers or technology can generate ideas and make decisions.
Challenges and Benefits of Flattening
While some employees applaud the move towards flatter structures, others face challenges. At Amazon, managers reported having to oversee more direct reports, which led to increased reporting burdens on employees and more time spent in meetings. Yvonne Lee-Hawkins, a former Amazon HR team member, noted that having 21 direct reports made it impossible to maintain weekly one-on-ones, forcing her to cut them in half.
At Microsoft, employees generally viewed the flattening as positive, as it eliminated inefficient management layers. However, some managers had as few as one or two reports, indicating previous overstaffing in management. Gary Hamel, a visiting professor at London Business School, noted that having more direct reports could reduce micromanaging by forcing managers to hire trustworthy employees and mentor rather than manage.
The Ideal Number of Direct Reports
The optimal number of direct reports varies by company and role complexity. Nvidia CEO Jensen Huang has 60 direct reports, while Dell managers are expected to have 15 to 20. Gallup research indicates that the quality of a manager matters more than the number of direct reports for team performance. Ravin Jesuthasan of Mercer consulting firm noted that managing dozens of people becomes harder when work is complex or personal issues intersect with work.
Experts agree that while flattening can be beneficial, it requires strong management to be successful. Jane Edison Stevenson of Korn Ferry warned that flatter companies might fail to develop leaders who can integrate different parts of the organization. The key to successful flattening lies in balancing efficiency with effective management and leadership development.
