Thanks to the confluence of the gig economy, the sharing economy, and globalization there are now more middle managers in the U.S. than ever before. In fact, since 1983, the number of managers, supervisors, and support staff in the U.S. has grown by over 90%, while the number of employees in other positions has grown less than 40%. As part of the NewtonX enterprise productivity survey with 1500 full-time American salaried employees in office jobs and 200 senior level executives at these same companies, we examined how the growth of the middle manager has affected productivity, management, and employee satisfaction.
The survey revealed that 73% of employees feel that they are overmanaged, while another 26% also felt that they are micromanaged. When asked how management affects their daily productivity, most survey respondents indicated that it negatively affected output through excess meetings, inefficient tracking processes, and unwarranted interruptions.
The insights from this article are sourced from NewtonX surveys, panels, and expert consultations. To gain access to these services visit newtonx.com.
Liberate the Employee, Do Away With the Middle Manager?
Not only do 44% of employees believe they could work better without a boss whatsoever, but even 26% of executives feel that there are too many bureaucratic layers in most organizations. If employees and executives both want to simplify and streamline office hierarchies, why aren’t more companies doing it?
The answer is that dismantling hierarchy in favor of holacracy or radical transparency comes with its own host of problems. Despite the fact that over 50% of employees said they would like to dismantle traditional office hierarchy, a look at companies that have done just that provide evidence that gives many executives pause.
Medium, for instance tried out holacracy from 2012 to 2016, ultimately abandoning it because it actually decreased productivity as employees struggled to understand a jargon-heavy and confusing new system. Additionally, as the company grew it became increasingly painful to scale with a holacratic system, and large projects would get stuck due to communication mismanagement.
Other companies have also experimented with self-management systems, but to mixed results. Zappos, which instated a no-manager ethos in 2013, is perhaps the most well-known example, but the effort had severe consequences: in 2015 managers were given an ultimatum to either get on board with the new system or leave, and ultimately 18 percent of the workforce chose to leave. In 2016, Zappos fell off the Fortune 100 Best Companies to Work For list for the first time in eight years.
This has left executives in a no-win situation: data and anecdotal evidence indicates that excess middle management decreases productivity, but doing away with hierarchy altogether also negatively impacts productivity, and can additionally increase employee turnover.
A Happy Middle: How Some Companies Are Slashing Middle Management But Keeping the Hierarchy
Excess management is costing the U.S. $3T, or 17% of GDP. Clearly, there’s need to free up employees for effective and impactful work. The most successful examples of companies doing this have all consisted of dismantling bureaucracy without doing away with hierarchy. For example, GE’s Durham plant has 300 technicians to a single supervisor, the plant manager. This plant is more than twice as productive as comparable plants in GE Aviation. While 300:1 isn’t always the right number — sometimes it’s more like 25:1 — this extreme illustration demonstrates how much more productive employees can be when they are left to just do their jobs.
Indeed, we’ve implemented a similar structure in my company, NewtonX, and have similarly seen productivity rise accordingly. While our manager to employee ratio is roughly 1:10, most managers don’t directly oversee their peers’ work, but are rather considered resources for employees due to longer tenure and experience. The ratio of actual managers to employees for us is in reality more like 25:1.
For most companies, this ratio can be daunting. Typically middle managers oversee teams of 1-4, and top managers oversee teams of 3-7 (according to the NewtonX survey). But research indicates that this ratio could be changed to at minimum 1:10, freeing up millions of employees to do actual work rather than unnecessary management.
Excess bureaucracy drags down innovation and productivity, but executives don’t have to overhaul their entire corporate structure to fix this problem. In fact, it’s not even necessary to change middle management structure throughout the whole company all at once. As GE demonstrated, it can be worthwhile to pilot a program with less management and monitor employee adoption, satisfaction, and productivity before rolling the change out company-wide.