U.S. public companies have downsized their middle manager ranks by about 6% since the end of 2021, a new analysis finds.
The Wall Street Journal cited data from employment-data provider Live Data Technologies, which analyzed over 20 million white-collar workers and found senior executive ranks have also declined by nearly 5% during the same period.
Streamlining supervisor and executive ranks may create immediate efficiencies, but it can also lead to cultural challenges. According to The Wall Street Journal, aspiring managers are finding it harder to secure promotions as higher-level positions become scarcer. Some former supervisors have transitioned into nonsupervisory roles, often involuntarily, while others are switching industries to maintain their management careers.
Meanwhile, companies are grappling with how to inspire employees who feel stalled in their professional growth and disconnected from their teams. About 2 in 10 employees feel strongly connected to their workplace culture, a Gallup poll found this fall.
Elimination of managerial roles can also obscure the increasing difficulty of these positions. "The trimming has made one of the toughest corporate jobs harder," according to The Journal. Data from Gartner shows that managers now oversee nearly three times as many employees as they did in 2017. Additionally, LinkedIn's latest Workforce Confidence survey reveals that roughly 30% of workers feel their bosses are too overwhelmed to provide adequate support.
AI is another driving force behind these changes. Experts suggest that people managers, rather than process managers, are better positioned to adapt as technology automates work. Gartner forecasts that one in five companies will use AI to flatten their organizational structure, potentially eliminating half of middle-management roles through 2026.
Health systems are also feeling the pressure to streamline upper management. Becker's has covered system decisions to pare down upper ranks, combine executive roles and/or streamline operating models.
While eliminating executive roles may seem like a practical cost-saving measure, it can significantly impact morale, operations, and organizational effectiveness. In recent years, COOs across industries have faced heightened job insecurity, with some companies eliminating the role entirely — a trend Becker's Healthcare founder Scott Becker questions.
"First, CEOs don't have the capacity to engage in close day-to-day management and need COOs to oversee the daily overall operations at systems and hospitals," Mr. Becker said. "Second, CFOs have involvement in overall strategy and operations, but first and foremost must make sure the financial ship is in order. This is a multifaceted and very complex job today."
Some health systems, in line with this thinking, are looking to reinvest in their managerial ranks given how many people these roles can influence and the challenges brought by high turnover and the loss of institutional knowledge.
Such is the case at UCSF Health in San Francisco. Corey Jackson, senior vice president of human resources and associate vice chancellor of human resources, told Becker's the system has adopted a training program for managers focused on developing the skills they will need only today but as far out as 2030.
"You have a lot of new people coming into healthcare, and you have to have strong managers and leaders. And a lot of the managers on the clinical side are also at the bedside," Mr. Jackson said. "So that's really important too, to have those people with that knowledge, that institutional knowledge, that clinical knowledge out there."