As the economy reverts back from the 2021 hiring boom, companies are increasingly removing middle managers in favor of one leader for very large teams. For example, as opposed to marketing being led by one middle manager, outside sales by another manager, customer support by another manager, and customer success by another manager, many companies are opting to remove the layer of middle management and have one leader in charge of all of those functions without any leaders in between.
This has led to a major need for companies to increase their focus on helping their employees effectively communicate and collaborate across functions to achieve desired business outcomes. While somewhat redundant, there was still a lot of information handled by those middle managers that is now the responsibility of the employee.
Why have companies opted to remove middle managers in the first place?
The simple answer is lack of perceived value.
The logic behind creating a layer of middle management is that the guidance of a manager of a smaller team that owns and is fully accountable for their outcomes will be greater than if there was one manager for multiple functions within the organization.
This logic is sound if:
- Those middle managers know how to manage and lead people (e.g. know how to have effective 1:1’s, know how to give feedback, and know how to achieve results as a team).
- They have incentives that compliment other functions of the business and are directly correlated with achieving overarching business goals.
- All the middle managers are effective in their roles (e.g. they communicate well across functions, are willing to sacrifice individual metrics for overall business success, and they hold their team accountable).
This logic doesn’t make sense when:
- The middle managers fail to effectively manage and lead people.
- The middle managers have unintentionally competing incentives.
- The middle managers choose to achieve individual team goals over business goals and/or they have to pick up the slack for another poor-performing team.
For example, let’s say we are a recruiting company in 2021 and the market is hot. All the outside sales team needs is a pulse to close deals. There was a process that the middle manager leading outside sales followed to maintain a base level of competence but because sales are coming in from everywhere, bad habits are overlooked.
Fast forward to 2023. The market has completely dried up, and the outside sales team is really struggling to meet their goals. The CEO is begging and pleading for his team to close more deals. The outside sales team blames the economy and all these other factors for why their numbers are down. But in reality, the middle manager in charge of the outside sales team hasn’t been holding her team accountable to the standard business development process they have found to be tried and true. And now she’s out of practice at holding her team accountable, and the team is out of practice taking hard advice from their manager. This is a recipe for failure.
The CEO then asks the middle managers in other departments to help pickup the slack in sales. He implores his customer success team to focus on upselling current customers. The customer success middle manager says that she is up for the task. She and her team have devised a plan for trying to turn open support tickets and queries into opportunities for upselling.
The plan looks great, but they run into a brick wall with customer support. The customer support middle manager is incentivized to close support tickets as quickly as possible, and this clashes with the overarching business goals of upselling to current clients. To resolve this, the customer success manager has a 1:1 with the customer support manager. The customer support manager knows that him closing support tickets hurts the customer success managers goal of upselling the existing customers and closing more deals, but mentions that “his hands are tied” because in order for him to achieve his end of year bonus, he needs his time to closed ticket ratio to be under a certain level. They are at an impasse.
The outside sales manager isn’t effectively holding her team accountable, the customer support manager is only focused on his end of year bonus for the metrics he is accountable for, and the customer success manager is stressed out because her team is putting in overtime to try to pick up the slack for the outside sales team but keeps running into hurdles from the support team.
Executive teams look at this situation and have determined…screw it! Let’s remove middle managers and have one overarching manager over a wide group of people so they can adjust incentives effectively and ensure everyone is rowing in the same direction. The executive team can’t guarantee that this new model will be any more effective, but they can guarantee that it will cost a whole lot less to not have all of these middle managers than to have them.
Their logic is that if it isn’t working with middle managers right now, why keep paying for them?
In order to achieve effective cross-functional communication and collaboration, there needs to be:
- Clear accountability as to who owns what functional unit
- Training to the leaders of those functional units on how to effectively delegate, how to have effective 1:1’s, how to give feedback, and how to develop skills and competencies
- Incentives that focus on the business outcomes above everything else and a clear process for challenging and adjusting individual team incentives if unintended consequences develop from the those incentives
- Regular (minimum monthly) opportunities for middle managers/functional leaders to meet, share challenges, and collaborate (and the executive team needs to give them the grace on their individual expectations to have the time to do this).
If companies cannot effectively achieve all four of these points, they will continue to struggle to achieve effective cross-functional communication and collaboration.