companies are supposed to be as efficient as possible in the name of maximizing profit so
then why the [ __ ] are so many bloated with middle management and why are they likely to
outlast everyone else with the simple hack of job security everybody thinks
the middle managers are all idiots like everybody hates little man if you listen
to every activist investor or business manager trying to turn a company around you won't have
to wait long for them to talk about cutting out middle management as one of the steps in
their plan to return a company to profitability hierarchical corporate structures where senior
executives are separated from the front line staff by multiple levels of Vice Presidents
managers and team leaders are falling out of fashion overly complex management structures
are frequently satirized as a relic of outdated Corporate America for its first six seasons the
Scranton branch of Dunder Mifflin reported to David the CFO of the company tomorrow
yes a Chief Financial Officer has no business getting involved in the day-to-day operations
of a sales branch that should be handled by an operations manager like a chief operating
officer or one of their reports I don't know if this was an intentional addition
by the showrunners but it's hilarious because of how common it is for people in companies
with complex corporate structures to end up with misaligned roles like this no real business wants
to be Dunder Mifflin they want to be like the tech companies that pioneered flat management
structures and are now worth trillions a survey conducted by researchers at the Wharton School of
Business on 300 major American companies found that corporate hierarchies were indeed getting
flatter with fewer positions between the CEO and the entry-level staff you might think that's a
bad sign for the career prospects of the middle manager but you would be wrong middle managers
aren't going anywhere and they actually have more job security than you do for three big reasons
the first reason is that middle management is actually important management hierarchies were
adapted from the military command and militaries throughout the ages have used them because they
were work according to an article published by the Wharton School of Business flight organizational
structures led to underperforming business performance in startup companies which were
the organizations most likely to adopt this style the research found that structures without middle
management were actually less agile than companies that kept a typical corporate hierarchy when teams
get too large they are prone to spending too much time on meaningless collaboration instead
of achieving objectives and management is spread too thin to give support to their team or provide
adequate oversight managers that oversaw six or more direct reports and answered to
a senior manager that also had six or more direct reports both had less capacity and less pressure
put on them to closely monitor issues in their team meaning that underperformance malpractice
and fraud was more likely to occur and go unnoticed with companies that did away with
middle management their nose FTX and wework all made a very big deal about their flat management
structure interactions with the superior are usually not negative smaller more organized teams
also make getting feedback permissions or simple face time with a boss easier instead of promoting
a culture where staff and large teams needs to fight amongst one another for the attention of
their boss the author of the article also pointed out that thanks to the power of compounding most
companies don't even need that many levels of management if you were a manager with six
employees you could place them all directly under you in a flat management structure or you could
have two middle managers each with two analysts of their own the average manager in the first model
which is only you has to look after six employees the average manager in the second model only has
to look after two there are 15 different ways the team in the flat management structure can
be arranged making planning delegating tasks very difficult in the hierarchical structure
there is only one way a team can be arranged making it clear who is in charge of what all
of these benefits come with adding just one more layer of management now sometimes this
does go too far and corporate structures can easily get too hierarchical but this is just
the first reason so it's time to learn how money Works to find out why middle managers aren't going
away no matter how much people make fun of them this week's lesson was sponsored by brilliant if
you can't Outlast your middle manager you might as well become one and there's no better way to
prepare for that than becoming Smarter with brilliant of course being a middle manager
requires you to have a broad understanding of a variety of topics fortunately brilliant has you
covered they offer courses on applicable topics in today's work environment including programming in
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can take their course on neural networks which can equip any product manager with the tools
to lead the development team and a technology company the teaching method used by brilliant
encourages Hands-On education making the process both enjoyable and straightforward rather than
feeling like a burdensome homework task it comes across as an engaging game that's educational the
most convenient aspect is the flexibility to study from any location whether it's on your smartphone
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the second reason that middle managers are going to outlast all of us is because they are one of
the best tools that companies have to motivate staff middle managers can be good at making sure
that staff stay focused by rewarding hard-working employees and punishing Slackers but even if you
have a completely useless middle manager their mere existence is enough to motivate people that
want to move up the corporate ladder according to a 2022 workplace survey conducted by Pew research
the second most common reason that workers gave for leaving their job was no opportunities for
advancement a flat management structure means that there are fewer senior jobs for people
to progress into and there is more competition from their peers for what few positions do open
up the report found that almost as many people were leaving their job because there were no
advancement opportunities as there were who left because they felt their pay was too low if you
ever find yourself running a company that wants to cut down on Staffing costs one of the most
effective things you can do is actually introduce more managers managers are usually paid more than
non-managers but if it lowers staff turnover it can pay for itself easily advertising a job
opening to replace no employee costs on average four thousand seven hundred dollars according to
benchmarking data from the society for human resource management that is just the cost to
advertise the new position survey respondents in the study reported spending as much as three times
a position salary to onboard a new staff member once all soft costs were accounted for hiring
for a new position takes time away from the hiring manager and an HR team there are background checks
onboarding procedures and training times before the new employee will be as good as the outgoing
employee if you want to be a smart business owner you can avoid this by giving your staff
what they want a promotion and the more levels of management you have in your organization the
more promotions they are to go around the best part is you can even pay them less managers earn
more than non-managers but they usually earn less than new hires who can negotiate their
wage upon entering the business employees that move companies every two years on average earn
fifty percent more than their peers who stay at their companies long term that's why if you are an
employee you should always be on the lookout for a new job but if you own the company you should
be trying to keep people around for as long as possible the third reason that middle managers
will Outlast us all is because most of the hiring and firing in a company is done by these people
large company layoffs come into varieties the first is a top-down restructuring where the
board of directors or major investors will demand a shake-up in senior company leadership starting
with the CEO and the rest of the c-suite this can happen because the CEO was incompetent or
fraudulent in their work and the directors think they will get a better result with new leadership
the average tenure of a Fortune 500 CEO is just five years according to record from the Harvard
Business Review 71 percent were fired only 28 of Fortune 500 CEOs left their positions on
their own terms and the remaining one percent died while having the job after all their average age
was 58 and it is a highly stressful job senior managers can also be fired if their company is
acquired or merged with another company there is no reason to have two sets of c-suite employees
so in the case of an acquisition or a merger the new board of directors will meet to decide who is
kept and who has paid a nice fat Severance that second type of company wide layoff is a reduction
in force which occurs when company revenues are down and less staff are needed for Daily Business
operations these removed employees from the bottom up and Senior Management will usually delegate the
decisions for who to lay off to Middle managers who have a better idea of who the strong and
weak performers are on their team despite the big talk from some activist investors middle
managers are usually the last people targeted during layoffs and since they are also full-time
employees they are harder to fire individually as well so if middle managers actually do offer
value to their companies and have such good job security then why are they always the target of
ridicule most of the time it's because companies don't hire middle managers for the right reasons
a good middle manager should be able to take the long-term vision for the company set out by the
CEO and translate that Vision into actionable duties for their team to perform and after that
their job is to make sure that their team has everything they need to perform those duties a
lot of middle managers are instead High tired for three of the wrong reasons the first reason is to
manage processes instead of people a good middle manager should be a One-Stop point of contact for
all of their subordinates for all of their duties if a sales team has one manager that manages their
sales performance another manager that manages benefits like pay insurance and leave and another
manager that manages training the sales team is going to get confused over who to talk to
about what companies trying to make this flawed system work will use phrases like the Matrix
organization or dotted line reporting so if you hear these terms you might be in for a bad time
the second incorrect reason that companies hire middle managers is to reward good employees even
though they don't need another manager a survey by McKenzie and Company on middle management found
that Personnel in these positions were more often wasted when there wasn't a need for a manager
level position at all employees in these roles ended up doing just the same work as the team
below them most of them causing dissatisfaction in higher job stress because they are working
two jobs at once if new management positions are created existing management positions need
to give a up some of their power to the new people below or alongside them in the corporate structure
or else these positions become meaningless if a person is given a management title but
no agency it can also be confusing for their subordinates to know who to talk to the third
reason middle managers get their position if the old Dilbert principle a Dilbert popularized by the
satirical cartoonist Scott Adams is someone who was a high performing employee who got promoted
over and over again until they were given a job that they weren't good at anymore since they are
no longer a high performing employee they won't get promoted anymore so they end up spending most
of their career doing a job that they are not good at more people than ever are passing over
promotions because they would rather do a job that they are good at rather than take on the
stress of a more senior position some employees are even taking advantage of low stress roles
that let them work from home or work two or more full-time jobs at the same time many have worked
out that they would get paid more and still work Less hours than their manager who would
do their own work while also looking after their subordinates management is a unique skill that
companies are going to find harder to fill because people realize that there is more money to be made
in easier roles with less stress so if you want to be a middle manager don't let the world shame
you it's a hard underappreciated job but you will always be needed now the final reason that middle
managers will Outlast a stall is because middle management roles are easy to make and hard to
get rid of as companies get older go and watch my new video about how to start a company that
will last 1000 years over on how history works to see this process in action if you want to watch
these videos entirely and get daily articles that will never be made into videos for YouTube then
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