Mass layoffs often hit middle managers. The cuts are largely short-sighted

Big layoffs at US companies continue to proliferate as employers have handed pink slips to workers by the hundreds, sometimes thousands. 

In January alone, eBay laid off 1,000 workers, and Amazon announced personnel cuts at several of its subsidiaries, including 500 at Twitch and a few hundred more at Prime Video and its film studio MGM. Citigroup announced that it will lay off 20,000 workers by the end of 2026. The retailer Macy's will eliminate more than 2,000 jobs and close five of its stores, and the Los Angeles Times laid off at least 115 employees, cutting 20% of its workforce, in what one worker described as "chaos". It's just a small sampling.

Layoffs can hit anyone, from the entry level to the C-suite. Yet experts say the first wave of workers to go in mass dismissals typically are the much maligned, but always necessary, middle managers. 

These workers do most of the people management in a company, and in recent years, their responsibilities have grown amid the difficult dance of remote management, says Bill Schaninger, senior partner at Modern Executive Solutions and author of Power to the Middle. In addition to managing the workload and skill development of their direct reports, many are also responsible for protecting their teams' mental health and ensuring inclusion and equity in nearly every aspect of working life.

If middle managers are so essential, then why are these jobs frequently treated as disposable? 

Along with saving busineses money – managers cost more than their employees – some companies also see a strategic reason to cut them. Removing middle managers flattens organisational structure in the service of making companies more adaptable to changing business priorities – a kind of "delayering", says Amanda Jones, professor of human resources management at King's College London. "There's a belief that the panacea is a flat organisation, where we can make decisions quickly, we can have shorter hierarchies and we can have bigger spans of control." 

But although budgets may temporarily relax and management may be able to inflate their corporate power, especially in a time of transition, ultimately, Schaninger says "more often than not, [companies] will suffer mightily".

"The more optimistic view is that taking out these layers … makes organisations more agile, increases efficiencies and reduces the wage bill," says Jones. "But with that, you lose certain things."

One problem is brain drain. Companies haemorrhage the expertise and specialisation of middle managers, who hold a great deal of institutional knowledge and interpersonal skills. And when there aren't enough experienced middle managers around, there is little opportunity for remaining workers to develop their skills and make up the difference. 

Younger employees may also find their plans thwarted, says Jones. Early-career workers hoping to climb the ladder can mentally check out; in other cases, they may engage in more aggressive competition for the scant remaining roles.

And despite intentional delayering, companies still need someone to manage the people who remain. Rather than hiring back experienced and expensive people managers at the mid-level, they may promote junior employees who aren't equipped for the job, through what Schaninger says are "battlefield promotions" – when traditional the promotion process is skipped due to extraordinary circumstances.

Yet he says these workers usually aren't up to it. "We're often putting people into these roles who are decent individual contributors or decent technically, but terrible at leading." Eventually, he adds, workers will leave.

We're often putting people into these roles who are decent individual contributors or decent technically, but terrible at leading – Bill Schaninger

Ultimately, cutting middle managers can backfire. Short-term gains may be good to take stress off payroll and please shareholders at first, but the long-term results are counterproductive in many instances. In the end, cutting managers to slash costs seldom saves money. Bills may go down, but low employee engagement and lack of experience will cost the company in the long run.

"I'm seeing that companies with the highest level of employee engagement are outperforming companies that have much lower employee engagement," says Bill Castellano, chair of the department of human resource management at Rutgers University, US. And it's good managers who keep employees engaged. Most companies compete with their human capital, he says, and employers seem to have lost sight of this.

After layoffs, the skills of the remaining employees should match business goals, says Schaninger. But that's theory, not reality – and it doesn't pan out when companies are left with executives and individual contributors. Firms often won't be able to accomplish their goals post-staff cuts. 

"If you're going to have less people, those who are left should be better matched to what's coming in the future. In my experience, that very rarely happens," he says. "More often than not, [companies are] lousy at figuring out who should stay."

-bbc