Companies are cutting middle-management roles, and millennials are likely to be most affected

Companies are cutting middle-management roles, and millennials are likely to be most affected.

The latest corporate buzzword is efficiency, and it hasn’t been kind to middle managers. If you’ve got direct reports, you might want to watch your back.

“It’s always been a joke with my peers that middle management is the most dangerous position to be in,” said Cody Sandell, who lost his job late last year as a director of product management at a fintech startup.

Middle managers—non-executives who oversee employees—made up almost a third of layoffs, up from 20% in 2018, according to an analysis by Live Data Technologies for Bloomberg News.

In January, United Parcel Service Inc. announced it would save over $1 billion by cutting 12,000 manager jobs. Citigroup Inc. plans to eliminate 20,000 roles over the next several years, reducing its management layers from 13 to eight. And more cuts could be on the way; mentions of “operational efficiency” in the US reached a record high this earnings season, according to Morgan Stanley.

Meanwhile, middle managers’ confidence in their employers dropped to a record low last month—matching that of entry-level workers—as the pressure to do more with less increases, according to a report from job-review site Glassdoor.

The appeal of a lean organization has been around for decades. The concept of the “lean and mean” organization was popularized in the 1980s by General Electric Co.’s CEO Jack Welch. The term “efficiency” follows other euphemisms for layoffs like streamlining and downsizing but seems more targeted at middle managers due to their higher salaries and lack of direct contributions to projects, such as coding or making sales calls.

Mark Zuckerberg criticized top-heavy organizational structures last year when Meta Platforms Inc.'s results weakened. After a hiring spree to support his metaverse vision failed, he declared 2023 the “Year of Efficiency” and eliminated entire layers of management. “I don’t think you want a management structure that’s just managers managing managers, managing managers, managing managers, managing the people who are doing the work,” Zuckerberg told staff, according to a report from The Verge.

Elon Musk has also criticized bloated management levels. After taking over Twitter in 2022, he stated that the most “messed up” thing about the company was that there seemed to be 10 managers for every one person coding.

However, cutting middle management can lead to uncertainty. At Meta, employees’ workflows stalled after layoffs, with many anxious about the company’s direction. Managers play a crucial role in making employees feel supported and valued. Without them, some of that support is lost as higher-ups won’t have time for personalized attention.

“There are more impacts to morale that I don’t think companies quantify,” Sandell said. “It’s hard to put a value on that.”

Proving their value has long been a struggle for managers. Their days are filled with intangibles like coaching staff or building team consensus, making it harder to measure effectiveness compared to metrics like lines of code or customer retention.

Kendall Smith led a marketing team at a health-care staffing tech startup before she was recently let go after surviving previous layoffs. That was the second time she’d been let go in 14 months amid the wider Silicon Valley slump. She noticed patterns emerging.

“That middle layer is the most vulnerable because they can’t quantify their impact quite as much,” Smith said.

After surviving the first round of cuts, demonstrating her worth became a priority. She documented her efforts more often and found ways to share her work directly with top executives. Another strategy is adopting a player-coach role where managers lead teams while also directly contributing.

“I definitely focused on talking more about the work,” she said.

But in the end, that still wasn’t enough.

Live Data Technologies analyzed data from sites like LinkedIn for over 6.5 million primarily white-collar workers in North America, using machine learning to classify the seniority level associated with various job titles. When an employee leaves a company and spends over 60 days without starting a new role, Live Data Technologies uses this as a proxy for an involuntary job change.