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What’s it: Delayering means removing a management layer, often targeted at those between the top and bottom layers. In other words, the target is middle management. As a result, the organizational structure becomes flatter with shorter hierarchical levels. It differs from downsizing, in which the company reduces employees permanently; it may involve removing layers or divisions but may not.
Delayering is useful for making the organizational structure more flexible and less bureaucratic. It also improves communication and engagement within the company. Higher empowerment and motivation are other benefits.
But, it also comes with criticism. For example, authority tends to be concentrated to fewer levels. In addition, deleting some positions means reduced opportunities for promotion.
Why is delayering important?
When a company has many layers, the organization tends to be bureaucratic and rigid. Communication must go through several layers to get to the intended person. Finally, it makes the company slow in making and implementing decisions. As a result, companies become less flexible when the business environment requires them to adapt quickly to changes.
Thus, companies get a less bureaucratic structure by removing layers in the hierarchy. As a result, the organizational structure becomes flatter. In addition, it allows communication and decisions to flow quickly along the chain of command.
Each manager will have more subordinates. In other words, the span of control becomes wider. This situation should lead to more delegation to subordinates. Existing managers give more authority and autonomy to their subordinates to reduce workload. As a result, it contributes to empowering subordinates. Thus, it leads to higher job satisfaction and motivation.
How does delayering work?
Delayering usually targets intermediate layers. Many companies may have a tall structure with many middle managers. For example, a company has a structure – from top to bottom: directors, vice presidents, senior managers, managers, assistant managers, and supervisors.
The company then removes senior managers and assistant managers from the structure. As a result, the structure becomes shorter. It consists only of directors, vice presidents, managers, and supervisors. And roles and authority are transferred to them.
In practice, how this strategy works may vary between companies. Each may have a different structure. And they take a different approach to removing those layers. For example, many large banks have multiple managers to oversee each branch. They then removed some. And they prefer to appoint a manager to oversee several branches.
Reduced bureaucracy
As it removes several managerial layers, the organization becomes flatter. Every decision goes through a faster process due to fewer managerial layers. Superiors and subordinates become closer. Finally, their communication and interactions are better than before.
Moreover, it should lead to more delegation and autonomy to lower levels. And, subordinates can have more opportunities to organize and control their work.
A wider span of control
Delayering widens the span of control of higher-level managers. And they are responsible for more subordinates.
Let’s recall the above case as an example. Say the company has two vice presidents, and each oversees three senior managers. Meanwhile, each senior manager supervises 6 managers.
As a result, post delayering, a vice president has a wider span of control. They have to supervise 18 managers instead of the 3 senior managers in the previous structure.
When is delayering adopted?
Companies usually adopt a delayering strategy when their structure is too complex and involves multiple hierarchies. As a result, decision-making and implementation take too long because it has to go through many layers.
Company staff saw the process as too long. And, their work becomes hampered because they have to go through it all. They have to deal with a lot of bureaucracy to get top management approval. And management is too slow and unresponsive to make decisions. Though, they may see a big problem in sight. Finally, this rigid structure makes the company less flexible in responding to change.
However, not all companies are compatible with delayering. When there is a competency gap between top-level and lower-level managers, removing layers can be problematic.
Let’s take the previous example. The company removed senior manager and assistant manager positions, leaving direct command between the vice president and the manager. Vice presidents may become more stressed as their roles and responsibilities increase. Likely, they will delegate some authority to the manager.
Then, because the competency gap is high, managers have low skills. Delegation doesn’t just stress them out. However, they may also make bad decisions. Inadequate competence makes it difficult for them to take on larger and strategic roles post-delegation.
In other words, delayering may be suitable for companies where the competence of managers at every level is adequate. Thus, they are better equipped to carry out greater roles and responsibilities.
What is the difference between delayering and downsizing?
If delayering involves removing layers, downsizing is making the organization smaller, for example, eliminating some unproductive jobs or units. So, the latter does not necessarily involve delayering. Companies may remove certain divisions because they are not strategic or cost centers. In other cases, the company might redesign the organizational structure.
Companies often downsize organizations during tough economic times. They need efficiency measures to survive and be competitive to face the tough business environment. By removing some unproductive jobs or units, they reduce employees and ultimately reduce costs.
What are the advantages of delayering?
Faster decision-making is an advantage of delayering. Often companies get stuck in a time-consuming and complex decision-making process. It ends up resulting in poor execution.
Thus, by removing unnecessary managerial layers, the decision-making process can be faster. This is because each decision goes through fewer layers. As a result, decisions from top-level management take less time to get to the lower-level management to be implemented.
Such benefits are important when companies face a dynamic business environment, which requires fast decision-making. So, by removing some managerial layers, they can be more flexible in adapting.
Other advantages of delayering are:
More effective communication. Because it involves fewer layers, a communication message can reach the intended person quickly. Messages from the lower level can quickly reach the top level and vice versa. Apart from speeding up the communication flow within the company, it minimizes information lost as it flows through multiple layers. Thus, subordinates have more opportunities to be heard by decision-makers when they express their aspirations.
Cost-cutting. Companies can save costs by requiring fewer layers. While they may still retain individuals, management positions are often expensive to hire. So, it can help to improve their profitability.
Motivating. Upper managers have a wider span of control. Their roles and responsibilities are increasing. On the one hand, they are more likely to empower lower layers by delegating less essential decisions and tasks. They may also give more autonomy to subordinates. On the other hand, they can focus on more strategic aspects. As a result, subordinates are more motivated because they can have more control over their work.
More accountability. Delayering not only increases the involvement of the lower layers. But, it should lead to more accountability. Lower layers have more opportunities to organize and control their work areas through delegation and autonomy. So, because they have more responsibilities, they should be more accountable for carrying out the role.
Closer contact. Upper-level managers can be closer to business customers because they don’t have to wait long for lower-layers reports. That should lead to better customer service.
What are the disadvantages of delayering?
The disadvantage of delayering is the increased workload. Roles and responsibilities are distributed among the positions. On the one hand, higher managers have to handle more subordinates. On the other hand, lower managers are also likely to get more work and responsibilities because higher managers delegate less strategic responsibilities and roles to them.
Other disadvantages of delayering are:
More concentrated control. Control is concentrated in fewer positions. Upper managers gain more control over strategic decision-making. If they are poorly competent, they can be more stressed and make poor decisions. In other cases, they may abuse their authority.
Disruption period. During the transition period, business operations may be disrupted. Each managerial layer must adapt to new roles and responsibilities. As a result, they may not be effective quickly in their additional roles.
Bad decision. Managers at each level may have wide competency gaps. Lower managers may be less capable when accepting more roles and responsibilities. Thus, when their superiors delegate some authority, it is less effective. And it can end in bad decision-making. Their accountability may also be poor, tending to avoid responsibility.
Fewer promotions. Delayering leads to fewer promotion opportunities. Since the hierarchy tends to be flatter, there are fewer positions for promotion. It can discourage those who are career-oriented.
Discouraged. Companies may remove managerial layers not to make the organization less bureaucratic and more flexible. Rather, it is for a staff reduction reason. As a result, it harms employee morale instead of motivating existing employees.
Then, it could also create a skills shortage in business. Individuals whose positions are removed may have valuable talents and skills. So, when delayering is accompanied by layoffs, it can have a negative impact on the company in the future.
