The Rise of Flat Management and the Strain on Middle Managers
As more companies adopt artificial intelligence (AI), a noticeable shift is occurring in corporate structures. One of the most significant changes is the reduction in middle-management positions, which is placing increased pressure on those who remain in these roles. This trend is part of a broader movement toward flatter organizational hierarchies, where fewer levels of management are seen as a way to streamline operations and boost efficiency.
According to recent analysis, the push for flat management styles is gaining momentum across various industries. Companies are cutting back on mid-level managers, often through attrition rather than direct hiring. Instead of replacing departing managers, organizations are expanding the responsibilities of existing ones. This has led to a situation where middle managers now oversee twice as many junior employees as they did five years ago.
Data from Gusto, a payroll software company based in San Francisco, highlights this shift. In 2019, mid-level managers typically had an average of three direct reports. By the end of 2024, that number had nearly doubled to six. While this may seem modest compared to the large teams managed by executives at tech giants like Amazon or Apple, it’s important to note that Gusto’s data comes from 8,500 small businesses, which generally have smaller teams.
Nich Tremper, a senior economist at Gusto, noted that this trend is “broadly across the economy.” He explained that many businesses, especially in the service sector, have been reducing mid-level management roles as a cost-cutting measure. This is particularly true for smaller companies that needed to find ways to reduce labor costs after the pandemic.
The role of middle managers has long been a subject of humor and criticism, as seen in shows like The Office, where their inefficiencies are played for comedic effect. However, research suggests that having more managers can actually lead to higher productivity. Junior staff often benefit from the mentorship and training provided by close relationships with their supervisors. As middle-management ranks shrink and team sizes grow, however, this support system becomes harder to maintain.
The relationship between AI and the decline of middle-management roles is complex and still debated. Many AI tools are helping managers perform their duties more efficiently, including tasks such as hiring and promotions. Some AI advocates argue that these technologies can free up time for managers to focus on more strategic, face-to-face leadership activities.
However, the impact of AI is not universally positive. Companies like Meta have openly stated their intention to use AI to replace mid-level coders, while also laying off thousands of employees as part of their efforts to flatten organizational structures. Similarly, Amazon CEO Andy Jassy has indicated that AI could lead to future layoffs, and he has expressed a desire to reduce bureaucracy within the company.
Beyond AI, other factors may be contributing to the decline of middle-management roles. For instance, Gen-Z workers are increasingly choosing to avoid promotion into managerial positions. They value work-life balance and prefer to stay in lower-ranked roles where they can leave their responsibilities behind at the end of the day. This shift could be accelerating as senior leaders choose to leave some mid-level positions vacant, instead assigning additional duties to existing managers.
While flat organizational structures are often praised for their efficiency, there are potential downsides. A 2015 article in the Wall Street Journal emphasized that what truly matters is the quality of a manager, not the structure of the organization. Additionally, middle managers are facing growing burnout due to increased workloads, and adding more responsibilities to their roles is unlikely to improve the situation.
Despite its advancements, AI is not yet capable of fully replacing human leaders. While it can handle certain tasks, it lacks the nuanced judgment and emotional intelligence required for effective leadership. As companies continue to embrace AI, it remains to be seen how this technology will shape the future of middle management—and whether it will ultimately lead to more efficient, sustainable workplaces.
