Engagement Success

Middle management cost cuts: A fad diet or sustainable healthy eating?

01 March 2018

Over recent weeks the business pages have been full of stories of the big retailers cutting costs out of their middle management layers.

“Tesco to shed up to 1,700 jobs in new management shake-up. Tesco is stripping out a layer of management from its stores in a move that puts up to 1,700 jobs at risk, in the latest effort by the UK’s biggest supermarket chain to cut costs by £1.5bn”

“Morrisons to cut 1,500 management roles. Supermarket to have fewer managers and more staff on shop floor and tills to save costs”

“Sainsbury’s to axe thousands of store management roles. Retailer says cost-cutting drive will affect thousands of roles but headcount will stay the same”

“More than 800 jobs at risk across Asda stores. More than 800 Asda jobs are at risk after it emerged the Walmart-owned supermarket has launched a consultation with stores over slashing management positions”

To some degree this just reflects current trading conditions and the ongoing impact of Brexit – something has to give and customers aren’t keen on higher prices. It is also good to see, in the headlines at least, that the orientation is to put some of the costs back to where they make most difference, in customer-facing roles.

However, a trip through history tells me that in whatever sector you operate this has been a constant theme every couple of years/ 3-year planning cycle. There is a need to cut costs and to do it quickly. Usually under some catchy programme name that in reality is just code for ‘cost cuts’. Almost always they are taken out of the middle-management layer (in central offices often or area/ regional/ divisional/ sector/ market roles supporting stores), which begs the question, where are all these costs coming from if they have been cut before? I get the sense that this ‘fatty middle management layer’ gets put on a ‘fad diet’ but then discipline is lost and before you know it is back to square one. I would strongly propose a requirement for sustainable healthy eating!!

There are many occasions when managers, despite their best efforts, simply get in the way. They don’t mean to, they just do.

Sometimes you have to get a message out that requires immediate and clear action – health & safety, regulatory etc – and, despite your best efforts, managers put their own spin on it, often diluting the message. Other times you want to hear opinions and thoughts from the front line – on a new product launch or new campaign, for example – and managers collate the input for you. What you end up with is a watered down version of truth and a manager’s spin on it.

The ‘Fatty Middle Management Layer’

I think the problem is pretty well understood. I’ll call it the ‘Fatty Middle Management Layer’. Spans of control necessitate that there are layers of management between the strategic leaders of the organisation and the most important people in the organisation, those frontline colleagues who are facing your customers every day of the week. These middle managers are almost always hard-working and trying to do a great job. However, a variety of factors – interpretation, process, understanding – means that they can, at times, have a detrimental impact on the outcome. The best businesses have great leaders, clarity of vision, talented managers, deep market and customer knowledge but even they will recognise this is a problem.

Middle-managers facing their boss??

I think middle-management is a tough gig. The majority of these colleagues have worked their way up and hit the choice of facing their boss or continuing to face the customer. Let me explain. The best people realise that facing the customer and meeting their needs is what makes them great and what gets them promoted. However, once they get to management level they face a dilemma. Do they continue to face the customer (albeit through their team) or do they face their boss (usually the next level up middle-manager)? The reality is that self-preservation means a large proportion start to face their boss. They find themselves delivering what their managers want to the timings their managers set. Sometimes this aligns with the customer but over time they often disconnect from the customer and the ‘Fatty Middle Management Layer’ is strengthened.

Millennials and new tech – Changing the game?

Do you believe the travel brochure or take your guidance from someone who reviewed the hotel on Trip Advisor? Do you believe your doctor or search Doctor Google to understand for yourself? Do you fill in the staff survey and want to see the results emerging in real-time rather than waiting eight weeks for a full cascade briefing? People, especially millennials, now expect to receive information in an instant. The role of the layers in-between is being challenged every day of the week in the way people simply now live their lives. The truth is that world is going digital. The choice you now have is how do you participate in it?

You look at this summary and it is hardly surprising that middle-management is the place organisations are going to go when they need to become more efficient. However, the fact these costs swell again suggests that the problem is not really addressed.

Sustainable Healthy Eating
Change your mindset. People in your organisation are not ‘employees’ who you tell, cascade and listen to. Start a new way of thinking. Colleagues with shared common goals and open forms of participative communication. There will always be leadership and senior leaders. It is a critical part of business success. I also believe the middle-management layer will always have a role but it has to be different than it has been in the past. I would stop thinking about spans of control and simple up and down communication and management. Rather, I would think about the real value-add of middle-management and start to think about how you develop this as a muscle in your organisation. It will require different and new skills but it will be far more stimulating for people and I bet you’ll find a few athletes in your organisation you did not know you had.

So yes, cutting costs is part of business life and I’m sure the cycle will remain for many years and CEOs to come. However, in the next 10 years I believe the best businesses will be those who are able to embrace the ever-changing workplace and engage with their colleagues in a modern digitised world.