The hidden cost of cutting managers: Slower decisions, weaker teams

Often, what sits in the middle isn’t just another lawyer – it’s the engine room making the business run with cohesion, writes Roxanne Calder.

For years, in response to crises and new technology, organisations have removed the middle. During the 1990s recession, middle managers were a “natural target”. As for the 2008–2009 Global Financial Crisis (GFC), middle management roles were severely thinned. And here we are in the recalibration era: post-COVID-19, economically strained, and geopolitically unsettled. Every force pushes organisations to be more efficient. Add artificial intelligence (AI) to the mix, promising scale without layers, and it makes the case seductively simple.

In the 12 months from November 2023 to 2024, middle management was disproportionately affected by redundancies. Once again, a renewed confidence in the old decision: remove the middle. As a recruitment business founder and executive coach, I am privy to some of these challenging decisions. Except this time, we misread the moment.

Before, unnecessary ‘fat’ was cut

Today, it’s an arterial function. The more complex, distributed, and technology-enabled work becomes, the greater the need for coordination and coherence. When the middle layer weakens, it’s not just the structure that shifts. It’s how people understand what’s going on, jeopardising communication, trust and employee engagement. Leaders might set a strategy that sounds clear at the top but arrives confused at the ground level. Managers are critical for translating organisational priorities into action, clarity and connection. Employees rely heavily on their direct managers. 52 per cent of employees consider their direct manager as their most trusted source for company updates, with 63 per cent relying on their manager for support in navigating work challenges and for career coaching and feedback (72 per cent). Remove the middle layer in today’s context, and you risk organisational disintegration.

From functional to dysfunctional

For a while, the trade-off felt acceptable. Faster decisions, fewer conversations, a sense of momentum. It’s hard to argue with that. Momentum, though, is not the same as progress or quality. Performative, perhaps, “it seems to be working”, but consider the metrics. Eventually, the system feels it. In diluted decisions, 49 per cent of companies have stagnant decision styles, customer response times slowing down, employee engagement continuing to decline, poor customer retention with research indicating 9.5 per cent annual revenue is at risk globally, productivity growth slowing and delegating to offload, not to empower. The list and measures continue. Certain roles exist because the system requires them. What was removed in the name of efficiency re-emerges as risk.

An overwhelmed workforce

Structures flatten and, in the beginning, organisations probably saved money. But the work had to go somewhere. And it did. Senior leaders found themselves drawn back into day-to-day details they thought they had left behind. Latest research shows only 19 per cent of leaders have enough time to fulfill their responsibilities with the depth and diligence required. This isn’t due to the normal leadership stress; it’s directly linked to the leadership time trap. And the result, 72 per cent of leaders are now concerned about burnout.

The effects extend beyond the leaders themselves. Data shows employee trust in management has fallen to just 29 per cent. When leaders struggle, their teams feel it, undermining engagement, morale and retention across the organisation.

Responsibility also landed on the front line. Jobs seemed to contain a wider scope, fewer boundaries, and it was harder to see what “ownership” really meant. Australian workers report the highest levels of stress in the Asia-Pacific region, with a significant proportion feeling overloaded at work. The paradox of productivity: performing through overwhelm only to collapse afterwards. Overwhelm isn’t just high stress, but a distinct emotional tipping point with serious consequences for performance, motivation, and well-being.

The glue

What’s interesting is that the focus wasn’t on what middle management was doing. It was on how they looked. Too many layers. Too many approvals. Too much distance from work. In some organisations, that was valid. Yet, what really sat in the middle wasn’t just another layer. It was the part of the business that made things cohesive. Senior leaders would decide on direction; teams executed; and, in between, someone would decide what mattered now, what could wait, and how everything stayed connected without escalation. And that’s where the middle manager returns, not as excess but as infrastructure.

As for future leaders, middle management is your talent pipeline. Investing in, not disposing of, middle management is a strategic imperative. Organisations that treat it as expendable don’t just lose a layer; they weaken the very place where future leadership is formed.

Roxanne Calder is an author, career strategist, and founder and managing director of EST10.

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