The Middle Manager Multiplier

Cutting management can save costs but it's sabotaging your strategy

A recent Wall Street Journal article highlights a growing trend: “Companies are increasingly flattening their organizational structures, eliminating management layers to cut costs and boost agility.”

While this sounds efficient on paper, it’s a risky move if not done thoughtfully. As I’ve often pointed out, resource allocation isn’t just about savings—it’s about preparing for all reasonable contingencies. When management is thinned solely for budgetary reasons, organizations risk creating serious gaps in communication, decision-making, and employee development.

And while cash is always king, these gaps can create significant challenges for CEOs, especially as their organizations scale.

In my experience, the magic number is 100. For companies with fewer than 100 employees, it’s still realistic for CEOs to connect directly with employees and get everyone aligned with the vision, mission, and objectives.

But once a company grows beyond 100 employees, the dynamics shift dramatically. At this point, a critical lynchpin is introduced: middle management. Instead of communicating 1:1 with every employee, CEOs must rely on managers to translate the company’s vision into actionable plans and ensure alignment across teams.