This article is about the process related to rearranging organizational structure known as delayering.
What is delayering?
It is the process where a business removes one or more levels of hierarchy from an organizational structure.
Normally, cutting out a layer, or layers of middle management, will flatten out the organizational structure.
Reducing the number of hierarchical levels in an organization reduces the number of layers of middle management. Middle management are often managers working in various business departments such as finance, marketing, or managers of different units or products within a business.
In the past years, delayering has been assisted by improvements in communication technology. That enables senior managers to communicate with and monitor the performance of junior staff as well as widely dispersed departments.
Reasons for delayering
There are several reasons why many large businesses have opted to delayer their organizations:
- Reduce costs. Eliminating middle management positions can save organizations with tall structures costs which include money spent on salaries and benefits for managers.
- Improve communication. Many businesses will remove whole layers of management to create flatter structures. With fewer layers of management, it is easier for information to flow up and down the organization.
- Increase motivation. Delayering can help solve issues with employee motivation as it widens the span of control in the hierarchy.
- Improve efficiency. By reducing the number of layers of management, organizations can make decisions more quickly and get things done faster.
- Increase employee autonomy. Delayering can give employees more responsibility and decision-making authority, which can lead to increased job satisfaction and motivation.
Delayering has been caused by diminishing the importance of the role of middle managers.
What does delayering look like?
What is the effect on a business organization of delayering?
In an organizational structure with five levels (Level 1 being at the top and Level 5 being at the bottom), when Level 2 and Level 4 are removed, then the hierarchy will reduce the number of levels from five to three. Level 2, Level 3 and Level 4 are both middle management.
The organizational structure will not be described as tall anymore as it was before the delayering. There are now only three levels left – Level 1, Level 3 and Level 5.
There is only one middle management level left which is Level 3. It is between the directors at the top in Level 1 and workers (operatives) the bottom of the hierarchy in Level 5.
After delayering, the business must be able to use its resources in order to produce a product organizing those resources into different business functions. Let’s take a look at an example of how business organizations do this.
Case Study 1: A new local councilor wants to make cuts in council spending; as a committed anti-exercise enthusiast, they target the local leisure center first. Taking a look at the list of people employed at the center, the politician has an idea. Why not fire all non-essential leisure center staff in order to do delayering and then save money? They calculate that at least 75% of employees fit this category. They write a report to be circulated to the council's sports and leisure committee. At the next meeting of the council's sports and leisure committee, the new councilor’s proposals are rejected. It is pointed out that the recommendations put forward would leave the leisure center unable to meet its operational and legal commitments. In particular, the committee stressed the vital roles played by the following leisure center departments: Administration: Reception, filing, providing management reports, data input, etc. Marketing: Promoting the center’s activities to the community. Technical: Maintaining effective operation of center facilities, including health and safety, etc. Finance: Record-keeping of all financial transactions. The new councilor was cautioned about coming up with such unworkable ideas in future.
Delayering – Evaluation
Advantages of delayering include:
- Reduces business costs. This happens thanks to removing levels of management because costs are saved on the salaries and benefits of middle management.
- Improves the speed of communication flows. Flattening hierarchical structures shortens chains of command are reduced improving communication through the organization. Decision-making should be quicker, so more effective.
- Improves opportunities for delegation. Increased spans of control and greater empowerment encourages employees to take on wider responsibilities. This helps develop workers’ skills who are given more trust by managers. Senior managers are also in closer touch with what is happening in the business; hence they will be able to delegate more due to less remoteness from the bottom level.
Disadvantages of delayering include:
- Redundancy payments. This is a ‘one-off’ cost of making middle managers redundant because they lose their jobs without making any mistkes.
- Overloads staff as their workload increases. Larger teams and decision-making taking longer can be counter-productive having negative effect on the quality of work. Wider span of control after delayering will most likely reduce the effective management of subordinates and create problems for meeting deadlines. And, increased workloads for managers could lead to overwork and stress.
- Decreased job security. Fear that redundancies might be used by Any intention of the business to cut costs could would cause fear of redundancies. Higher anxiety and increased insecurity among the managers who are worried about losing their jobs or being demoted may harm morale and negatively impact productivity of the whole firm.
Common mistake about delayering
Many people confuse the terms delayering and downsizing. Delayering is not downsizing.
Delayering means removing at least one level of management in the hierarchical structure without anyone necessarily losing their jobs.
While downsizing involves a reduction in the number of workers to decreased size of the business.
Overall, delayering can be a powerful tool for improving organizational efficiency and effectiveness. However, it is important to carefully consider the potential downsides before implementing such a change.
