CHAPTER TWENTY-THREE
Slimming Management’s Midriff
A WIDELY QUOTED ARTICLE in the Harvard Business Review thirty years ago asked, “Is Middle Management Obsolete?” and answered a resounding yes. But instead of disappearing or even shrinking, middle management has been exploding in the last few decades. In many companies the “middle” between the first-line supervisor and the corporate top has been growing three or four times faster than sales, even before adjustment for inflation.
The growth hasn’t been confined to big business; middle management in small and medium-size companies may have grown even faster: since thirty years ago many of these companies had no “management” except the owning family. And it hasn’t been confined to business; middle-management growth has been even greater in government, the military, and a host of nonprofit institutions. Thirty years ago the community hospital of 250 beds had an administrator (often an elderly physician retired from practice) and a director of nursing. Now it also has three or four associate or assistant administrators, a comptroller, and half a dozen “directors”: of the medical lab, of X ray, of physical therapy, of food services, of data processing, and so on. A liberal arts college I know had, in 1950, a president, a dean, an assistant dean of students who also handled admissions, and a chief clerk who kept the books. Enrollment has doubled, from five hundred to one thousand, but administrative staff has increased sixfold, with three vice-presidents, four deans, and seventeen assistant deans and assistant vice-presidents.
Some of this growth is healthy. Thirty years ago, middle management was overworked and overaged, following twenty-five years of very low birthrates and twenty years (beginning in 1929) of low hiring and slow promotions. And of course all institutions have expanded tremendously since then, with both population and the economy growing at a fast clip. Some of this growth has been imposed from without. Of the three new vice-presidents in one community hospital, one works full time on labor relations, one on government regulations. And business has grown in complexity and new performance demands. The computer which the Harvard Business Review thought would make middle management obsolete has instead spawned a very large number of new middle-management jobs.
But a large part, perhaps the major part, of this growth has been inflation pure and simple. The inflation in management titles has been even more severe these last thirty years than the inflation of money. In the liberal-arts college of 1950, for instance, five secretaries did the same work now being done by seven or eight deans, assistant deans, and assistant vice-presidents—and did it very well. The head of Letters of Credit in a large commercial bank was then a “supervisor” or at most a “manager"; he is a senior vice-president now. There were many large companies with only one vice-president. And title inflation has been even worse in the military and in state and local governments.
Demographics pushed for rapid growth in middle-management jobs and titles, especially in the last ten years, when the baby-boomers entered the managerial labor force. As younger people entered in large numbers, older people in the organization had to be given promotions to make room. And as entrance salaries for the young, highly educated ones went up, the older ones had to be given corresponding raises and titles to go with them.
As a result middle managements today tend to be over-staffed to the point of obesity (and by no means only in the United States—Europe may be worse). This slows the decision process to a crawl and makes the organization increasingly incapable of adapting to change. Far too few people, even in high positions with imposing titles, are exposed to the challenge of producing results. And it isn’t only in the armed services that “support” has grown to the point that it overshadows the combat troops and employs many more people. A good many businesses large and small have become equally bureaucratic and equally suffer from gross overweight around the midriff.
Yet by the late 1980s the supply of young people is going to drop sharply as the children of the baby bust replace the baby-boom children in professional schools. By the end of the decade the supply of young management candidates may be 30 percent below what it has been in the last several years. Not only will it become progressively easier to correct middle-management bulge; it will become progressively more important. To maintain the present level of middle-management jobs, let alone continue expanding, would only lead to further bidding up management wages and further inflating management titles. Now is the time to start middle-management weight control.
One means is attrition. As a job becomes vacant through retirement, death, or resignation, don’t automatically fill it. Don’t “make a study” either. Leave jobs open for six or eight months and see what happens; unless there is an overwhelming clamor for filling the job then, abolish it. The few companies that have tried this report that about half the “vacancies” disappeared after six months. A large university that is using the same approach reports similar results.
Above all, use attrition to cut down on the number of managerial “levels.” In the past thirty years levels have increased even faster than middle-management jobs. In the large university, which is now trying to reduce management, administration levels have been growing twice as fast as administrative staff positions (which in turn grew almost three times as fast as student enrollment). And similar or worse ratios can be found in many large businesses as well as in research labs. Every additional level, however, increases rigidity. Each slows the decision-making process. And it is a law of information theory that every relay (that is, “level") halves the information transmitted and doubles the noise. Levels should increase much more slowly than numbers, if at all.
The justification for this managerial growth will disappear: We will no longer have green people who must be promoted fast into positions for which they are inadequately prepared and who then don’t stay long enough in the jobs to become proficient before being promoted out of them again. With the age structure of the managerial population changing rapidly—the median will be above forty in 1990; in the early 1980s it was in the very low thirties—the “ninety-day wonder” in management is about to be replaced by people with years of experience. Indeed we may well see a return to the old rule that people aren’t ready for a promotion unless they already know enough about their new job to perform it without supervision after a very short time. And the “span of control” can then be substantially widened as subordinates will be expected to take responsibility for upward communications and for self-control. Then, as attrition creates a vacancy on one level, one abolishes the level.
A second way to reduce middle-management bulk is to substitute job-enlargement for promotion. In the last thirty years, and especially in the last ten or fifteen, we were almost forced to emphasize promotion. As recently as 1960 senior managers tended to be quite old in most organizations. And because of the low birthrates between 1925 and 1950 and the even lower hiring and promotion rates during most of that period, there wasn’t nearly enough middle management around to replace them, let alone to provide managerial staff for rapid expansion. Hence from 1960 on young people had to be promoted as soon as they showed “promise.”
But for the near term the pipelines are full. How much promotional opportunity is there, for instance, for the eager and brilliant vice-president of thirty-one at a large commercial bank when the senior VP to whom he or she reports is thirty-eight, the executive VP forty-six, and the president fifty? Or for his or her counterpart in academia, the assistant dean of twenty-nine whose dean is thirty-four, the provost forty-five, and the president forty-six? The one and only way to provide satisfaction and achievement for these young managers and executives—and for the even younger people working under them—is to make jobs bigger, more challenging, more demanding, and more autonomous, while increasingly using lateral transfers to different assignments, rather than promotions, as a reward for outstanding performance.
Twenty years ago we built into the performance review of managerial people the question, “Are they ready for promotion?” Now we need to replace the question with “Are they ready for a bigger, more demanding challenge and for the addition of new responsibilities to their existing job?”
(1983)