Middle managers are crippling the economy

Middle Managers

There tends to be two approaches to the idea of middle managers:

  1. This is where the real work is done and the trains keep moving.
  2. They’re mostly sucking halfway-decent salaries and doing absolutely nothing.

There are other perspectives on middle managers, sure — but most tend to fall into those two camps. (1) is usually what middle managers say about themselves, and (2) is usually those that report to middle managers. Executives vary between (1) and (2) — if you’ve got a middle manager who hits targets for you and deflects the bullshit, you probably say (1) a lot. If your margins are stinking up the joint in a quarter and you’re looking to wield the axe, you probably say (2). Work is fickle.

Now look, middle managers have it tough. Executives don’t have to manage up (and often barely manage down) and rank-and-file employees don’t manage down. Middle managers are some of the only people in a company trying to go in multiple directions. That is hard.

For my money, though, middle management is useless. If your job is to “make the trains run” or whatever, then what happens when your company buys a CRM like Oracle? Now your executives can go to Starbucks, open an app on the line, and see all the numbers they need to run their business. What value are you now, middle managers?

Answer: not much. And now we’ve got some financials behind it too.

Middle managers: Spans of control

They might well be. Here’s a new article on HBR entitled “Excess Management Is Costing The U.S. $3 Trillion Per Year.” That doesn’t seem like a good thing, so let’s explore more. Let’s start by setting up the math:

Here’s the arithmetic. According to our analysis of occupational data provided by the U.S. Bureau of Labor Statistics, there were 23.8 million managers, first-line supervisors, and administrators in the American workforce in 2014. (This figure includes both the public and private sectors but does not include individuals in IT-related functions.) That works out to one manager and administrator for every 4.7 employees. Overall, managers and administrators made up 17.6% of the U.S. workforce and received nearly 30% of total compensation.

This makes sense so far. There are similar numbers in this article.

Alright, now let’s find certain “vanguard” operational models, such as a GE plant in Durham, North Carolina. In this plant, 300 technicians all have one boss: the plant manager. So the ratio goes from 4.7-to-1 (pull quote) to 300-to-1. But productivity must suffer, right? Naw. The Durham facility is the most productive GE Aviation plant in the world — by a factor of 2 to 1.

So maybe we can reduce spans of control. Does that mean we need all 23.8 million managers in the U.S.? Likely not.

Middle managers: How many do we really need?

300-to-1 isn’t manageable for most companies as a ratio, but try this quote from HBR on for size:

The experience of the vanguard suggests it should be possible to double the ratio of employees to managers and administrators, from 4.7:1 to 10:1. Doing so would free up 12.5 million individuals for other work that is more creative and productive.

OK. 10.1 seems reasonable. I’ve worked at a lot of places where middle managers tended to have 8-12 direct reports.

Now here’s where the math gets interesting:

In total, then, there are 21.4 million employees in the U.S. workforce — 12.5 million managers and the equivalent of 8.9 million individual contributors, who, through no fault of their own, are creating little or no economic value. This means the U.S. could achieve current levels of economic output with 15% fewer people in the labor force. That would, in effect, boost GDP per worker from $120,000 to $141,000.

Again, these numbers aren’t surprising. It’s similar to some stats in this article.

There’s 125.51 million full-time employees in the U.S., and 21.4 million — about 17 percent — basically create no value. Hmm. Sad. I’d assume most are middle managers.

Middle managers: How much are they costing us?

Well, you know from the title of the HBR article, but here’s the deal:

The goal, of course, isn’t to put 21.4 million people out of work, but to redeploy them into value-creating activities. If these individuals were contributing an average of $141,000 each to economic output each year, rather than adding nothing, U.S. GDP could grow by $3 trillion — and the actual figure would likely be higher. Managers and administrators tend to be better educated than the workforce at large and typically possess technical or functional skills. Given that, we should expect them to deliver better than average output per capita once reassigned to more productive, and potentially more satisfying, work.

Yep. I’m not trying to advocate for 21.4 million people to be fired — although you could probably fire half and there wouldn’t be a huge issue — but it’s all about re-contextualizing what middle managers do. Instead of essentially ignoring them and forcing them to create their own purpose, put them on value-add activities.


What would be value-add activities for middle managers?

Here are a few ideas off the top of my head:

  • Aligning strategy (from the execs) with execution (what the worker bees do all week)
  • Coaching employees
  • Giving feedback
  • Having real conversations
  • Soliciting ideas that could grow the business
  • Creating a way for those ideas to float up for approval
  • Taking on “stretch assignments” where they grow an aspect of the company
  • Figuring out ways to deepen customer engagement
  • Taking responsibility for their own metrics and reporting on them to the execs
  • Looking for new revenue streams
  • Developing talent pipelines
  • Explaining ROI of concepts like social media to the top brass

That’s just a quick list I made up. Good middle managers do some of these already, but most middle managers could do all of them in pockets and be way more effective.

Instead, what do most middle managers do all day?

Varies by org, but I’d say this is a fairly accurate rundown:

  • Sit in meetings
  • Hop on conference calls
  • Tell everyone how busy they are
  • Ignore their employees
  • Hide behind once-a-year reviews as “feedback”
  • Digitally push papers around
  • Stick their nose so far up the execs’ anuses that no one is sure where their nose went
  • Say “On it, boss!” a lot
  • Manage spreadsheets
  • Talk often about process
  • Paperwork
  • Put people they don’t like on PIPs
  • Claim their actions are “strategic” when they’re “logistical”

See the difference between List 1 and List 2? That’s costing us trillions of dollars a year. That’s, uh, not good.

What else would you add about middle managers?

Ted Bauer