Workplace experts say that as middle management jobs decline, executives may be underestimating how important these roles are to their companies, especially in the age of AI.
The number of middle managers, who are professionals who act as a bridge between senior leaders and front-line employees, has been decreasing in recent years. Middle managers accounted for one-third of all layoffs in 2023, according to an analysis by Bloomberg and LiveData Technologies. According to the “Workforce 2025: Power Shifts” report, which surveyed 15,000 professionals around the world from organizational consulting firm Korn Ferry, 41% of employees said their company has reduced management levels this year.
This trend is expected to continue through 2026, with one in five (20%) companies expected to use AI to flatten their organizational structures and eliminate more than half of their current middle management positions, according to an October 2024 report from research and advisory firm Gartner.
The layoffs range from large publicly traded companies such as Amazon and Google to small and medium-sized U.S. companies, particularly in industries such as technology and retail. Some of these companies say they are correcting pandemic-era hiring overhangs. A recent Harris Poll survey conducted on behalf of staffing firm Express Employment Professionals found that some workers said they laid off middle managers in search of faster, more efficient workflows, while others cited economic pressures as the reason for the downsizing. The timing may be coincidental, but the enhancements come as some CEOs are mandating that their companies use artificial intelligence to run their jobs before requesting more headcount.
While there may be some benefits to cutting back on ineffective management layers, leadership and management experts caution against cutting too deep. They say these positions are a necessary piece of the puzzle for success in the workplace.
“Middle management is more important than ever,” says Deborah Rovich, executive advisor and senior partner at Boston Consulting Group, who has been advising leaders on how to improve the employee experience for more than 30 years.
In today’s fast-paced, uncertain economy, where employee burnout, dissatisfaction is on the rise and self-confidence is low, middle managers can provide the motivation and reassurance employees need to be productive, Lovich says.
A well-equipped manager is more than just an “expense”
Many companies are tightening their belts amid rising inflation, tariffs and economic concerns. Middle managers, who generally have higher salaries, are often the first targets during economic downturns.
Indeed, there can be benefits to thinning out excess layers of hierarchy.
A 2020 report from management consulting firm McKinsey & Company says that by eliminating middle management positions, companies can reduce costs, increase collaboration between front-line employees and senior executives, and increase speed and efficiency across the enterprise.
That doesn’t mean the role of middle management should be completely or indiscriminately eliminated, says Meg Whinton, vice president of enterprise analytics at HR solutions company Insperity. Rather, she says, these professionals should be better equipped to do their jobs.
Effective middle managers motivate and increase team productivity and play an important role in a company’s culture, Lovich says.
In contrast, incompetent middle managers can reduce performance and morale, whether due to inexperience, poor job fit, vague guidance from superiors, or other reasons. According to data from Insperity, only 51% of new managers with less than three years of experience feel fully prepared to lead other managers. Additionally, a recent Insperity survey of 1,000 U.S. executives, managers, and front-line employees found that only 20% of employees said their managers exceeded their expectations.
One potential solution suggests Withington. Rather than resorting to layoffs as a short-term solution, companies can invest in training and upskilling managers. Of course, improving your skills is not free. But when you factor in turnover costs and loss of employee trust and morale, Inton says spending about $1,000 per employee on talent training and development could yield better results in the long run. This is especially true for companies that end up rehiring after being laid off anyway.
What’s more, effective management is about more than money, Winton says. Some workers find their jobs even more difficult when their immediate supervisor is fired. In the Korn Ferry report, 37% of survey respondents said they felt directionless without a middle management role.
“I encourage you to think of managers as agents of change, rather than as an expense, administrative department, or layer of bureaucracy,” she says. As organizations rethink their strategies and workflows to further advance AI, managers can guide their teams to use technology effectively rather than fear it. “We’re all going to be struggling to keep up for some time as this new (AI-driven) world unfolds,[especially]in an era where things are changing week by week.”
How to get the most out of your managers
Lovich says managers are most valuable when they hold their teams accountable and help employees feel motivated and supported, but not necessarily when they’re handling administrative tasks like coordinating meetings and tracking employees.
She points out that in the age of AI, the emotional component of management is especially important. The technology can and should be used to enhance a manager’s ability to complete administrative tasks, but it can’t be used to heartily congratulate an employee on a job well done or notice that an employee is feeling a little down on a particular day, not you, Lovich said.
Insperity performance consultant Chris Brennan says manager training should focus on skills such as fostering interpersonal relationships, effective communication, decision-making and accountability, conflict resolution, and building trust within teams.
Insperity research shows that organizations that utilize their managers to their fullest potential reap significant benefits. We found that employees are five times more likely to report a healthy work culture and four times more likely to report understanding and alignment with the company’s goals. Additionally, a June 2023 report from McKinsey & Company found that companies with great managers tend to deliver higher shareholder returns than other companies.
Inton says these benefits are especially important as organizations begin to integrate artificial intelligence into their workflows.
“Before anyone jumps in and says, ‘AI is going to make the manager’s role obsolete or significantly reduced,’ you need to actually implement AI and make it work in your company,” says Inton. “And managers are the ones who can actually make sure it’s being used in the right way every day. There’s no way around that.”
Still, pressing questions remain. Are today’s managers prepared to become increasingly obsolete tomorrow by accelerating the transition to AI? Time will tell.
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