[HN Gopher] Why are corporations cutting managers?
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Why are corporations cutting managers?
Author : mooreds
Score : 60 points
Date : 2025-01-06 12:28 UTC (10 hours ago)
(HTM) web link (arnoldkling.substack.com)
(TXT) w3m dump (arnoldkling.substack.com)
| apwell23 wrote:
| This is all over news but is this actually true. Meta is always
| citied as example because Mark said and did bunch of things to
| appease the markets.
|
| There are no reduction in numbers at meta now. Middle managers
| have made a comeback at meta big time. CEOs love middle managers
| despite what they say to investors.
|
| Even the numbers cited in the article are not convincing
|
| > middle-manager head counts by about 6% since the peak of their
| pandemic hiring sprees
|
| This actually indicates the opposite that middle managment is
| unusually resilient to layoffs
| dyauspitr wrote:
| Middle management gets a bad rap but that political
| battleground makes or break companies.
| danjl wrote:
| Exactly. Not having political battlegrounds makes companies
| better. Whereas, it sounds like you're saying having people
| to fight in the battleground is the goal.
| georgeecollins wrote:
| I think what the previous post meant was that a political
| battleground always exists, not that middle managers create
| them. If you think they don't, you're telling me your role
| in the organization without telling me your role.
| dyauspitr wrote:
| Those battles will always exist and need to be fought.
| scarface_74 wrote:
| Why would Mark care about appeasing the market? He has a
| controlling interest in Meta and can't be fired no matter what
| the market thinks.
|
| You can accuse Meta of a lot of things. But being short term
| focused is not one.
| apwell23 wrote:
| > Why would Mark care about appeasing the market?
|
| you mean he doesn't care what the meta stock price is ?
|
| then I don't have a theory why mark claimed to cut middle
| management in 'year of efficiency' but didn't actually do it.
| scarface_74 wrote:
| I can't find numbers for 2024. But as of the end of 2023,
| they still have more employees than they did in 2020.
|
| https://www.statista.com/statistics/273563/number-of-
| faceboo...
| datadrivenangel wrote:
| Corporations cut managers because they're expensive. Not having
| enough managers is also expensive though.
| lazide wrote:
| That part usually takes a couple quarters to show up though. :(
| datadrivenangel wrote:
| The organizational / social capital starts decreasing and
| then a few quarters later people see the costs of not having
| enough organizational capital. Boom/bust.
| marcinzm wrote:
| Management monopolizing organizational / social capital is
| itself a sign of a fairly unhealthy organization. So you
| might get a couple quarters of pain but then you'll end up
| with a better long term organization.
| jmclnx wrote:
| Actually my manager was "demoted" back to a programmer, which I
| think is a good thing. He was forced onto management a few
| years ago, but that was a waste of talent in my opinion. I also
| think a lot of stress he suffered as a manager is gone.
|
| But yes, a lot of people were let go at the same time (8 months
| ago).
|
| And the article, no useful information from what I can see.
| 98codes wrote:
| One of the big things that keeps me where I'm working now is
| the org structure that keeps managers & non-managers on
| separate career tracks until significantly higher in the org
| chart than most big companies. Moving between manager & not
| isn't a promotion or demotion; it's a sideways shift.
| marcinzm wrote:
| Having too many also causes endless politics, empire building,
| meetings, etc, etc. Much more expensive than too few. They need
| to justify their existence somehow and since they can't
| directly drive features and you can only optimize a team so
| much that eventually ends in bureaucratic hell.
| _DeadFred_ wrote:
| In the past maybe. Now that all managers are 'working managers'
| and treated as a manager and an addition human work unit I'm
| not so sure. Corporations don't normally replaced the fired
| manager with an additional human work unit and just expect the
| team to absorb one more HWU worth of work with the smaller
| headcount.
| bhouston wrote:
| I find this article doesn't really say much of substance nor does
| it have hard facts to back it its claims related to the title. It
| really is just an observation piece - there are cuts and here are
| some very general theories without evidence. I didn't really gain
| much reading it.
| 6510 wrote:
| https://news.ycombinator.com/item?id=42611851
| vonnik wrote:
| Not terribly insightful. The question in the headline is not
| answered.
| bhouston wrote:
| Was it written by an AI?
| bjt wrote:
| Arnold Kling is a fairly well known academic.
| https://en.wikipedia.org/wiki/Arnold_Kling
|
| I read this blog post as "thinking out loud on the internet".
| It's something I see done quite a bit in the econ
| blogosphere. Sometimes a post like this will prompt responses
| from other econ bloggers (Greg Mankiw, Tyler Cowen, etc.).
| Sometimes not. It's not meant to be an essay.
| scarface_74 wrote:
| It wasn't mean to.
|
| The entire last paragraph was a bunch of questions meant to
| invoke discussions and theories.
|
| It has no ads, the author is already a well known economist and
| has nothing to prove for trying to be a "thought leader".
| hyperpape wrote:
| This reads as if the required amount of management for different
| initiatives is constant, but it isn't.
|
| One thing that happens is that when money is plentiful, there is
| a push to find new ways to generate returns. When money is tight,
| new bets look bad, and companies may cut new bets and work on
| optimizing their existing cash-cows.
|
| Strictly, that says nothing about the number of managers needed,
| but I do think it's less management intensive to keep on with
| what you're already doing.
| nine_zeros wrote:
| This is insightful and mirrors my understanding of
| corporations. New bets are too risky but existing bets need to
| be maintained for the sake of customers.
|
| Thus, new managers are not necessary as new teams are not
| necessary. Folding teams together also starts making sense.
| Fewer layers also starts making sense.
|
| Ultimately, management is overhead and administrative. Less
| important than individuals who are actually building,
| maintaining, advertising, and selling.
| asdasdsddd wrote:
| > When money is tight, new bets look bad
|
| It's not optical, it's just bad. The risk adjusted returns for
| bets need to cross the interest rate threshold and when rates
| are high, the number of bets you can take must drop.
| karaterobot wrote:
| > U.S. public companies have cut their middle-manager head counts
| by about 6% since the peak of their pandemic hiring sprees
|
| Haven't there been pretty big, well-known layoffs in other areas
| as well in the last couple years? Lots of engineers have gotten
| laid off, and the article also points out a 6% reduction in HR.
| Might it be that they're just laying everybody off across the
| board? I'd love it if this article considered management layoffs
| compared to the base rate of layoffs.
|
| I'm a designer, and what I tell people is that you can't avoid
| having a designer on your team: if you don't have a dedicated
| designer, design is going to get done by everybody else. Probably
| by people who don't want to do it, aren't good at it, or may not
| even know they're doing it as they make unconsidered choices that
| shape your product forever. I think the same is probably true
| with managers. You hypothesize: _ahh, managers are probably dead
| weight, let 's get rid of them to save money_. But then it turns
| out that all the individual contributors have to split the work
| the managers used to do. Or, more likely, your lead IC has to do
| it along with their main job. And in most cases they are not good
| at it, and do a poor job, and when it nets out you've got a less
| productive team. My manager quit a year ago, they didn't backfill
| for his position, and it's been an utter shitshow ever since.
| Animats wrote:
| Does it take fewer managers to manage remote employees?
|
| Do the tools that help manage projects with remote employees
| reduce the number of managers needed?
| ergonaught wrote:
| Comments so far seem to fail to recognize that this post is a
| "response" to the WSJ article linked at the very beginning and
| isn't a standalone piece by itself.
| mooreds wrote:
| Here's the WSJ piece for folks without a subscription:
| https://archive.is/SwWn6
| rybosworld wrote:
| Lots of bad faith in this article. Example:
|
| "On the same WSJ front page that the story of management cutbacks
| appeared, there was also a story about the stock market having
| risen unusually fast the last two years. Perhaps these stories
| are connected"
| jawns wrote:
| Remember that about 3-4 years ago, we experienced the Great
| Migration. The percentage of tech workers who moved to new
| companies was very high compared with historical migration
| patterns. Interests rates were still very low, companies had been
| buoyed by pandemic-related assistance, and inflation hadn't yet
| set in, so the salaries that were being offered were very
| attractive.
|
| In the years since, the incentives to leave one's current
| employer have decreased. Salaries have stagnated, there's been
| belt tightening and layoffs, the pool of applicants competing for
| the same jobs has become bigger, and a lot of folks who've gotten
| cushy benefits like permanent WFH arrangements would have to go
| back to the office if they changed jobs.
|
| But that means that a lot of tech companies are experiencing
| lower than normal attrition, but there's still professional
| growth happening, and the only way the companies have been able
| to reward employees is through promotions. That has led to bloat
| at the management layer, which this year many companies have
| tried to address, either by letting managers go or sending them
| back into IC roles.
|
| I predict that due to "tenure lock" (where a lot of people who
| moved in the Great Migration have the same tenure at their
| current company) we're likely to hit a watershed moment that
| leads to another Great Migration later in the decade.
| vikingerik wrote:
| The Great Migration wasn't as real as the headlines made it
| look, though. It was an artifact of time-shifting from the
| pandemic. Normal job switching didn't happen in 2020 and became
| pent-up demand in 2021. So the numbers looked high for a short
| duration, but it wasn't really any fundamental shift, just the
| same activity pushed into a shorter time period. Look at the
| total numbers from 2019-2024 and I bet it's about the same as
| any five-year period.
| jawns wrote:
| Correct, the pandemic led to pent-up demand, and the Great
| Migration was what happened when job switching became tenable
| again. But the effects of that pent-up demand are a larger
| than normal group of people who now have the same relative
| tenure at their new organizations, and demand is building up
| again, as more and more people who've been with their company
| for 3+ years are looking for a change, but can't find one in
| the current hiring climate. So I predict we'll see a similar
| wave of large-scale job hopping once conditions become more
| favorable.
| blackeyeblitzar wrote:
| A number of corporations are going to learn hard lessons from
| indiscriminate cutting of middle management, like when Google
| thought they were being innovative in not having much management
| a long time ago.
| mschild wrote:
| I think as with everything, it depends on what end of the
| spectrum your company is at.
|
| There are a lot companies, Volkswagen to name a prominent
| example, that have over time built up massive management layers
| that don't ultimately serve the company goals.
|
| Getting rid of excess is something that is necessary because
| they have ballooned to expensive and unhealthy proportions.
|
| Having none at all or too little obviously also has downsides.
| _DeadFred_ wrote:
| Manufacturing is all about management though, isn't it?
| Management is the make or break in that industry. Sure you
| can coast with your current setup, but that isn't enough for
| an auto company long term.
|
| You need to manage your PLM (product life cycle CAD/design
| software) integrated to your EBOM (engineering bill of
| materials) to your MBOM (manufacturing bill of materials) to
| support your ERP (enterprise resource planning) in support of
| your MRP (manufacturing resource planning). All of that
| requires people at higher levels that understand the systems
| at the conceptual level and the company specific level,
| working together to make sure that 40,000 parts manufactured
| in house and purchased externally, all with varying lead
| times, come together at the exact right time to build the
| correct model/configuration for the market right now.
|
| I've seen plenty of companies making bank today but that were
| doomed because they no longer did any of the above, they
| fired management, they outsourced design, they outsourced IT,
| they coasted on prior managers work in setting/configuring
| everything and it all became fixed in place as is. Best they
| could hope for was to bring in consultants to heavy lift
| changes as part of 'major' efforts going forward, allowing
| what managers would have been continually adapting to pill up
| until it became such a big issue money was freed up for the
| consultants.
| mschild wrote:
| Again, that's generally fine and correct, but when you have
| 2 separate departments that do almost the identical job,
| it's time to question whether or not that 2nd department is
| needed.
|
| My argument wasn't that most management wasn't necessary.
| Especially for something as complex as modern cars, there
| is a need for organizing and managing the whole process
| correctly. What companies like VW suffer from is too much
| management.
|
| I've worked for one of their sub-brands. It was not a rare
| sight to see that there were individual contributors that
| had more than 1 manager while working on a single project.
| It made no sense from any conceivable standpoint. The movie
| Office Space comes to mind.
|
| The main problem I saw while working there was that to be
| considered successful, and get corresponding salary
| adjustments and promotions, managers increased their head
| count by any means necessary. That included hiring and
| promoting more managers who's sole goal was to increase it
| even further. There came a point where my team had 3
| managers at once, all on a different career level, but all
| responsible for only my team. Division Lead (responsible
| only for Team X) -> Sub-division Lead (responsible only for
| Team X) -> Team Lead (responsible only for Team X) -> Team
| X. That structure made no sense.
| pjdemers wrote:
| The same reason sports teams fire their head coach (or manager)
| when the owners want a change - because it is easy to replace one
| manager than an entire team.
| riku_iki wrote:
| new manager then can slowly fire and hire according to new
| goals.
| xoneill wrote:
| Part of the problem:
|
| https://47cleanupcrew.com/
|
| "Of course they want to bring in Indians and Artificial
| Intelligence. Why would they want to pay a US citizen $100,000 a
| year or whatever the commensurate salary is for your job."
| 9rx wrote:
| Is head count the right metric anymore? For all the talk of the
| LLM impact on programming, LLMs are even better at doing
| managerial tasks. The managers may no longer have heads.
| acjohnson55 wrote:
| To begin with, the people who make and influence strategic
| decisions at companies--executives, boards, and major investors--
| are just as susceptible to fads as anybody else. The difference
| is that the fads they get into have massive impacts on people's
| lives. You rarely get fired for making a bad decisions everyone
| else is making at the same time. We see this in professional
| sports where playcallers will make decisions that are
| conventional but demonstrably suboptimal.
|
| There are a lot of managers who are force multipliers for their
| teams. There are a lot that do crucial glue work but aren't
| gamechangers. There are a lot who are mediocre. There are some
| that are counterproductive. It is very difficult to tell the
| difference between these. Even if you have lots of time, it is
| hard to isolate the work of the manager from the circumstances
| they're in. One way to find out is to get rid of the managers and
| see which initiatives suffer.
|
| I'm guessing we'll see the number of managers gradually converge
| to whatever the long-term average, unless the nature of white
| collar work has changed. On case-by-case bases, teams that are
| hamstrung by insufficient management will demand more management.
| They'll get it, especially if they are doing critical work. Other
| teams will regain management due to the desire for consistency.
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