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Why are corporations cutting managers?

arnoldkling.substack.com

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Re: Why are corporations cutting managers?

#41

Post by apwell23 »

scarface_74 wrote: post #23
apwell23 wrote: post #2

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…

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.

> 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.

Re: Why are corporations cutting managers?

#43

Post by scarface_74 »

apwell23 wrote: post #41
scarface_74 wrote: post #23

Earlier quoted context omitted.

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.

> 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.

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...

Re: Why are corporations cutting managers?

#44

Post by mschild »

_DeadFred_ wrote: post #38
mschild wrote: post #25

Earlier quoted context omitted.

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…

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 plan…

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.

Re: Why are corporations cutting managers?

#45

Post by vikingerik »

jawns wrote: post #21

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 leav…

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.

Re: Why are corporations cutting managers?

#46

Post by marcinzm »

datadrivenangel wrote: post #9
lazide wrote: post #8

Earlier quoted context omitted.

That part usually takes a couple quarters to show up though. :(

The organizational / social capital starts decreasing and then a few quarters later people see the costs of not having enough organizational capital. Boom/bust.

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.

Re: Why are corporations cutting managers?

#47

Post by jawns »

vikingerik wrote: post #45
jawns wrote: post #21

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 leav…

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…

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.

Re: Why are corporations cutting managers?

#48

Post by mobilejdral »

Because there was general layoffs of the workers in the previous year or two? There is a fairly formulaic way that companies tighten belts. First you do layoffs, get rid of projects that will never make money, reduce headcount for orgs that grew fat, etc. At the same time you explore offshoring (especially as it keeps the same number of headcount under a vp for less cost). Then there is a round of cleaning up the management layer, making sure everyone has a minimum number of reports, moving some managers back to being leads/IC etc.

This was all formulaic and the more experienced directors and VP's back in 2022 knew this and immediately started playing the new corporate game to win in the long run.

Re: Why are corporations cutting managers?

#49

Post by Spivak »

jmclnx wrote: post #14
datadrivenangel wrote: post #3

Corporations cut managers because they're expensive. Not having enough managers is also expensive though.

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.

As long as it's a demotion with a pay raise and a more senior sounding title like "staff engineer" then I think most technical managers would jump at the opportunity. The narrative drastically affects the perception.

Re: Why are corporations cutting managers?

#50

Post by _DeadFred_ »

mschild wrote: post #44
_DeadFred_ wrote: post #38

Earlier quoted context omitted.

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 plan…

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 manag…

I see what you are saying. Companies where managers build kingdoms for zero business reason are pretty bad, especially when you are a manager that doesn't play those sorts of games.

Was your project seen as quasi make or break? I've been places where that structure made sense in that context. Division lead is mainly full time liason to the board in order to keep them comfortable with the project, sales planning, forecasts, etc. There's a lot of invisible at the team level stuff that can go on up there. Subdivision lead is to smooth the projects interactions/needs with other functional areas of the company, and team lead to actually keep the project on track internally.

I saw things from the other side but just from site visits. We implemented the same software and our management actually invested in our staff and flew us all over to see how others implemented things/their processes/etc.

Did site visits to an auto company where they had outsourced everything to TATA. At this point there is zero reason that brand exists, it doesn't bring anything over anyone else, not much institutional knowledge (or care for that matter) and basically treating their business like a franchise where any old body could step in, and not a specialized institution where the employees actually added/had internal value.

One McDonalds franchise is the same as the next, but seeing your auto company that way you are dead long term.

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