Over the past year, mid-level managers across Australia have found themselves at the forefront of corporate cost-cutting measures, as companies face economic pressures and the need to streamline their operations. Dubbed the great unbossing, this global trend is seeing middle managers disproportionately affected by rounds of redundancies, reshaping the management landscape in Australian businesses.

Middle managers, who typically bridge the gap between senior leadership and frontline employees, are being hit hardest by these corporate changes. New payroll data from HR platform Employment Hero, provided exclusively to The Australian Financial Review, reveals that managers have been disproportionately affected by layoffs in Australia over the past 12 months. While overall employment growth increased by 5.4% year-on-year to August 2023, the number of standardised job titles containing the word “manager” dropped by 7.1%.

This data, drawn from a sample of nearly 90,000 managers across various industries, also indicates a decline in managerial positions across all age groups. According to Employment Hero’s chief of staff, Zara Tonkin, the "broad-based reduction" in middle management is one of the key strategies businesses are using to adapt to a slowing economy.

“Companies are looking to save costs and boost productivity by cutting middle management,” Tonkin said. “We’re seeing a broader trend where businesses are reducing work hours and hiring more casual employees as part of their cost-saving measures.”

As companies cut back on managerial roles, they’re also adjusting workforce structures in other ways. Employment Hero’s data showed that the median number of hours worked by employees in August was down 2% compared to the previous year, with casual employment rising by 9.8%.

These adjustments highlight a shift toward more flexible and less costly employment models, as companies try to weather economic headwinds. “All of these data points suggest that employers are navigating a challenging environment by trying to operate leaner and more efficiently,” Tonkin added.

A cyclical response to economic pressures

The impact on middle managers is part of a broader, cyclical response to tough economic conditions, said Jason Johnson, CEO of top recruiting firm Johnson Partners. “Businesses are reviewing their workforce structures to find savings and improve productivity,” Johnson explained. “Middle management roles, being neither at the executive level nor directly involved in frontline tasks, are often the first to be targeted for cuts.”

This trend of eliminating middle management positions reflects a broader effort to cut costs in a cooling economy. Many companies are looking for ways to maintain their bottom line without compromising the strategic direction set by senior leadership or the execution of tasks performed by frontline workers. However, middle managers, who often carry higher salaries and occupy roles that can be perceived as less essential, have become prime targets for redundancy.

Vulnerability to automation and cost-cutting

In addition to being caught between strategy and execution, middle managers are seen as vulnerable to both automation and cost-cutting. “The question often becomes, ‘What are these managers in the middle actually doing?’” said Dr. Bradley Hastings, a research associate at the University of New South Wales with a PhD in change leadership. “Their roles can be more difficult to quantify, and they’re often paid more than individual contributors, making them easier targets for automation or elimination.”

While automation can help streamline certain managerial tasks, such as data analysis and performance tracking, it has raised questions about the future of these roles. With advancements in technology, companies are increasingly questioning the need for layers of management when software can handle many of the operational responsibilities once held by middle managers.

The 'Chinese whispers' problem

Dr. Hastings noted that one of the driving factors behind the cuts is the desire to eliminate the inefficiencies that can arise from having too many layers of management. “Reducing middle management can help avoid the problem of ‘Chinese whispers,’ where communication becomes distorted as it moves up and down the chain of command,” he said. However, he was quick to point out that middle managers also play a crucial, often underappreciated, role in organisations.

“Middle managers are often the unsung heroes of an organisation,” Hastings added. “They’re responsible for translating strategy into action and ensuring that frontline employees understand and align with the company’s goals. When you cut them, you risk losing that vital layer of communication and coordination.”

Amazon's flattening of management

This trend toward reducing middle management is not unique to Australia. Global corporations like Amazon have also embraced the "great unbossing" as part of broader post-pandemic restructuring efforts. In a memo to employees earlier this year, Amazon CEO Andy Jassy announced that the company would be flattening its management structure by reducing the number of managerial roles. This move, Jassy explained, would help reduce bureaucracy, speed up decision-making, and empower individual contributors to take more ownership of their work.

“We want our employees to feel like they can move fast without being bogged down by unnecessary processes, meetings, and layers of management,” Jassy said. Amazon’s restructuring, which Morgan Stanley estimates could result in the elimination of nearly 14,000 managerial positions, is expected to save the company up to $5.3 billion.

The future of middle management

As more companies follow Amazon’s lead in flattening their management structures, the role of middle managers is evolving. While some businesses see cutting these roles as a way to reduce overhead and streamline operations, others recognize the unique value that middle managers bring to the table.

“Middle managers are the ones who translate corporate strategy into action and maintain the day-to-day functioning of the company,” Hastings said. “Cutting them may save money in the short term, but it could lead to long-term inefficiencies if companies aren’t careful.”

In the coming years, businesses will likely continue to reassess their organisational structures, balancing the need for cost savings with the importance of effective management. For middle managers, this could mean redefining their roles to focus more on leadership, coaching, and strategic decision-making, areas where automation and casual labour cannot easily replace them.