How many layers of management does your organization have?
Novartis CEO Daniel Vasella announced today that he plans a general rule of a maximum of six layers from shop floor operator to the head of one of the four divisions. Novartis has 98,000 employees delivering almost $40 billion in sales.
The changes at Novartis would come on top of some job cuts and management changes the company laid out in October, when it reported disappointing third-quarter earnings. Dr. Vasella said he has continued scrutinizing the organization since then and is looking to remove several layers of management, with the main goal of positioning employees to make decisions more quickly and simply.
It’s a laudable goal, and incredible agility can result from employees empowered… and trained… to make decisions. But it’s not quite as easy as simply "positioning." The flatter the organization the more important it is to have "the right people on the bus, and in the right seats" (apologies to Jim Collins). That requires improved recruiting, retention, training, and inherent leadership ability.
And in the spirit of being flat and concise… I’ll keep this brief!
A laudable goal, but in my experience what usually happens is a lot of good, talented “middle” managers are booted out on to the street without thought of promotion and many others are reassigned to positions that amount to demotions. That generates a huge morale problem. Then, all of a sudden the people in positions that used to report to mid-level managers find themselves reporting to some distant leader who now has way too many direct reports to deal with effectively and everyone at all levels has more work to do because the system is never reengineered to accomodate the decrease in management. I’m skeptical. I think “flattening” an organization is nothing more than code for “middle managers make too much money so we will empower (force) those below them to do more and get rid of those overpaid chumps in the middle.”
Louis English says
I very much agree with your commentary. Too often companies go for structural solutions to problems without understanding the system dynamics that created the structure they currently have. Before companies go to a new structure I ask them to list the both the weaknesses and strengths of their current structure. That way they can insure the new structure preserves what was best in the old one. I put “strengths” in quotes because what they consider strengths often aren’t helpful in moving to a lean management system. Still its a good place to start.
Lou English PhD.