Tech giants flatten management to speed up decision-making

[UNITED STATES] In a widespread effort to streamline operations, companies are increasingly cutting layers of middle management — a strategy known as "flattening the middle" — with the aim of reducing bureaucracy and accelerating decision-making. Some employees see the shift as a welcome move that could boost productivity and simplify workflows.

Microsoft announced Tuesday it would lay off roughly 6,000 employees. While many of those impacted were individual-contributor engineers, company executives previously told that a key motivation behind the cuts was to expand managers’ “span of control,” or the number of employees they oversee.

Though not a novel trend, the push toward flatter corporate hierarchies has gained momentum in recent years. A 2023 Gartner report found that 70% of large companies have either begun or plan to begin reducing management layers within the next two years. Beyond cost savings, the move is driven by the need to adapt swiftly to rapid technological change and heightened competition.

Intel joined the movement last month, announcing a significant reorganization designed to reduce administrative overhead, increase office presence, and foster smaller, more agile teams.

“The best leaders get the most done with the fewest people,” Intel CEO Lip-Bu Tan wrote in a memo to staff.

Tech giants are at the forefront of this shift. Amazon has upped its ratio of individual contributors to managers — dubbed the “builder ratio” — while Google trimmed 10% of its vice president and managerial roles in 2023 as part of its efficiency initiative. Meta, too, has been downsizing management ranks for years, with CEO Mark Zuckerberg declaring in a memo, “Flatter is faster.”

Still, the strategy carries risks. Reducing too many layers may overburden remaining managers, leaving them responsible for an unsustainable number of direct reports.

Aiming for Agility

Management experts generally support the logic behind the flattening trend. “You can’t go faster and stay connected in a fast-changing world if decisions have to pass through multiple layers,” said MIT management professor Deborah Ancona. She noted that while some organizations have attempted to streamline for years, today’s pace of change has introduced fresh urgency.

The rise of remote and hybrid work has only intensified the need for flatter models. A 2024 Harvard Business Review study found decentralized decision-making to be 32% more effective in hybrid environments, where waiting for approvals can hinder momentum. The result: companies are rethinking how authority is distributed, particularly in tech, where agility is critical.

At Dell, where headcount has dropped by 25,000 over the past two years, leadership has reorganized managers to handle larger teams, citing the influence of AI as a factor necessitating greater speed.

The ideal outcome, according to Ancona, is an empowered workforce where decisions and ideas originate from those closest to the customer or the technology. “You’re flipping the organization,” she said. “Instead of top-down directives, you have entrepreneurial leaders rising from within.”

Bayer CEO Bill Anderson is taking a similar approach. Since taking the helm of the German biotech firm in 2023, Anderson has eliminated thousands of managerial roles, introducing a “dynamic shared ownership” model where staff form rotating “mini-networks” to tackle 90-day projects.

“We hire smart, capable people, then bog them down with rules and hierarchy,” Anderson told. “Then we wonder why big companies underperform.”

More Reports, More Pressure

As organizations flatten, managers are left with more direct reports — sometimes dozens — creating challenges in oversight and communication. Success varies depending on a company’s baseline and how well it supports those taking on larger teams.

Some critics warn that flattening can lead to confusion and bottlenecks. A 2023 Deloitte survey found that 45% of employees in flatter organizations experienced increased stress due to unclear decision pathways, and 30% reported communication breakdowns. These figures highlight the need for well-designed support structures during restructuring.

Amazon's internal memo last September ordered a 15% increase in the builder ratio by March. In January, AWS managers received guidance to limit high-level hiring and increase their number of direct reports. A company spokesperson later clarified that the directive applied to a specific team and reiterated CEO Andy Jassy’s belief that fewer layers would benefit the organization.

Still, employees have expressed concern. One AWS manager said the new structure led to increased reporting duties and more meetings, as managers struggled to keep up with diverse and larger teams.

Yvonne Lee-Hawkins, a former Amazon HR employee, said she was managing 21 direct reports at one point, double her original team size. She had to adopt asynchronous communication strategies and halve her weekly one-on-ones, which she believes negatively impacted performance.

At Microsoft, several employees welcomed the downsizing of managerial layers, arguing that too many managers added little value. Some said managers with only one or two reports were common — a structure that had emerged from efforts to reward engineers by promoting them, even when they lacked strong leadership skills.

More senior or experienced employees, however, often prefer larger teams and less frequent check-ins, one Microsoft staffer noted.

A Microsoft spokesperson declined to comment on the issue.

The Trade-Offs of Scale

Reducing management can lessen micromanagement and promote trust, said Gary Hamel, a visiting professor at London Business School. “Managers with more reports are forced to hire better people, mentor rather than control, and delegate authority,” he said. “That’s a healthy shift — though a dramatic one.”

Some executives are setting ambitious targets. Nvidia CEO Jensen Huang reportedly manages 60 direct reports. Dell expects its managers to oversee 15 to 20 employees. Internal AWS documents recommended a minimum of eight per manager — up from six — though Amazon says no such rule applies companywide.

Still, experts stress that quantity isn’t everything. Gallup research shows that managerial quality, not team size, is the stronger predictor of performance. Small teams often experience either high engagement or significant dysfunction, depending on how effective the manager is.

The nature of the work also plays a role. Highly complex roles often require more hands-on management. “When life intersects with work, people need someone they trust to talk to,” said Ravin Jesuthasan of consulting firm Mercer. “That’s why 20 direct reports can be really hard for most managers.”

McKinsey & Co. found that companies with top-tier managers significantly outperform those with average leadership in terms of shareholder returns. While flattening can reduce overhead and speed up decisions, it may also stifle leadership development and hinder long-term growth.

“Flatter structures can elevate high performers,” said Jane Edison Stevenson, global vice chair at Korn Ferry. “But if you eliminate too many layers, you lose the people who connect the dots across functions. At some point, you have to invest in leaders who can grow horizontally, not just vertically.”