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America has too many managers.
In a 2016 Harvard Business Review analysis, two writers calculated the annual cost of excess corporate bureaucracy as about $3 trillion, with an average of one manager per every 4.7 workers. Their story mentioned several case studies—a successful GE plant with 300 technicians and a single supervisor, a Swedish bank with 12,000 workers and three levels of hierarchy—that showed that reducing the number of managers usually led to more productivity and profit. And yet, at the time of the story, 17.6 percent of the U.S. workforce (and 30 percent of the workforce’s compensation) was made up of managers and administrators—an alarming statistic that shows how bloated America’s management ranks had become.
The United States, more than anywhere else in the world, is addicted to the concept of management. As I’ve written before, management has become a title rather than a discipline. We have a glut of people in management who were never evaluated on their ability to manage before being promoted to their role. We have built corporate America around the idea that if you work hard enough, one day you might become a manager, someone who makes rather than takes orders. While this is not the only form of management, based on the response to my previous article and my newsletters on the subject, this appears to be how many white-collar employees feel. Across disparate industries, an overwhelming portion of management personnel is focused more on taking credit and placing blame rather than actually managing people, with dire consequences.
This type of “hall monitor” management, as a practice, is extremely difficult to execute remotely, and thus the coming shift toward permanent all- or part-remote work will lead to a dramatic rethinking of corporate structure. Many office workers—particularly those in industries that rely on the skill or creativity of day-to-day employees—are entering a new world where bureaucracy will be reduced not because executives have magically become empathetic during the pandemic, but because slowing down progress is bad business. In my eyes, that looks like a world in which the power dynamics of the office are inverted. With large swaths of people working from home some or all of the time, managers will be assessed not on their ability to intimidate other people into doing things, but on their ability to provide their workers with the tools they need to measurably succeed at their job.
In order to survive, managers, in other words, will need to start proving that they actually do something. What makes this shift all the more complicated is that many 21st-century, white-collar employees don’t necessarily need a hands-on manager to make sure they get their work done.
One truly insufferable habit of the modern manager is their reliance on the sports metaphor—the home run, the Hail Mary, the slam dunk—when trying to inspire their team. And yet modern businesses regularly fail to learn lessons from successful sports franchises. The strongest modern companies will win the talent war not by simply hiring well from the outside, but by fostering and empowering the employees they have to create and produce for the company in the long term.
The pandemic has laid bare that corporate America disrespects entry-level workers. At many large companies, the early years of your career are a proving ground with little mentorship and training. Too many companies hand out enormous sums to poach people trained elsewhere, while ignoring the way that the best sports teams tend to develop stars—by taking young, energetic people and investing in their future (“trust the process,” etc.). This goes beyond investing in education and courses; it involves taking rising stars in your profession and working to make them as good as your top performer.
In a mostly remote world, a strong manager is someone who gets the best out of the people they’re managing, and sees the forest from the trees—directing workers in a way that’s informed by both experience and respect. Unfortunately, the traditional worker-to-manager pipeline often sets people up for inefficiency and failure. It’s the equivalent of taking a pitcher in their prime and making them a coach—being good at one thing doesn’t mean you can make other people good at the same thing. This is known as the Peter principle, a management concept developed by Laurence J. Peter in the late ’60s that posits that a person who’s good at their job in a hierarchical organization will invariably be promoted to a position that requires different skills, until they’re eventually promoted to something they can’t do, at which point they’ve reached their “maximum incompetence.” Consistent evidence shows that the principle is real: A study of sales workers at 214 firms by the National Bureau of Economic Research found that firms prioritize current job performance in promotion decisions over whether the person can actually do the job for which they’re being considered. In doing so, they’re placing higher value on offering the incentive of promotion to get more out of their workers, at the cost of potentially injecting bad management into their organization.
Successful sports teams generally—though not always—abide by the mantra that you put the best people for the job in the best position to succeed. That’s why you see a good number of former catchers in baseball end up as fairly successful managers—they’re workhorses who control the pace of the game, learning and directing the approach to each batter and, one might say, the entire field as a result. It’s a logical choice, because it involves a person who participates in both the strategy and the action, understanding the batting order and how to attack it—the same skill set a coach would need.
Right now, we basically have only one track (management), and it actively drains talent from an organization by siloing and repressing it in supervisory roles. Employees may rise into management, then leave to go make more money managing somewhere else. What we need—and will likely see—are more organizations opening a different track for people who are very good at their specific job, where these people are compensated for being great at what they do and mentoring others. While not everybody is a born teacher or mentor, I’ve yet to see someone very good at their job who doesn’t have anything useful to impart to the younger generation. Countless companies let high-flying performers write books and do seminars about their successes, but rarely take that success and look inward to see how it might be given to others. And instead of vacuous perks such as pool tables and free lunches, perhaps we simply give talent the means to get distractions and annoyances out of the way, such as assistants and software that automates parts of their job.
The reasoning behind this lack of talent focus in modern American business is cultural and fiscal. While you can give people senior-leadership positions, it’s challenging for an executive to keep paying someone more for being good at their job, for fear that they’ll start demanding compensation befitting the revenue that they bring to the business. And when someone is good at their job, it can still be hard to quantify exactly how good they are, or how much they actually contribute to the business. It’s easier to say, “Okay, let’s have you manage some people,” and pay them more to do that.
A focus on talent and potential is why many well-managed NFL teams draft their future quarterback years before their current one is out of his prime—they want someone who can hold the clipboard and spend his time watching and learning so that he can be a starter one day. While this relationship creates tension, there’s also an acknowledgment that winning football games is what matters. It may mean that talent leaves—as happened with Brett Favre, and may happen again with his replacement, Aaron Rodgers, over at Green Bay—but it is also necessary for an organization to last. And the problems that Rodgers has raised in his last years with the Packers have transparently been about a philosophical mismatch: an organization’s failure to listen to and empower its most prolific worker.
What I’m talking about here is a fundamental shift in how we view talent in the workplace. Usually, when someone is good at their job, they are given a soft remit to mentor people, but rarely is that formalized into something that is mutually beneficial. A lack of focus on fostering talent is counterintuitive, and likely based on a level of fear that one could train their own replacement, or that a business could foster its own competition. This is a problem that could be solved by paying people more money for being better at their job. Growing talent is also a more sustainable form of business—one that harkens back to the days of apprenticeships—where you’re fostering and locking up talent so that it doesn’t go elsewhere, and doesn’t cost you time and money to have to recruit it (or onboard it, which costs, on average, more than $4,000 a person). Philosophically, it changes organizations from a defensive position (having to recruit to keep up) to an offensive position (building an organization from within), and also greatly expands an organization’s ability to scale affordably.
A predominantly remote future will challenge the need for layer upon layer of bureaucracy in American work by rejecting the assumption that “management” is the only way to grow in a company. When a majority of employees are remote, a manager may be considered a tool to organize the assets of an organization and utilize them to their fullest, rather than a title that mostly means “I make sure you’re actually working.” A great manager (like a great coach) can take a good worker and make them great, or take an average worker and make them good. It’s an adjustment from seeing the young as employees who must be tolerated until they’re good to seeing them as early-stage investments who can be grown into something incredibly valuable.
Some Millennials entering the workforce feel isolated and hopeless, and not just because they have to work harder and their money doesn’t go as far as it did in previous generations). Recent graduates enter new roles burdened by student debt, knowing that they’re years from being able to even consider saving for a down payment on a house, and are too often told “Get these things done” with no real investment in their future. Young employees have to be their own champions, their own cheerleaders, their own coaches—despite the fact that the organization has a fiscal advantage to get the most out of them. The problem is that modern American capitalism has equated “getting the most out of someone” with “getting the most hours out of them,” rather than getting the most value out of them. “Success,” as I’ve discussed before, is worryingly disconnected from actually succeeding in business.
Reducing bureaucracy is also a net positive for the labor market, especially for young people. Entry-level corporate work is extremely competitive and painful, a years-long process in which you’re finding your footing in an industry and an organization. If we can change the lens through which we view those new to the workforce—as the potential hotshots of the future, rather than people who have to prove themselves—we’ll have stronger organizations that waste less money. We should be trying to distill and export the talents of our best performers, and give them what they need to keep doing great things for our companies while also making their colleagues better too.
All of this seems inevitable, to me, because a remote future naturally reconfigures the scaffolding of how work is done and how workers are organized. The internet makes the world a much smaller place, which means that simple things such as keeping people on task doesn’t justify an entire position—but mentorship and coaching that can get the best out of each worker does.
Hopefully we can move beyond management as a means of control, and toward a culture that appreciates a manager who fosters and grows the greatness in others.
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