GCSE / Level 2 Revision Notes

People management - Delayering

As we have seen earlier, there are some strong arguments in favour of a business have fewer rather than many layers in the hierarchy.  A business may develop a tall hierarchy over time which becomes costly and inefficient.  If management attempt to remove one or more layers from the hierarchy, this is known as “delayering”.

Frequently, the layers removed are those containing middle managers. For example, many high-street banks no longer have a manager in each of their branches, preferring to appoint a manager to oversee a number of branches. Some schools adopt this policy too – with a director of studies looking after several schools in a local area.

Delayering usually means increasing the average span of control of senior managers within the business and is seen as a way of reducing operating costs, particularly as a response to the economic downturn.

De-layering can offer a number of advantages to business:

• It offers opportunities for delegation, empowerment and motivation as the number of managers is reduced and more authority is given to shop-floor workers
• It can improve communication within the business as messages have to pass through fewer levels of hierarchy
• It can remove departmental rivalry if department heads are removed as the workforce is organised in teams
• It can reduce costs as fewer employees are required and employing middle managers can be expensive
• It can encourage innovation
• It brings managers into close contact with the business’ customers

But disadvantages exist too, making a decision to delayer less clear cut:

• Not all organisations are suited to flatter organisational structures - mass production industries with low-skilled employees may not adapt easily
• De-layering can have a negative impact on motivation due to job losses, especially if it is really just an excuse for redundancies
• A period of disruption may occur as people take on new responsibilities and fulfil new roles
• Those managers remaining will have a wider span of control which, if it is too wide, can damage communication within the business