Excess management is costing the U.S. $3T per year (2016)

In both public sector and private sector places I have worked, management usually was, at best, dead weight. More often than not, management was an active impediment of getting work done for the ordinary worker doing the actual productive work of the institution.<p>At one place, a director and the VP she reported to both retired. A temporary director was hired under contract who was mostly hands-off (and remote), but she immediately fired the manager who was her direct report. The group I worked in had reported to the fired manager.<p>Without managers, productivity soared. We literally got more accomplished in a year without managers than we did in the prior five years combined. All of our deferred maintenance issues, some dating back over a decade, were addressed in the first 6 months of being freed of the managers.<p>Sadly, it didn&#x27;t last. They re-hired the full hierarchy of positions. And, the pace of work ground to a halt. Quality of work also suffered due to the artificial deadlines imposed by the managers-- combined with their shifting priorities based on which other manager(s) it was most politically expedient for them to please on any given day.<p>At another, the new VP of marketing said in a meeting, about 9 months into his tenure, &quot;What?! We&#x27;re a software company?&quot; Imagine all the value he must have added for those prior nine months.

When I worked at efficient tech companies, I had a hard time understanding these articles. If anything, it felt like we had too few managers to handle typical management things and the engineers were often losing time to dealing with things that could have been more efficiently handled by a responsible manager.<p>Then I took a job at a management-heavy company. They had people with different manager titles for absolutely everything. I ended up on a small group where we somehow ended up with more managers than engineers.<p>Some of the excess managers used the situation to do very little. They&#x27;d join a couple meetings, maybe respond to a couple e-mails, then basically disappear. Others started inventing work to fill the time. It wasn&#x27;t uncommon for us to be scheduled for 4-5 hours of meetings in a single day because different managers felt like they needed to make themselves visible and point to things on the calendar to show that they were working.<p>The weirdest part was how everyone sort of acknowledged that the situation wasn&#x27;t good, but refused to do anything about it. When I tried to push back on some of the meetings, our CTO recommended that our team should join the meetings but continue to code during the meetings. It turned into this weird circus where we were spending most of our days in virtual meetings, trying to do work while managers would pepper us with questions.<p>When we had layoffs, they laid off mostly engineers. The ratio of managers to engineers went <i>up</i>. More meetings ensued.<p>When the CEO got angry that engineering wasn&#x27;t producing enough, management&#x27;s first reaction was to request more headcount <i>for more managers</i>. They insisted that with more managers they could more effectively manage the engineers. So they hired more managers, who scheduled more meetings...<p>The lesson I learned was that once a company becomes infected with managerial excess, your situation is only going to get worse. Get out and move to a company that understands how to operate and how to manage their managers.

Gary Hamel here. I co-wrote this piece for HBR a few years ago. Since then, the problem of bureaucratic drag has only gotten worse. Our most recent estimate is that an excess of bureaucracy and lack of empowerment reduces economic output by $18 trillion dollars per year across the OECD. The average Fortune 500 company has 8 layers of management, and few truly new ideas survive the journey up the chain of command. As per Gallup, only 1 in 5 employees believe their ideas matter at work, and only 1 in 11 are free to experiment with new methods, tools and products. If you want some practical ideas on how to bust bureaucracy, whatever your role or title, check out my book “Humanocracy” (available at Amazon), or “The New Human Movement” video series on YouTube. Love all your comments.

The reward for success in most corporations is to be able to hire more people.<p>I can’t think of many situations where being successful means you get to degrade the quality of what you are doing.<p>The problem is peoples egos and signaling.<p>I once worked at a company and did this huge set of projects on a shoe string using creativity and hard work.<p>A manager was hired in another parallel group to mine and they got to immediately hire six people.<p>It made me so annoyed because it felt like I had demonstrated results and not gotten resourced.<p>It sets off these ego driven hiring wars.<p>Once one manager starts staffing up, you immediately felt threatened and under siege and at war.<p>If your competitor peers (they are never your friend) out hire you, then soon their people are coming into your area trying to take over work under you.<p>The entire thing is super corrupt. Like I personally don’t like over hiring but if you have never felt what it is like to be put in that position - it is quite threatening.<p>It also signals if you don’t hire the way other teams are hiring they you are a failure as a manager or as a team.<p>After this experience I realized how compromised you are being middle management: you lose skill and value and you become at the mercy of impossible to control politics coming from all directions.<p>And then what happens next? Well, many times the hiring manager who built their little empire leaves and dumps all the people they hired loose. They all end up in a sort of limbo. Original manager had an idea of what to do with them, now someone else ends up having to baby sit them, often without any vision for what to do.<p>This process of hiring and leaving just degrades the talent and dead weight: it’s such a sort of baked in disease and hard to get rid of.<p>I personally won’t be a middle manager ever again. At least not one that doesn’t report direct to a ceo.

For years I&#x27;ve struggled to come up with a &quot;theory of the firm&quot; that&#x27;s intellectually satisfying but not cynical. Why do we have management? I&#x27;ve only been able to come up with a couple of hypotheses:<p>1. Principal-agent problem. Who do the employees work for? Self interest. The customers? Self interest. Suppliers? Self interest. The company has to figure out how to reconcile the self interest of individual participants with the interest of the company. If you let everybody do whatever they want with no repercussions, they will (figuratively speaking) walk away with anything that isn&#x27;t nailed down. So far the only way we know how to prevent this is to assign humans to guard the interest of the business.<p>2. Failure mode. John Gall claimed that all sufficiently complex systems operate in failure mode 100% of the time. What he meant was that some or all of the controls have been bypassed, and the system is being operated manually. Humans are (at least for now) uniquely capable of functioning in systems that are in failure mode, e.g., by breaking the rules when necessary. This is why I doubt that management can be automated.<p>Now, <i>while</i> managers are doing both of those things, perhaps even just instinctively, they can be doing good and productive things. I&#x27;m actually quite happy with my own boss.

I spent some time as a middle manager, talked way too much with friends in similar situations at other places and I learned the following:<p>* It is very easy to be both very busy and do nothing useful at all. Just accept and schedule a bunch of meetings.<p>* Your potential of improving things depends mostly on the C-level suite. Trying to get buy-in from other levels of management is a waste of time.<p>* Middle managers are quite often recreating other orgs they aspire to without any thought if their prescriptions are suitable for their orgs.<p>* The C-level are actually behaving more like individual contributors than managers. The CEO is typically working mostly on closing deals and attracting investors.<p>* Lower level managers are often created from senior or valuable employees because a title change is the only way of rewarding them and using their experience<p>* Some of the best managers are HR professionals, but they are completely sidelined. HR is working to protect the companies which for good and evil can clash with your goals.<p>* No one is a prophet in their own village, not matter how loyal you are climbing the ladder, and how much you learn along the way chances are they are still going to hire someone from the outside to be your boss that knows less than you. It&#x27;s better to switch orgs when making big jumps in your career.<p>* There are certain pure management skills (everything with budgets) which are quite valuable, and managers are either undertrained<p>So, if I ever run my own company of over a 100 people this is what I&#x27;m going to do:<p>- make sure executives &#x2F; senior managers are doing as much decision making as possible, while accepting input from every senior person in the company, manager or not.<p>- Promote only experts in their fields, preferably from your own ranks as managers.<p>- Instead of introducing hierarchy, consider instead providing managers with experts in management as deputies. Recruit fresh MBAs or experienced HR professionals. This way they help instead of hindering.<p>- Make sure every role has ways to grow while remaining individual contributors. Just give them levels, like Software Engineer lvl 12. Make sure they have free capacity to get delegated tasks or for their own initiatives.

That&#x27;s from the Harvard Business School. Perhaps they can start by reducing Harvard&#x27;s count of 7,024 full time administrators.<p>[1] <a href="https:&#x2F;&#x2F;www.schoolinfosystem.org&#x2F;2022&#x2F;12&#x2F;02&#x2F;harvard-employs-7024-total-full-time-administrators-only-slightly-fewer-than-the-undergraduate-population" rel="nofollow">https:&#x2F;&#x2F;www.schoolinfosystem.org&#x2F;2022&#x2F;12&#x2F;02&#x2F;harvard-employs-...</a>

&gt; “we believe a concerted effort to reverse the rising tide of bureaucracy offers a more immediate and less speculative route to enhanced economic performance”<p>David sacks was on episode of show “UnHeard”. Hit nail on head. ‘professional elite’ or ‘surplus elites’ he called them.<p>sacks came at it from politic angle. we know what happening but media and everyone quiet. this manager class say right politically correct thing.<p>in two big tech company me saw anti pattern where so many managers who give no real output. directors.. product and engineering management.. all involved in increasing headcount fight territory battles.<p>product manager and managers of product managers who just have meetings. product same thing as it existed 2 year ago..3 year ago.. 5 year ago. no innovation. maybe find way to show more ad.<p>me immigrant in this country. what me saw is h1b and other visa farm. entire industry of importing from other country. people sit idle.<p>if stock price $100 a share this organization not contributing even 1$ to that price. revenue is from legacy ad business. managers just bureaucratic up charge and organization so slow and resistant to change they contribution maybe -5$ or lower negative number.

I’m in management consulting<p>One of the most successful trends we’re seeing lately is something only brave companies are willing to do…<p>They get rid of managers entirely<p>Instead, for performance (instead of one on one’s for example) employees get a “counselor”<p>The caveat is that the counselors findings have weight<p>This is working very well and a few brave companies are trying it. Also employees are encouraged to say to their counselors “this project or team sucks move me to another one” and they are. They are also free to just switch counselors<p>If someone is constantly bouncing around, that’s a better indicator of who to get rid of than some random manager beefing with an employee

I think this dovetails nicely with Graeber&#x27;s &quot;Bullshit Jobs&quot; [0] thesis. From the Wikipedia entry, it looks like 37% of Britons polled thought their jobs were &quot;bullshit&quot;, with the HVB article talking about an excess management of around 17%.<p>I wonder how much overhead is &quot;natural&#x2F;health&quot; and whether the amount of &quot;bullshit&quot; jobs is related to a &quot;full employment&quot; mentality, maybe even subsidized by the government.<p>[0] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Bullshit_Jobs" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Bullshit_Jobs</a>

I was more interesting in learning about the $3T&#x2F;year number. Turns out that it is eye-catching but the math here is very dubious.<p>They have several factors - the primary being their taking a few very specific instances of companies, declaring these companies&#x27; manager-employee ratio be the ideal, and then computing how much other companies would save if they had similar manager-employee ratio.<p>This is just wrong.<p>By the same argument, given that Apple&#x27;s retail revenue is $5,500 per sq feet while Target is only $300, we should conclude that Target is wasting retail space and it should save money by shutting down 94% of its locations.<p>That is of course completely incorrect - these are two very different businesses. The same problem exists with the original analysis.

This is why US infrastructure is so much more expensive--it sure isn&#x27;t the labor costs. Germany and Denmark just built an 11 mile under-sea tunnel connecting the two countries that cost $7B. Meanwhile, San Francisco built a 1.7 mile subway that cost $2B--more than the Singapore airport. The institutionalized grift has become endemic in the US. We can&#x27;t build houses, infrastructure, get healthcare, or any of the things other developed democracies have because bribery&#x2F;corruption have become legalized as lobbying.

Its not &quot;costing&quot; $3T, its creating it. The managerial class will spend $3T in the economy and some of it will surely trickle down to somebody actually working.<p>Jokes aside, while the concept of bullshit jobs is instantly relatable by anybody who ever worked in a non-trivial organisation, determing what fraction of that is completely bogus is not so obvious.<p>Maybe the incentives generated by a corporate structure are broken even by its own narrowly defined monetary optimisation objectives.<p>Maybe we underestimate what it takes to herd humans at scale.

What is the role of an engineering manager exactly? I&#x27;ve been thinking about this question for awhile and I get wildly different answers depending on who I ask. It seems to me that an engineering manager contributes to the intellectual product, attempts to solve communication issues between teams, and fills in gaps for what the team needs. It is amazing to me that there is so much variance for something that should be a well defined role.

There are very very few companies that cannot be improved by randomly firing half the folks with MBAs.

I am pretty sure that you can improve the productivity of almost all companies by firing half of middle management and using the money saved to hire skilled people who do the actual work.<p>The most productive and successful company I worked for have zero middle management (150+ staff). The worst most dysfunctional company I have worked for had more middle managers than software developers (50+ staff).

Line management can be good. A good executive suite can deal with finance, market development etc.<p>But middle managers? Motivated to get the biggest budget and deliver the smallest increment (to reduce risk), they are actively working against the interests of everybody.<p>Which makes sense; they have no contact with customers or investors. Just their little myopic budget-meetings and miniscule deliverable promises.<p>Line them all up in the parking lot, and shoot them with one bullet. To save money on bullets.

People managers in tech are overpaid for what they bring to the table. I&#x27;ve seen many whose whole job is:<p>* 1:1 with members of the team<p>* Judge others (during perf review) based one noisy signals<p>* Play politics with other parts of the org to ensure the survival and growth of your own team<p>* Plan team building events (sometimes done by their assistants)<p>They rarely care about the end user, the product, technical decisions, etc.<p>So even though people management is needed the money shouldn&#x27;t be in the management track.

There is a good way to do &quot;lots of management&quot;: it&#x27;s when a small amount of bureaucracy is distributed over management with plenty of autonomy so that managers get to spend 80 % of their time with technical work and only do a small amount of clerical work.<p>That creates skilled managers that can step in and substitute for individual contributors. It also teaches them what the day-to-day work actually looks like, what the culture of the company actually is, what the obstacles actually are, and so on. Technically active management is super powerful, and the only way to achieve it is with a large group of managers, because a small group won&#x27;t have time to regularly dive into technical details.<p>The problem is that&#x27;s never what happens. Any time managers have excess time on their hands, they don&#x27;t find something valuable to do -- instead they invent more bureaucracy and administration to fill their time, and make the organisation less effective.<p>Why is that?<p>I genuinely want to know because if I ever get the opportunity to help shape an organisation, I would want technically active management. I think it&#x27;s critical for success.

The best managers I have had are the ones I&#x27;ve rarely seen. Don&#x27;t misunderstand, I see them all the time, I just don&#x27;t have to interact with them all the time. They aren&#x27;t in every meeting, every SCRUM, every this or that. They check in routinely and ask if I&#x27;m okay, then step back out of the way. We have scheduled 1:1s once per month so that come reviews there are no surprises<i>. They also step in when a team member is struggling and rehome that person.<p></i> If you&#x27;re a manager, you absolutely suck at your job if, come reviews, the person you review is shocked about their review. Some people are dense, I get that, but you don&#x27;t get a pass for that.

Does anyone have any resources that discuss managing in holistic and productive ways?<p>I have <i>The Fractal Organization: Creating sustainable organizations with the Viable System Model</i> by Patrick Hoverstadt, <i>Administrative Behavior</i> by Herbert Simon, and <i>Designing Freedom</i> and <i>Brain of the Firm</i> by Stafford Beer on my docket. Another one is <i>Impro: Improvisation and the Theatre</i> by Keith Johnstone. But I am curious if people have other suggestions, including atypical ones, that approach management almost from a first principles ideal.

About 30% of workers are in &quot;bullshit jobs&quot;.<p><a href="https:&#x2F;&#x2F;theanarchistlibrary.org&#x2F;library&#x2F;david-graeber-bullshit-jobs" rel="nofollow">https:&#x2F;&#x2F;theanarchistlibrary.org&#x2F;library&#x2F;david-graeber-bullsh...</a><p>Here is a dystopia we don&#x27;t hear about too often: instead of robotic overlords, infinite inequality or labor-less utopia, automation could instead be met with an increase of bullshit jobs validating each others. (Iain Banks&#x27; Walking On Glass is the closest I found)

How did we go from 10 employees for 1 manager to 4.7:1?

I wonder what is generally the best way is to trim excess in the correct way.<p>How do you seperate doers and value add from dead weight. Maybe some kind of 360 review where you try to find out who people go to when there is a problem. I suspect you&#x27;d find a small percentage of people that are known for sorting issues and these are the managers you want to keep.<p>For example, a couple months ago a company I consult to had an email get pushed through 5 people in a team that needed something simple to be done. It wasn&#x27;t my job but when it came via me I did it, was like a 5 min task any one of the previous people could have done. If I was the manager of that team I would ask each person on that thread to explain why they added someone else to the email vs just getting it done as you end up with 6 people on an email chain for no good reason. This kind of behaviour is common in this company and its quite amazing to me. Full of people shuffling work vs doing it.

<i>This figure includes both the public and private sectors but does not include individuals in IT-related functions</i><p>Huh? Why exclude IT?

I sense a recurring theme in these discussions:<p>Thesis: &quot;Here are all sorts of ways to run a good organisation with fewer managers.&quot;<p>Antithesis: &quot;That sounds nice for a little startup but it would never work in a big organisation.&quot;<p>Is the antithesis valid? It rarely comes with any citation beyond gut feeling. If yes, what&#x27;s the synthesis?

What this says is that investors in these companies, the ownership in general, are lax and inactive - passive that is. Because every dollar an &#x27;excess&#x27; management person puts in their pocket technically should have gone into an investor&#x27;s pocket. It&#x27;s kind of interesting because this is exactly the kind of management that &#x27;passive&#x27; investing would seem to encourage. No one is putting money in their Vanguard IRA and then demanding that Vanguard harass CEOs to trim down their bloated management, but perhaps this is what the numbers would suggest should be happening. Perhaps passive investing eventually goes away, due to the costs associated with these bloated, tumorous corporate structures, and then only people who are actually getting returns on their money are those that pay attention.

At my work you have to go up 3 levels before we have someone who’s actual job is just managing. and that person was primarily brought in to sort out issues on another team. I’m fortunate that a lot of our org is very functional and doing the work.

Ultimately, how much management is required is a result of team culture, the number of departments in the organization, and how many products are being produced. If you have too many departments or products, you should split the company into more companies. If the culture is wrong, you need to fire the toxic elements or those who do not fit well. In general, organizations grow as needs arise and there isn’t too much actual strategic thought put into “organizational design.” A top heavy organizational structure is a rather obvious result as people when generally hire to solve issues rather than rethinking the entire organization.

50%+ of the US workforce are salespeople who are useless middlemen.

I do think there is ambiguity in the value of a Director&#x2F;VP of Eng in an Engineering organization. It&#x27;s definitely harder to quantify.<p>From my experience, it&#x27;s important to see your role as enabling people in the organization to be more effective rather than just you and your team.<p>That can take the shape of:<p>- Streamlining the hiring process<p>- Spend time on reducing build time &#x2F; decreasing the time to run tests &#x2F; focusing on local environment setup<p>- Reviewing how teams plan and interact with each other

A very underrated take. Consider how the <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Professional%E2%80%93managerial_class" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Professional%E2%80%93manageria...</a> gets a very privileged treatment by the media and what this says about our society.<p>There should be no sinecures if we strive for fairness.

The irony coming from an HBS publication.<p>The opposite argument is that we should make managers more effective at unlocking their team and org’s potential. And that the number is just about right (when you consider two pizza teams and the managers of managers in larger orgs).<p>Good managers help organize the most effective thing known to humans: humans.

Realized revenue and profit are not the job of the layers of indirection. Liability laundering is.

Every control&#x2F;alignment system has overhead. That is exactly why distributes systems are both hard and slow, just look and Spanner&#x2F;Cockroach and compare them so single node PSQL.<p>To get rid of managers, you will need to solve comms problem.

Go for mob programming. Zero manager, zero meeting, zero standup. True team work.<p>Project owner work with the programers (when needed)<p><a href="https:&#x2F;&#x2F;youtu.be&#x2F;28S4CVkYhWA" rel="nofollow">https:&#x2F;&#x2F;youtu.be&#x2F;28S4CVkYhWA</a>

How can we reconcile this with the relative death of small business:<p>&quot;More people are working in big, bureaucratic organizations than ever before. Yet there’s compelling evidence that bureaucracy creates a significant drag on productivity and organizational resilience and innovation.&quot;<p>And yet small businesses have been dying and more and more economic activity is being taken over by large businesses. But these large businesses then waste $3 trillion on management? If that is true, what exactly is it that makes small business so inefficient that they cannot compete against an enemy who sabotages itself with a self-inflicted $3 trillion penalty?

Are things so simple? Jobs have income which feeds back into the economy. The $3T figure is the expense burden, but much of spent back into the economy (and also taxed).

&gt;&quot;Managers and administrators tend to be better educated than the workforce&quot;<p>I&#x27;d say in many modern industries, science, r&amp;d this would not be the case in average.

You mean the VP of Equity Diversity and climate relations and 1000 people under them are costing companies but not contributing to actual productivity and products ?

Maybe they can get rid of SAFe and save half of that?

I think realistically the true figure would be a lot higher.<p>In my 17 years working in tech - most (but not all) managers mostly serve to promote their own existence.<p>The more sociopathic ones seem to try to buzzword their way to C-suite roles, while the majority end up living out their working lives booking &quot;important&quot; meetings with far too many attendees and &quot;fixing&quot; problems by purchasing new &quot;enterprise&quot; software&#x2F;tools.<p>The upper floors of many companies become a vast sea of Madogiwa Zoku[1].<p>[^1] <a href="https:&#x2F;&#x2F;japanesequizzes.com&#x2F;portfolio&#x2F;madogiwa-zoku&#x2F;" rel="nofollow">https:&#x2F;&#x2F;japanesequizzes.com&#x2F;portfolio&#x2F;madogiwa-zoku&#x2F;</a>

<a href="http:&#x2F;&#x2F;archive.today&#x2F;HnGhE" rel="nofollow">http:&#x2F;&#x2F;archive.today&#x2F;HnGhE</a>

Serious Question: Why are managers needed? What is the steelman argument for managers and for not having managers?

I once met an angry drunk Czech who went on - at great length - about how their government is absolutely paralyzed because most positions are &quot;management&quot;. Apparently, the communists wanted to employ everyone, so they set up thousands and thousands of pointless governmental middle-management jobs that never did anything.<p>I wonder how he&#x27;s doing? I bet he&#x27;s on a corner somewhere, screaming about Russia.

<a href="http:&#x2F;&#x2F;web.archive.org&#x2F;web&#x2F;20230107180139&#x2F;https:&#x2F;&#x2F;hbr.org&#x2F;2016&#x2F;09&#x2F;excess-management-is-costing-the-us-3-trillion-per-year" rel="nofollow">http:&#x2F;&#x2F;web.archive.org&#x2F;web&#x2F;20230107180139&#x2F;https:&#x2F;&#x2F;hbr.org&#x2F;20...</a><p><a href="https:&#x2F;&#x2F;archive.ph&#x2F;HnGhE" rel="nofollow">https:&#x2F;&#x2F;archive.ph&#x2F;HnGhE</a>

the most tangible leech-vichy of the capitalist ranks cost capitalists three trillion a year you say? surely theyve some organ meats that could be salvaged!

Because of a lot of meaninless meetings i left my previous job. As a developer i love to get paid for developing widgets not for talking shit on calls

It is because corporate America is filled with MBA graduates who study based on Harvard Business Review&#x27;s and Harvard Business Schools&#x27; case studies and learn best practices from the best administrators - Harvard itself.