Are Managers Obsolete?

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The economic disruption caused by the COVID-19 pandemic and changing dynamics of the modern economy has raised the question of dissatisfaction of workers with their bosses, and the bigger question of whether mangers are obsolete.

The current “Great Resignation” is a phenomenon in which large numbers of workers during the COVID-19 pandemic have voluntarily left their jobs and do not want to return to them. There are clear indications that the major reason is dissatisfaction with the organization’s culture. Which raises the question and observation that workers most often leave their job because of their boss, not dissatisfaction with their work.

A Microsoft survey of more than 30,000 global workers showed that 41% of workers were considering quitting or changing professions this year, and a study from HR software company Personio of workers in the UK and Ireland showed 38% of those surveyed planned to quit in the next six months to a year. In the US alone, April saw more than four million people quit their jobs, according to a summary from the US Department of Labor — the biggest spike on record.

Why Are Workers Leaving Their Jobs?

The COVID pandemic, with workers forced to do remote work or not work at all, has been a stimulus for many to review their desire to continue to work for their employers. Recent research has pointed to an important reason: toxic work cultures.

Contrary to popular belief and media reporting, a recent study by Donald Sull, Charles Sull, and Ben Zweig published by MIT Sloan Management Review found that compensation is hardly the best predictor of employee attrition, ranking only 16th among possible contributing factors.

They reported that “more than 40% of employees were thinking about leaving their jobs at the beginning of 2021…and between April and September 2021, more than 24 million Americans left their jobs, an all-time record.”

Based on an analysis of 34 million online employee profiles and 1.4 million Glassdoor reviews, the authors ranked the top factors that seemed to affect an employees’ decision to leave their organization. They found that the top five drivers include: (1) a toxic corporate culture, (2) job insecurity and reorganization, (3) high levels of innovation, (4) failure to recognize employee performance, and (5) poor response to COVID-19. Surprisingly, compensation was ranked “16th among all topics in terms of predicting employee turnover.”

They say that a toxic company culture, however, is over 10 times more powerful as an attrition predictor than compensation. According to the data analysis, the factors contributing most to a toxic culture are:

• failure to promote diversity, equity, and inclusion.
• workers feeling disrespected.
• unethical behavior.

Although this might be surprising to many, the study’s authors note that the findings are consistent with other recent research about the relationship between compensation and turnover and the contributing factors of toxic cultures.

And part of that toxic company culture can be attributed to bosses, according to other research.

Foremost, workers are taking decisions to leave based on how their employers treated them — or didn’t treat them ­– during the pandemic. Ultimately, workers stayed at companies that offered support, and darted from those that didn’t.

Workers who, pre-pandemic, may already been teetering on the edge of quitting companies with existing poor company culture saw themselves pushed to a breaking point. That’s because, as evidenced by a recent Stanford study, many of these companies with bad environments doubled-down on decisions that didn’t support workers, such as layoffs (while, conversely, companies that had good culture tended to treat employees well). This drove out already disgruntled workers who survived the layoffs, but could plainly see they were working in unsupportive environments.

DDI’s Frontline Leader Project reported that “ people quit bosses.” The research proves the old trope: People leave managers, not companies. 57 percent of employees have left a job because of their manager. Furthermore, 14 percent have left multiple jobs because of their managers. An additional 32 percent have seriously considered leaving because of their manager.

A Gallup study of 7,272 U.S. adults revealed that one in two had left their job to get away from their manager to improve their overall life at some point in their career.

While managers are often promoted as recognition of their job performance, individual accomplishments are rarely a strong indicator of managerial abilities. In recent years, and especially during the pandemic, there has been a broader recognition of the importance of demonstrating empathy as a manager. According to a study conducted by EY Consulting, 90% of American workers equate empathetic leadership with higher job satisfaction, 88% say it builds employee loyalty, and 79% agree that it reduces turnover.

According to another recent survey, however, this one conducted by Gartner, only 47% of managers feel they are prepared to lead with empathy. “We’re going from someone who manages the tasks of their employees to someone who has to be almost like a social worker or school counselor to support their employees as they confront challenges, both at work and in their personal lives,” says Brian Kropp, chief of research for Gartner. “If you don’t want your employees talking to you about their personal situations, their personal needs, and if you’re not going to be there to support them, odds are you shouldn’t be a manager.”

Kropp adds that managers are traditionally promoted because they have mastered a specific job, and are assigned to assist others in completing those same tasks. Over time, however, he says the responsibilities of managers — and the number of workers who report to them — have skyrocketed, making it more difficult to provide that hands-on assistance. According to the Gartner survey, 70% of midsize HR leaders say managers are overwhelmed by their responsibilities.

“When you compare now to about 15 years ago, the average manager’s span of control has increased by about 70%, so the average manager has a lot more direct reports than they ever did before,” he says. “When I’m one of many people trying to get in touch with my manager, it just makes it harder for that manager to find time for me.”

As a result, Kropp says employees are turning to their colleagues for the help and advice they would have traditionally sought from a manager. “Employees feel like their managers know less about their day-to-day work than their peers and coworkers do, so employees are more likely to turn to their coworkers to get advice and coaching for how to do their job,” he says. “You put all of that together, and that creates an environment where the average employee gets more value out of their peer relationship than their managerial relationship.”

Not only have managers become less of a resource to their direct reports, they’re also a primary source of toxicity in the workplace. According to a recent study conducted by CultureX, a toxic corporate culture is the number one cause of employee attrition, and is more than 10 times more likely to be the cause of an employee’s departure than compensation. “Leaders play a disproportionate role in shaping toxic cultures and specifically toxic micro-cultures,” says Charles Sull, cofounder of CultureX.

Toxic cultures, according to Sull, often accept or even promote disrespectful behavior, discrimination, and inequity. He says the effects of a toxic culture can be detrimental to business performance, but have an even more concerning role in causing employee burnout, depression, and even suicide.

Sull explains that toxic cultures are rarely spread universally across large organizations. They more frequently will show up in specific teams or pockets of the organizations, which he refers to as “microcultures.” He adds that managers are often the single greatest source of toxicity within these microcultures. “Leadership has such an important role in culture that it’s impossible to disentangle them,” he says.

Toxic Workplaces and Toxic Leaders

There has been increasing attention to the problems caused by toxic workplaces and toxic leaders. In my book, Toxic Bosses: Practical Wisdom for Developing Wise, Ethical and Moral Leaders, I argue “Our current turbulent and dangerous times underscores the need to have wise leaders who demonstrate the highest standards of moral principles and ethical behavior.”

In my book In my book, Eye of Storm: How Mindful Leaders Can Transform Chaotic Workplaces, I describe in detail the characteristics of toxic workplaces, and the part that dysfunctional leaders play in creating them. Robert Sutton was one of the first leadership experts to draw attention to the prevalence of abusive bosses and how organizations should screen them out, as detailed in his book, The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t. He points out that tech firms, particularly those in Silicon Valley are where abusive leaders thrive. His article in the Harvard Business Review on the subject received an overwhelming response of affirmation. He says in business and sports it is assumed if you are a big winner, you can get away with being a jerk. Sutton argues such bosses and cultures drive good people out and claims bad bosses affect the bottom line through increased turnover, absenteeism, decreased commitment and performance. He says the time spent counselling or appeasing these people, consoling victimized employees, reorganizing departments or teams and arranging transfers produce significant hidden costs for the company. And he warns organizations this behavior is contagious. Research suggests not only that some bosses are jerks but that many of them are bosses because they are jerks.

Can Workers Do Their Jobs Without Managers?

A recent survey of 3,000 American workers by GoodHire, an employment background check company, reported that 83% of respondents (89% for finance and insurance professionals, 88% among healthcare workers, and 87% for those in hospitality, science, and technology jobs) said they don’t need a manager to do their job. In addition, 84% of respondents said they could do their manager’s job.

According to a 2018 study by management consulting company WestMonroe , 34% of managers receive no manager-specific training. The study reported this was true for 59% for those who oversee one or two people, and 41% for those overseeing three to five. Furthermore, the report says, 43% of all managers do not receive management-specific training in their first year on the job.

“The key to management is to get rid of the managers,” advised Ricardo Semler, whose TED Talk in 2015 went viral, introducing terms such as “industrial democracy” and “corporate re-engineering”. It’s important to point out that Mr. Semler isn’t an academic or an expert in management theory, he is the CEO of a successful industrial company. His views are unlikely to represent mainstream thinking on organizational design. But perhaps it is time we redefine the term “manager”, and question whether the idea of “management” as it was inherited from the industrial era, has outlived its usefulness.

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A study by Deloitte’s Center for the Edge shows that the effectiveness of management in organizations has been steadily falling for the last 50 years. Management guru Gary Hamel in his article in in The Harvard Business Review, says, “Management is out of date, like the combustion engine, a technology that has stopped evolving.”

Jeffrey Pfeffer and Christina Fong, writing in the Academy of Management Learning and Education, argue that research shows business schools do not exert influence on management practices in organizations.

Harold Leavitt, writing in the California Management Review, says cryptically of business schools that they produce “critters with lopsided brains, icy hearts and shrunken souls.” Rakesh Khurana, Nitin Nohria and Daniel Penrice, writing in the Harvard Business Review, point out that other professionals have criteria that define it as a profession, notably a common body of knowledge, a system for certifying individuals before they can practice, and a commitment to use knowledge for the public good, and a code of ethics. The field of management has none of these characteristics and therefore cannot justifiably be called a profession.

Thomas Hout, writing in the Harvard Business Review, argues that if management is so good at predicting outcomes through analytical and scientific methods why have so few public companies performed well? “Companies that are managed the traditional way — by executives developing analytically-driven strategy and shaping the organization to meet the needs of the business as they see them — are obsolete. Management as we have known it, is too cumbersome.” Hout cites the work of Howard Sherman and Ron Schultz at the Santa Fe Center for Emergent Studies, who contend that business today moves in a nonlinear fashion, with no continuity in the flow of events, and no way to predict which products or services will succeed.

Sherman and Schultz argue, in their book, Open Boundaries, business structures should be self-organized to be successful, which means managers allow employees to organize as needed, based on customer needs. This conclusion places the role of the manager in a very different light.

Mitch MCrimmon, writing in the Ivey Business School Journal, argues “in many organizations, employees know more about their work than their managers. This reality should force organizations that still cling to the old top-down style of managing to recognize that many employees today are very capable of managing themselves.” He contends management should be seen as a process, one in which everyone can engage, rather than a role. McCrimmon contends a critical area of focus in today’s organization, employee engagement “cannot become a reality until we move beyond our industrial-age definition of a manager.”

Some futurists, such as Don Tapscott and Anthony Williams, authors of Wikinomics, go as far as to say that corporate hierarchies will disappear as individuals are empowered to work together in creating a new era of mass collaboration–in a new Renaissance.”

In an article in the Wall Street Journal, Alan Murray says that strategies for running large corporations, pioneered by men like Alfred Sloan of General Motors and popularized by scores of elite business schools, helped to fuel a century of unprecedented global prosperity. Murray suggests that management as an innovation won’t survive the 21st century.

An even bigger challenge that faces organizations is creating workplaces that motivate and inspire workers. Survey after survey show that most workers in complex and large organizations are not engaged in their work. The new kind of workplace, Murray argues, has to instill in workers the same kind of drive, creativity and innovation spirit seen in entrepreneurs, which may explain why an increasing number of Generation Y are becoming entrepreneurs.

So does that mean we need to abolish management structures and replace them with ad-hoc teams of peers who come together to accomplish specific work and then disband? The concept of a learning organization and knowledge management may have to be re-examined as well. Traditional bureaucratic organizations focus on not sharing information, which is used as a source of power by managers. New mechanisms for sharing the “wisdom of crowds,” or as the Japanese call it, “ba,” may have to be part of rethinking management.

Robert Sutton, professor of management at Stanford University argues that defining the job of managers, as a profession, has no parallel to other professions. Most other professions are trained to put their client’s interests ahead of their own. In contrast, Sutton argues the most effective managers take as much money as they can for themselves from their clients. Sutton suggests that managers would be well served to embrace the Buddhist philosophy of “do no harm.”

There’s some pretty good evidence that free market Capitalism as we know it could be in deep trouble in today’s world. And stereotypical CEOs, business models, as well as workplace practices are in equally deep trouble. One need only look at the increasing income gaps and disappearing middle class, increasing levels of employee disengagement and distrust of leaders, along with the control of almost all wealth in the hands of the few as evidence. We can point to some destructive myths about economic enterprise, leadership and work as feeding those problems.

Tony Schwartz, writing in the Harvard Business Review identifies four such myths often promoted by managers:

• Myth 1: Multitasking is critical in a world of infinite demand. This flies in the face of recent neuroscience research;
• Myth 2: Anxiety helps you perform better. This often shows up as bosses putting performance pressure on people which inversely affects motivation and performance.
• Myth 3: Creativity is a genetic trait and can’t be taught. But we know now that creative thinking can be taught and learned.
• Myth 4: The best way to get more work done is to work longer hours. This has led to workaholism and burnout and evidence of declining productivity.

Another myth is “management efficiency” — of course invented by managers. Tough economic times have produced a flood of management “experts” and many leaders of organizations whose only strategy for dealing with the downturn in the economy is cutting costs, layoffs and more efficiency-based strategies. The mantra for business for much of the last century has been operational efficiency. So leaders look for ways to cut costs and make the operations lean and mean. Yet much of the rationale for and evidence supporting efficiency as a key management strategy is questionable.

Management efficiency theory came to life in 1899 with a simple question: “How many tons of pig iron bars can a worker load onto a rail car in the course of a working day?” The man behind this question was Frederick Winslow Taylor, the author of The Principles of Scientific Management and, by most accounts, the founding father of the whole management business. Taylor’s scientific management principles became the Bible upon which management practices have been used to dominate Western business for the past century. The problem is, that Taylor was a better salesman than a scientist.

Mathew Stewart, the author of The Management Myth: Why The Experts Keep Getting It Wrong, describes how Taylor manufactured his data, lied to his clients and inflated his results. He argues that since Taylor, business programs in universities continue to model much of their education, with emphasis on technical knowledge and the scientific management approach.

In my article in the Financial Post, I present evidence to support the proposition that liberal arts graduates may be a wiser choice for organizations choosing leaders. Stewart, who was for many years a management consultant, argues that the study of philosophy and ethics would serve society better as a basis for educating business leaders.

This theme is echoed by Tom Demarco in his book, Slack: Getting Past Burnout, Busywork And The Myth Of Total Efficiency, in which he details American business leaders’ obsession with planning and cost saving efficiency based on a mistaken belief that human beings are efficient in the same way that machines are.

Aubrey C. Daniels, one of the world’s foremost authorities on management and human performance, outlines management practices that are destructive to organizations during boom or bust times, in his outstanding book, Oops! 13 Management Practices That Waste Time and Money (and what to do instead). Daniels points out that few managers look for behavioral data to affect employee performance because most managers know very little about the science of behavior and recent brain science or neuroscience, and very few business programs in universities teach it. Daniels identifies 13 managerial strategies that not only don’t work, but are destructive to organizations and the people in them, what’s wrong with them and what to do about it.

Traditional management strategies in organizations are based more on animal training than on human psychology and neuroscience. Leaders promise bonuses and promotions (the carrot) for those who go along with the changes, and punish those (the stick) who don’t with less important jobs or even job loss. This kind of managerial behavior flies in the face of evidence that shows that people’s primary motivation in the workplace is neither money or advancement but rather a personal interest in their jobs, a good environment to work in and fulfilling relationships with their boss and colleagues.

Over the last few decades, organizations have slowly transitioned from promoting employees based solely on technical ability to recognizing the critical importance of soft skills. No longer does the best accountant become the finance director; now it goes to a solid performer who can also manage stakeholders, develop employees, and communicate in an engaging manner. At the same time that this transition has occurred, companies have significantly increased investment in leadership development, recognizing that not only do new managers need help to thrive, but that the quality of leaders directly impacts the performance of the organization. Companies have embraced soft skills and the value of leadership and have invested significantly to support this culture change. Things must be going swimmingly in organizations, right?

Not quite. According to recent Gallup surveys, only 38% of workers say their manager helps them set their priorities, and fewer than one in five workers under the age of 37 [which includes the prime years when new workers need development the most] say they receive any routine feedback from their boss. Were you expecting more from your managers? Maybe you shouldn’t: According to Gallup, only 35% of them are engaged themselves.

Egalitarianism infiltrates the C-suite. One of the most impactful trends shaping organizations is the shift toward the structural flattening of hierarchy in the workplace, a direct result of a cultural move toward egalitarianism and democracy in general. And so it is beginning to go with company leadership, with even the biggest companies dispersing influence by creating less rigid hierarchies and more channels for input among their employees. The C-suite is getting flatter organizationally, and the influence of each executive is decreasing, particularly in newer organizations. While this might look like a benevolent gift of egalitarianism, it may possibly indicate a growing lack of desire for responsibility or true accountability among an increasing percentage of the workforce. The real question: Will younger workers really want to be leaders?

Moving from bosses to caretakers. We used to fear our bosses. Then we started having beers with them. In the future, our bosses may not only be our friends but our caretakers as well. Because many companies fear losing their talent, and because they have increased survey-based management and frequent emotional temperature taking among employees, many experts felt that compassionate leadership was becoming of paramount importance. As a result, future-forward managers are making an effort to put their people first, making employees· wellness and happiness a priority to enable them to produce their best work. However, this well-intentioned philosophy could grow into a dysfunctional not to mention costly] burden to bear as executives take on an increasing amount of responsibility for employees· welfare, potentially leading to a lack of independence and resilience in the broader workforce. In a few years, we’ll see employers begin to take on an unprecedented level of responsibility for their employee’s welfare, investing perhaps too heavily in positions and resources to sustain employees· physical, psychological, emotional, and even spiritual well-being. Smart leaders. though, will find ways to support their employees while continuing to develop their independence and resilience.

Organizational Evolution

We are evolving toward an age of networked enterprises, in which the traditional hierarchies of the corporation will be supplanted by self-organizing systems collaborating on digital platforms.

It will be an era of entrepreneurship, distributed leadership, and the continual reorganization of people and resources. It will be a time of disintermediation both within and between organizations. Layers of management will fall; the need for centralized systems and trusted go-betweens will dissipate, if not disappear.

Or so many experts predict.

But that’s history speaking. When we look ahead to life in the digital matrix, there is reason to question culture’s role. Our relationships to institutions will become increasingly defined by the activity in which we are engaged at any given time. We will come to view ourselves as “affiliates” more than “employees” — at least as we think of that term today. We will encounter new partners and colleagues on a rolling basis. We will weave in and out of relationships, working interchangeably with who belong to the same organization and those who do not.

In this world, we will no longer prize alignment; we will prize realignment. Such an environment benefits from clear and universal rules of engagement. It does not benefit from habits that are distinctive to one group of people — which is the essence of organizational culture.

In his book The Will to Manage, renowned management consultant Marvin Bower described a company’s philosophy as “the way we do things around here.” Those words helped to establish the role of corporate culture and solidify its purpose over the next 50 years. But we are embarking upon a time when the “way we do things” will be reinvented with each new collaboration. And in such waters, a tool meant to reinforce consistency of behavior over long periods of time transforms from a motor to an anchor.

While the division of labor was the hallmark of the industrial era, it is becoming increasingly difficult today to parse out and allocate white-collar work in the form of specific tasks. Regardless of how we describe the present, be it the digital epoch, the Fourth Industrial Revolution era, or the “second machine age”, what it boils down to is that all work that requires supervision is being outsourced to robots and algorithms. Non-standard, creative, experimental work, on the other hand, doesn’t naturally lend itself to management.

The bottom line is that the hierarchical management mode is no longer suited for the challenges of the modern economy. The status quo is often protected by the vocabulary of business: directors direct, presidents preside, and managers manage. But all those activities are adding much less value than they used to be. They constrain innovation and stifle creativity in the pursuit of order.

Contextual awareness, peripheral vision, design thinking and a multi-disciplinary approach — these are all terms that are trending in modern office-speak. And deservedly so. A project-based and titles-free organization — where yesterday’s team member is today’s team lead — can deliver the flexibility and agility that businesses yearn for.

Matthew Steward, writing in Atlantic Magazine, says “at its best, management theory is part of the democratic promise of America. It aims to replace the despotism of the old bosses with the rule of scientific law. It offers economic power to all who have the talent and energy to attain it. The managerial revolution must be counted as part of the great widening of economic opportunity that has contributed so much to our prosperity. But, insofar as it pretends to a kind of esoteric certitude to which it is not entitled, management theory betrays the ideals on which it was founded.”

Steward argues that each new fad calls attention to one virtue or another — first it’s efficiency, then quality, next it’s customer satisfaction, then supplier satisfaction, then self-satisfaction, and finally, at some point, it’s efficiency all over again. If it’s reminiscent of the kind of toothless wisdom offered in self-help literature, that’s because management theory is mostly a subgenre of self-help. Which isn’t to say it’s completely useless. But just as most people are able to lead fulfilling lives without consulting Deepak Chopra, most managers can probably spare themselves an education in management theory.

Thomas M. Hout says that while good management may make a difference for a short time, a company’s fate is determined by forces outside management’s control. Managers cannot predict which business strategies or product platforms will survive. At best, they can try to innovate or scramble to adapt. All companies will die, just at different times. In other words, it’s the system, not management, that dominates. “Creative destruction” is the watchword for this school, and Joseph Schumpeter is its prophet. Many economists, venture capitalists, and Darwinian business thinkers belong to this school.

This is the view laid out by Howard Sherman and Ron Schultz in their book Open Boundaries. Both are fellows at the Santa Fe Center for Emergent Strategies in New Mexico. (This center collaborates with but is not formally a part of the Santa Fe Institute, which has done much to develop complexity theory in the sciences.) The book will make readers rethink their assumptions about how competition works and how much managers truly understand the flow of business. Readers may find it fairly abstract, but it does provide an engaging way to think about management.

The authors argue that business today is not only faster hut also fundamentally different: it moves in a nonlinear fashion. There is no continuity in the flow of competitive events (except perhaps in retrospect), and there is no way to predict which products or companies will succeed. Competitive advantage is fleeting; technology and markets change so frequently and radically that yesterday’s assets become to- day’s dead weight. Look, for example, at what the CD-ROM did to Encyclopedia Britannica or how deregulation is transforming the electric utility business.

This shift to a nonlinear world has two major implications, according to the authors. First, business structures work best when they are self- organized. Rather than impose shape upon the organization, managers should simply allow the organization of people and effort to evolve in response to ongoing messages from customers. Markets, like other complex systems, reflect the intricacies of many low-level interactions. No intelligence from on high can match the quality of solutions to market problems that arise from players who are constantly communicating with one another on the ground level. The invisible hand of the marketplace should displace the visible hand of the manager. The markets can deter- mine where one team or initiative or company ends and another begins. Managers interfere at their peril.

Second, the authors contend, strategy should be “emergent.” Companies can’t plan ahead- they must allow their strategies to emerge out of current conditions. If managers try to map out strategies beforehand, they’ll simply end up driving by their rear-view mirror. Even scenario building has little value. Since everything in the economy is evolving simultaneously, affecting everything else in unpredictable ways, it’s dangerous to make any assumptions.

Managers are being cut adrift from many of their traditional moorings. The heightened pace of change is forcing them to rely more on instinct and intuition. And with organization and strategy increasingly set by people on the ground rather than at the top, managers’ roles are changing. But all three of these concepts- nonlinearity, self-organization, and emergent strategy-have important limitations that show the continued primacy of good management.

Summary:

It’s clear that the disruptive changes caused by the pandemic and a variety of economic, social and technological forces require organizations to evolve, and with them, the need to either reconceptualize of the role of middle managers, or realize that their time has passed.