The Work Wire - Navigating 'The Great Flattening' and Middle Management's Future

Speaker 1:
0:00
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Speaker 2:
0:31
Hey everybody, this is Bob Goodwin, president of Career Club, joined by my good friend, the president and CEO, Johnny C Taylor Jr of SHRM, for another episode of the Work Wire. Johnny, how are you?

Speaker 3:
0:43
I am really, really good. I mean, this is 2025, and, after an interesting 2024, I'm excited about the prospects of this year. Thanks for having me today.

Speaker 2:
0:54
No, this is great, and I mean, as you say, this is the beginning of the year, depending on when people might be finding this episode. We're in January of 2025, and there is a lot going on. Obviously, people are taking a fresh look at their business resetting, as somebody might say but one of the things that we're seeing this is a buzzword that's in the press right now is what they're calling the great flattening, where companies are looking at, especially with middle management do we have the right people on the team, do we have too many people on the team, and how do we drive more productivity, efficiency, profitability, and I think that, obviously, with most complicated things, there's more than one. You hear your dog?

Speaker 3:
1:37
I do do you hear the?

Speaker 2:
1:38
dog. Oh yeah, you hear the dog constant.

Speaker 3:
1:41
Oh yeah, you hear the dog constantly. Okay, so I'm okay with it, but I just wanted you to know.

Speaker 2:
1:51
So let's stop. Hey everybody, this is Bob Goodwin, president of Career Club, and welcome to another episode of the Work Wire, where I'm joined by my good friend, the president and CEO of SHRM, Johnny C Taylor. Jr, Johnny, happy new year to you.

Speaker 3:
2:04
Happy new year, my friend. I am so excited about 2025. I don't know about you.

Speaker 2:
2:08
Yeah, well, 2024 was a slog, wasn't it?

Speaker 3:
2:12
That's an understatement.

Speaker 2:
2:14
Yeah, so here we are 2025. And, of course, companies are looking to kind of reset, take a fresh look at their business, and they've got 12 months in front of them, and one of the things that we're seeing in the news that you and I've talked a little bit about is something that they're calling the great flattening. So we've had the great, you know, quiet, quitting, great resignation, whatever, whatever. Well, now we've got the great flattening, where companies are starting to take a look at do we have the right people? Do we have too many people? Are they doing the right things? All in a quest to drive profitability, efficiency, productivity, things like that. And so what I thought we could explore is just sort of the kind of pluses and minuses, the pros and the cons, and just sort of take a walk around how companies are looking at this, why they're looking at it and maybe some watchouts that listeners might want to think about as they think about their own companies and getting their workforce aligned correctly.

Speaker 2:
3:09
Sound good.

Speaker 3:
3:10
Yes, sounds good. I love it. That's one of my favorite topics, so let's see where we go.

Speaker 2:
3:15
So when I sent you a note on this, one of the things that I was saying was gosh, don't these things run in cycles and you go back to like re-engineering the corporation in the 80s, right, and it's like all right, let's just look at it, Bob.

Speaker 3:
3:27
I was in elementary school. I know nothing of what you're saying.

Speaker 2:
3:30
Yeah, yeah, it's kind of like the Iliad and the Odyssey it's pretty old but it's ancient history. But the thing is is that like these things do feel like they kind of tend to run in cycles, whether it's centralization, decentralization, and then you centralize again, same thing with, like well, we need to build out the team, we need to keep growing and building out, and then all of a sudden somebody say everybody's got too many people, you've got too many. And it's always sort of the guns pointed at the middle manager. That's your problem. You have too much fat, too much bureaucracy. We need to cut this layer of people. And I would love to just sort of get your first blush on that and we can kind of explore a little bit more deeply.

Speaker 3:
4:07
Well, I think it is cyclical and we have seen it before, we'll see it again, and I think to some extent it largely follows the economic cycle. When things are great, people are making a ton of money, you can layer in all levels of people and that, some of them adding value, others not. But that's, I think, when you see it to your point. Every time you are under economic pressure high inflation, high interest rates, et cetera people then start saying how can we fix this? And the natural tendency is to go to people who are not individual contributors, who don't have specific responsibilities, and query whether or not those people can be cut. So we're just, I think, experiencing that right now.

Speaker 3:
4:56
The problem and I use problem in air quotes is we're not in the middle of an economic downturn in the way that you and I have thought about and seen over our lives, and over over our lives, our professional careers in particular, because normally everyone knows you're in trouble. Right, there's inflation and people are laying people off and it's bad. It's hard to make this case when things aren't bad, right, and that's what's causing so much noise in the system. Companies are producing record profits. Stocks are at an all time high. Yesterday, the market closed 795 points or so ahead. So people are like and so why are we looking to eliminate these jobs? What's this all about these jobs? What's this all about? That's the disconnect in the conversation is nothing's wrong If it ain't broke, don't fix it.

Speaker 3:
5:53
And here we are trying to tinker with something when we still have resources. So what do you think that is? I think companies are. First of all, we haven't and hopefully won't have the traditional bad economy again. You know, feast or famine, that's kind of how it's been. And here we are. 2008 was the last time, 2007, 2008,. An economic downturn that we all really universally knew we were in the middle of. So companies want to avoid that. So they're being a little bit more proactive right Now. It's like let's get in the front of it. Where our margins used to be this big, they're now this big. They're not zero, but we're seeing the pressure and so we're going to get in the front of it and do that. So I think that's the real driver right now is they're getting ahead of it and not waiting until there's a real problem in the economy.

Speaker 2:
6:42
Yeah, so for me and I think you used the word fat earlier I want to maybe work a little bit with that analogy of the body. So, thinking about this episode, because it's a really interesting, and all complicated problems have complicated answers, so you really need to kind of think this out, and so if senior management and strategy is sort of the skeletal bones, this sort of stands the thing up and then I love this stuff.

Speaker 2:
7:12
But go ahead and then you've got, you know, individual contributors, people doing real work. That's the muscle, that's how stuff gets done, right, but there's connective tissue, there's tendons and ligaments that actually kind of serve as the conduit between strategy, which is the bones, right, the basic what are we? And then the muscles that actually get it done. But there's that connective tissue right that creates stability. So your joints work, movement and execution, right, and when they're healthy, then everything kind of works good. When they're injured or harmed or cut out, then that movement and it goes in both directions right. It's the ability to go execute the strategy, but it's also the ability to report back up what the heck is going on in the marketplace. And so you some level.

Speaker 2:
8:04
My concern would be at least not concern, but you know, watch out is are you cutting fat, which is we just keep growing and growing. It's sort of I'm in mixed metaphors now urban sprawl with no zoning codes, right, you just keep growing. And I'll say, like, what's that? Why do we have one on 15 nail salons? You know, like, we don't have that many. So the? But so there's fat that can easily get into the system. That doesn't get looked at, you know, with a critical, smart eye. But at the same time I get very concerned. In the name of appeasing Wall Street for the next quarter, are we actually cutting tendons and ligaments that are going to massively impact the performance of the company down the road?

Speaker 3:
8:49
Yeah, it's interesting that you say that because I think the other thing and I have another sports metaphor to use, but to that, from that perspective, what I would suggest to you say that because I think the other thing and I have another sports metaphor to use, but to that, from that perspective, what I would suggest to you is that the question is not getting rid of middle management, it is finding really effective value added Middle management. So you have just a ton of managers who are not adding value. Fair question. But to your point and pulling out your metaphor, you absolutely need to ensure that the tendons and the nerve systems and everything are connected and that you are getting that the body's working optimally, and so those are absolutely critical. More and more the headlines are always you're getting rid of middle management, you're? I don't know that. That's fair. This my you know I'm a former journalist. My colleagues sometimes are a little dramatic about it.

Speaker 3:
9:42
Yeah, if I put 10 percent of the my management team. It doesn't mean that I want a 10 percent smaller management team. I just may have concluded that 10 percent of them don't add value. Right, and that's the conversation. You've been with me in some meetings when I've said to my employees, like, let's right-size the organization not downsize but right-size and there is a subtle but nuanced difference between that. So, at least from my perspective, a lot of the organizations are saying we understand the value of middle management. People need to be managed and I hope we get some time to talk about more than ever, because we have a generation who experience life, whose relationship with work is very different than ours.

Speaker 3:
10:27
You know there was a time when you could tell you know 20 guys what to do. Point to it and come back at the end of the day, maybe periodically, check in. Now those guys what to do, point to it and come back at the end of the day, maybe periodically, check in. Now those guys want to make sure that their mental wealth, mental health, is fine. They want you to make sure, like they want you to do so much for them.

Speaker 3:
10:44
The care and feeding of employees is very different than the care and feeding model of, call it 20, 30 years ago, hell, 10 years ago. So there is even more I can make a case even more of a need for really good middle managers. I was just and I'm going to stop talking, but it's really funny I was talking to a group of employees, of executives, yesterday at CGI, which has 91,000 employees across the world, and I have a full management team in the room, and we were talking like how different what it requires now to manage employees and the word empathy kept coming up empathy, empathy, empathy. And one woman walked up to me afterwards and she was a very senior level person with an organization and she said you know, I was raised to be appropriately sympathetic. Where did all this empathy stuff come from?

Speaker 3:
11:38
She said I just no, my manager didn't have to feel my pain and walk in my shoes. If someone died in my family, they'd send flowers, send a turkey or a ham. She said, but it wasn't my job to now get all into this, like, how are you feeling? And and I know how you feel she said it just wasn't my, I had to do my work. And so I say that I make that point, not to knock it, but to say now more than ever, middle managers have to be psychologists, they have to be doctors, they have to be parenting experts, like they have to do a lot for their employees. And so I actually can make the case that we need either more or better middle managers, not fewer, for the sake of fewer.

Speaker 2:
12:23
So our mutual friend at Koch Industries, kara Chenault-Reed, who leads their people, she says it's such a simple thing, it's so true. People experience the company through their manager. Yes, people experience the company through their manager, like that just sticks in my head and so you know. I think that when companies start to delay or too much, all of a sudden I'm now having a different company experience and to your your empathy point then you run into span of control, like I've not got 25 people reporting to me. I don't know how empathetic I can be with 25 people. Like that that's.

Speaker 3:
13:06
I just don't know how you even do that um, that's right, and their issues are diverse and buried and no, it's really a different job. So I what I was when I sent you that note and she said we're going to talk about this today, I said I'm going to surprise you guys. I could make a really compelling case for there to be more, or, at a minimum, better, middle managers than fewer, because of the new demands on leaders and the. The middle manager I hate that term in some ways because they actually are the manager. Like I'm the CEO, the people I know of my employees.

Speaker 3:
13:46
I work hard, but it's high, it's by, and if I have a need to work with a particular person but I don't manage that person every day, the person who manages that is the keeper on the team, because if you do it right, the level of productivity something you mentioned employee engagement, tenure, therefore retention, is impacted directly by that manager. Not Johnny, I can give the best speeches in the world and make people feel good and everything else. That manager is how that person experiences work period no, exactly so.

Speaker 2:
14:21
If, if somebody's listening, you could be an executive, your company, who's you know being either thinking about their own business and what they should be doing in terms of potentially de-layering, or you're in that middle management layer, how would you encourage them to think about this? What are some criteria or ways of sort of structuring their thinking?

Speaker 3:
14:48
I think you know we talk a lot in business about value add. Do you add value? Middle managers have got to stop thinking of themselves just conceptually as babysitters. I mean they do and say how can I add value what I do? How can I show my manager that getting rid of me will hurt you and will hurt the organization?

Speaker 3:
15:13
And literally identifying the things that are so impactful and important hurt the organization and literally identifying the things that are so impactful and important to the organization. That's the way you make the case. The case isn't oh my gosh, you shouldn't get rid of me. No, it is. This is what happens. My retention I can save you 10% of the turnover in the organization every year by being a great middle manager. My team is more productive than my colleague who is their manager. I can show you that in productivity terms. This is why I pay for myself and some every day.

Speaker 3:
15:49
You've got to really think of yourself as sort of like, and this just came to my mind. I'm sort of a management consulting firm, you know in some ways, and I own a little firm. I have my group of 10, 12, 15 employees, whatever it is, and we are better because of what I do and how they see and respect me. That's the case for middle managers. But if you are sitting around waiting and if you really aren't adding value, then it's a fair question for management to say senior executive management to say maybe I don't need that person, but I've never been in a situation personally and maybe that sounds a little full of oneself, but where I was worried about losing my job as a people manager, as a middle manager, because I knew the value that I brought to the business.

Speaker 2:
16:39
Can I lean into that for a minute please? Because you know, in my business, as an executive coach, you know working with people sometimes who are in job transition and so you know we start to look at their resume and stuff like that and I will tell you what. What things are like major red flags when it's, you know, coordinated Lee, a right right, and say I don't know what that means and where I just really put my chance is. But how did you either help the business make money, save money or mitigate risk? And you've got to be able to put numbers. The language of business is numbers. What did you do? Oftentimes people put their, you know, like job description basically on there and like people get fired for not doing their job description. What did you do? How did you possibly impact the company? And it's very telling.

Speaker 2:
17:29
I'm a little sad when people like I I don't know how my role actually contributed in these ways. So if you don't know, why do you think they don't know? That's my point. So, dear listener, dear viewer, if you don't know how you could go make the case that Johnny made on how I helped the company make money, save money or mitigate risk, then you should be afraid because somebody's going to figure that out for you and that's not going to be a very fun day for you at work. Conversely, when you can demonstrate that I can go ask for a raise now because I know my value proposition, I should feel fairly secure in my role, making sure that's all being communicated and understood how I add value. But it's kind of a creeping thing that if you're not keeping track of how you contribute, somebody's going to figure it out for you, and that's when layoffs actually start to make or job cuts or thinning mental management makes sense, because nobody can figure out how you contribute to the KPIs that are driving the strategy of the company.

Speaker 3:
18:41
No, it absolutely is. I use the term making yourself indispensable. If your team will operate just fine if you were there or not, then guess what? You don't need to be there. That's the case.

Speaker 3:
18:56
What you want to show is the value of your presence, the addition of you, and it needs to be addition, not subtraction, and not even the same, not equal. But I say, you know, think about an NBA team, and I'm pulling out the sports metaphor a little bit further there are 15 players. The typical back office or the team is about 120 people Like. So think about like 10 people per one, I don't know nine, eight, whatever the math is. But the point is there are only 15 true producers, people who go out, and one could argue, of those 15, only five of them, like, are the starting lineup. Those are the people who are truly, truly adding the most.

Speaker 3:
19:39
If winning is the way that you think about this is the way that you which. It is so, but you have a lot of people who are connecting and doing things to ensure that when you go out there, when that producer goes out there, they do one thing, which is put that ball in the basket, defend against the other, et cetera. They have a very simple role that's the way I see people manage is removing barriers, providing training, helping people, your producers, be better at what they do, and then quantifying it. The reason head coaches are so well-paid is, one could argue, I don't need a general manager and a head coach and a strength coach and a this, this and that, but if you are making the organization better, if you are making the organization, win if the employees, the players, are better because you are a part of this ecosystem, then you have a job, and when you don't, you don't have a job.

Speaker 2:
20:34
I was doing a bit of research for this episode and I came across something that's probably extremely well known to you, but it was RACI and it was are you responsible, are you accountable, are you just consulted or are you just informed? And you can kind of see, there's a layer of contribution that sort of goes in descending order there, a layer of contribution that sort of goes in descending order there, and it's like no, I'm directly responsible, I put the ball in the hoop, I'm the coach, I am accountable for this team, this is my team. I'm accountable. Okay, cool, I'm consulted. Okay, we're starting to get into some. And maybe as a cross-functional partner, you might be consulted on stuff. But within your group you're responsible or accountable for something. And if you find that you're like, just like CC'd on a lot of stuff, I'm just informed about things, that's probably not a great role.

Speaker 3:
21:31
Well, bob, and let me tell you you have to. I've always I had a good friend of mine and I'm going to be very careful not to disclose too much about her because she's now in the market.

Speaker 3:
21:41
One of the casualties of the middle market war, middle manager, war, right. And she called me and she said you know, they just wiped us out. And of course I always appropriately empathetic, but a direct friend now, did they wipe you out or did you wipe yourself out, like, let's not make your organization the enemy? How did you lose your job? And let's step back. And it was interesting. She said well, I could tell over the last year that things weren't going well. You know, as opposed to the emails coming to me, I was simply being carbon copied. I said, well, what did you do when you were carbon copied on something that directly impacted your organization and the people who you were responsible for, as you call it responsible for, right? Well, you know, it was observation, I read it, I was aware of it, so you did nothing with it, right? I said maybe they were testing you, maybe they wanted you to do something. You see it, you want to jump in, you want to add value. I use that term a lot. I said maybe they were testing you, maybe they wanted you to do something. You see it, you want to jump in, you want to add value. I use that term a lot. I said you know you let this happen to yourself and it was a really uncomfortable conversation, not to throw salt in your wound but to get you ready for your next job. So I had that conversation. You're going to land again. You're past the days of being an individual contributor, so you're not going to go back to an individual contributor role. At least that's not your goal. Your goal is to go back into a middle management role in technology. Well, let's start talking now. The only way you do better is to look at the past. It's why teams, after they lose, they look at the tapes, they go back and review what did I do wrong the last time? What did I do well the last time, so that for the next game, the next time you're out there, next time you're in seat as a middle manager, you can be better than you were on this last trip. And that's what I think we all if you're out there listening you don't shouldn't have to wait until you've been fired. But I can tell you now that all of corporate America, all of us, even in the nonprofit, in government I mean that's what Doge is arguing right now at the federal government level is, if you have a job and we're paying you. You had better be addingworker or anti-anything. It says. We all need to win, and everyone here, everyone who receives a check from an employer, needs to be able to make the case that they're worth it. Otherwise, why spending money on you?

Speaker 2:
24:09
So let's jump into the boardroom for just a minute, because you're on board, you talk to CEOs every day of your life. You are a CEO Because things happen in trends and you kind of tend to see, you know, amazon's doing something, meta just announced 5%, you know, and other big companies you know are taking these actions. It's like, oh shoot, I'll just sort of follow them. Sounds like what I should be doing. How would you, if you were in the boardroom, how would you say wait a minute, ms CEO, before we go there. Board members, I want y'all to think about some things before we just kind of just start taking the ax out and start, you know, de-layering or cutting out middle managers.

Speaker 3:
24:55
Well, to some extent, a sophisticated board knows that it's one and only primary job is to find a CEO. So I remind people, my board has one employee, I have 600. So I mean, you start with that, like boards should not be managing the operations of the business, but what they can. And actually what happens to us is, as a board member, I'm watching the trends across all of business, sometimes just a sector, but what have you? And we will call the CEO and say, hey, I see, I'm in technology. Meta just did this. What is Alphabet doing? What like?

Speaker 3:
25:35
And typically as a CEO, your eyes are open. You said yeah, they're doing it. The answer is one of two things. We already did it. Therefore, we don't have a need to do it or guess what we're now doing it. We're watching. It may have beat us to the, or we may decide we're not going to go public with it, but we're going to do the same thing and I think that's what I'm hearing more and more from the board level is meta announces it, but uh, alphabet is probably doing it.

Speaker 3:
26:03
Microsoft is doing it, like everyone's doing it, and and that's what the boards are they just want assurances that every organization has something.

Speaker 3:
26:13
You know, even going back to the body, as you you describe it, all of us have. You know, not a few of us have a perfect BMI, right, this is something that you can work on. And here we are, in the beginning of the year and we all sign up to be healthier and better, because there's an acknowledgement that we all can be better. That's what boards are saying is, whether you do it, whether it's public or not, you should at least go through the exercise of asking yourself do we have the right number and quality of middle managers within our organization? That's what boards are saying Right now. I mean, you know better than anyone. Even forget the Fortune 500, all of us, sherm, I've got a $300 million a year business and I'm sitting down asking my people, as you know, don't go cut to downsize. We've had the best and most successful year in our history, but I want to make sure that you right size and all of our people managers have to add value.

Speaker 2:
27:10
Yeah, and I think that's what I really appreciate you saying is, that lasts a little bit and I think that that's a lesson that anybody listening to this can take away from. It is to take a sober look at the business here at the beginning of the year. Do we have the right people doing the right number of people doing the right things the right way? And if we do cool, you know we're going to get to perfect. You know whatever, I don't know what body fat percentage is ideal, but I just know I'm not there, but but. But. But if we can look at the business and it's not because you know well, I don't want to hurt somebody or whatever, but like what is the right thing for the business and we took a good look that, no, this is. I can make a very straight, short fat line between what this group does, what this person does, and the results that we're trying to achieve. Keep and is in alignment with our culture, because that's very important.

Speaker 2:
28:06
But, but at the same time, say what do those guys do again could? Why do we need to pay three hundred thousand dollars to a team over there when I could hire an agency to do that for a hundred and I'd be a really important client to them. Why are we doing that? Why do I have a group in location X when I could potentially be doing that in location Y? I mean, those are legitimate business questions to be asking. Where I get concerned and I'll just be quiet on this is just the fast followers who aren't going through the intellectual exercise, the analysis. Well, if Zuckerberg's doing it, he's smarter than I am. I guess we should be doing that too. Really, we're just going to start extremely cutting people.

Speaker 3:
28:51
Bob, let me just tell you I'm sensitive to that concern but, having been in business for a very long time like you, that doesn't happen a lot and where it does, you learn very quickly. Uh-oh, I went past the fat, I'm now cutting bone. You quickly figure it out. If you overcut, you know it as a leader because your business especially if those middle managers were impactful and added value, the second you take them out you will feel the loss of that value. But I'm not at scale. They're always not great operators and great business leaders. But I think all of us are being smart and having the right conversation again, not downsizing, right-sizing, like doing and thinking about this in a thoughtful way. But we're struggling with and I don't want to go on this anti-media thing but taking out 5% of your work should be celebrated.

Speaker 3:
29:46
Think about what we do. Going back to sports, when you have a non of those 15 players on an NBA team, if everyone universally agrees, there are two players on this team little over 10%, right who just aren't pulling their weight, what do we do? We celebrate trading them. We tell them yeah, you should have traded that person a long time ago. If the offensive line coach on a football team and the offensive line was horrible and you didn't make it into the quarterfinals of the football championship or whatever.

Speaker 3:
30:17
We celebrate? Yeah right, you should be celebrating when a company says 5% of your lowest performers probably need to go somewhere else because some of them are ill-equipped to do their work, others and there are other jobs for them to do, it's just not the job they're in. No one should want to be at the bottom 5% of their employee population, right? So that's the struggle is. I just wish we would talk differently about it when in sports and we use a lot of sports jargon but we see coaches have a, you know, you lose two or three seasons, you're gone and you didn't get it. Maybe you'll do better at another team.

Speaker 3:
31:08
And that happens and that happens. But in industry, somehow we CEOs and other executives are vilified when you make a change of an employee or a group of employees because they're not performing or not aligned. That is, it's bizarre to me, the double standard. It's bizarre to me the double standard.

Speaker 2:
31:27
So performance matters in business. You need, as an individual and an executive, you need to know how you contribute, right. It needs to be visual within your organization, visible within your organization, right? And if you don't know that for yourself, that's a problem and you need to go figure it out quickly. But at the same time, what you're also saying is just the nature of a distribution of performance is you're going to have some people on the negative side of that distribution, and you're one. Could. I think you're making a good case, good case one can, can argue that not only are you doing those individuals a favor because nobody wants to not be good at what they do or unhappy where they are, but you also send a very strong message to the other people who are top performers that we don't tolerate mediocrity. Right, and we're here to win and we're not here to be mean. But it's to the back, to the body. The body thrives more, it is a healthier body when it's not carrying around extra weight.

Speaker 3:
32:35
Oh, well said, and I'll end with this as, just as a reminder to everyone, especially coming from Sherm's CEO is red carpet in, red carpet out. So I'm actually more concerned about how we exit those individuals who are employees. If you decide that it is appropriate to exit a middle manager, let's ensure that we do so with dignity and respect, short of the person stealing or doing something really, really bad. The notion is that if you've made the decision that you're just not quite cutting it, we're not adding the value. The organization needs to ensure that we do so in a way that the other employees see you also as a good employer when it's all said and done.

Speaker 2:
33:19
I think that's a very tangible example of your earlier empathy, but you also just did an excellent job of teasing our next episode on the work wire, so thank you for doing that. So, uh, Johnny, thanks so much. It's always great to be with you. Uh, I love the important topics that you're open to discussing and and helping me and other people just sort of think about in a fuller way to help their organizations and their careers be the best that they can be.

Speaker 3:
33:45
Yes, thank you, man.

Speaker 2:
33:47
Thanks, listeners, we appreciate you and we will see you on the next episode of the Work Wire.

Speaker 1:
33:51
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