16 Feb 2016 19:26 IST

The benefits of meaningful delayering

An organisation must evolve the required type of layers by building fast and high-quality processes

“I have done some case studies on delayering, but never have I come across it in my working life,” said Amit, who was into his third job, years after his MBA.

Before his MBA, he had done a BE in computer science. Usually, people do an MBA to get away from engineering or technical jobs. But something else must have happened to this guy — the techie bug bit him and he took a job in his classmate’s start-up. When the start-up collapsed, he jumped into another start-up, which too aimed to change the world. And from there, he stepped into another one.

We met at a conference on ‘Innovation EcoSystem’, and an investor had just addressed the gathering. He mentioned that he preferred a ‘delayered organisation’, which could be scaled up fast. This seemed to bother Amit.

“I thought we could do with some layers in our team of 25 engineers so that other ‘senior’ guys and I could concentrate on ‘our’ work, instead of hunting for technical information,” said Amit, as we chatted during a tea break.

Amit had, so far, worked only in start-ups. Their employee strength ranged from five to 75. Sure, these companies had seniors and juniors, but it didn’t feel like layers because everyone did everything.

The fact that Amit felt ‘senior’ within three years of starting work is interesting. It could be that he was genuinely better at something that those relatively his juniors couldn’t yet do, and felt he should be allowed to concentrate on ‘his’ work. It could also be that he ‘needed’ to control people.

Whatever the reason, Amit clearly didn’t appreciate this delayering concept.

About the concept

The concept of delayering didn’t come from start-up companies. It came from old and established companies, where the ‘old and established’ added layers of managers between themselves and those below them.

It suited them well. It also suited those who became that new layer because it meant a promotion, a better designation, and control of more people. For those below the new layer, it meant an opportunity for an earlier promotion.

To those who were already in higher layers, this idea seemed sensible as it made them feel good and important. Those who were really at the top of all these layers couldn’t see through them. As long as the company did well, this arrangement suited all.

Beginning of changes

The layers sat atop others happily until the markets began to change. Customers developed new fancies, new upstart companies offered better things at affordable prices, and looked cool too.

The company’s stock crashed. It incurred mounting debts and allowed high debtor levels. Then someone broke the news to the top layer: you have seven grades of managers between you and the field sales or service guy or the machine operator in your factory. Each of these seven grades has three salary slabs.

Of course they knew about this 7 x 3 structure — they had themselves approved the salaries and such designations as Assistant Vice-President, VP and Senior VP. But, when the consultant reported that there was nothing much to distinguish across the various job levels, things got inconvenient.

Most of the delayering efforts focus on eliminating or reducing the much-reviled middle managers, who constitute those extra layers of convenience. Middle managers are blamed for creating silos, blocking change, and making organisations (meaning the top layer) blind to external forces. Note that the higher layers came from the middle layers of the same company (or from middle layers of similar companies). So the possibility that the top layers suffer from the same faults is quite real.

But who can bell this cat? Who can question the job content of those in the top layers? Normally, no one, unless there is a corporate takeover or a change of generation in an organisation.

Now, however, the pendulum swings in the opposite direction. Entire top layers often get cleaned up by the new owners, and some middle managers survive because of their specialist knowledge.

Start-up CEOs may be relieved to think that the above situations don’t apply to them — some might even hope they grow big enough to encounter such problems. They might as well be careful, for the layers aren’t a function of the turnover or employee strength of companies. They are more a function of the aging of a company. Layers start forming over time, and it is immaterial whether they are formal or informal.

Is it always negative?

Layers can have a better purpose. There are good reasons to ‘elevate’ people. A highly experienced and knowledgeable expert needs to be used well. To keep him busy in routine jobs is not wise. A specialist may not relish the task of co-coordinating with people and getting work done.

On the other hand, a person who can understand end-to-end processes well, who can parcel out work to people, who is sensitive to attitudes and skills of people, who is steadfast about quality and customer service, and who is resourceful, should be used for the benefit of the organisation. The way such a person is used has to be different when compared to the technical specialist.

An organisation must evolve the required type of layers by building fast and high-quality processes and executing projects smartly. If development of people is centred around these goals, the right kind of people come up. Start-ups need layers to use available talent wisely, they may not be lucky enough to be taken over.