Name: The Middle Manager Conundrum
Uploaded: 2025-05-19
Duration: 19 min 43 s

It’s been said that people don’t leave companies, they leave managers. As companies seek new ways to increase productivity, morale and retention, is the solutions to invest more in this under-trained and burnt- out cohort of high- potential managers ... or remove this layer of bureaucracy altogether? Hear from one company who made the bold decision to remove its middle management and the lessons learned 18 months into this strategic decision, as well as a leading expert who believes in the power of keeping middle managers and empowering them with the tools to succeed in the new era of work.  

The Middle Manager Conundrum

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Well, good morning everyone. Um, I was looking forward to this session because I think middle managers can be maligned and ridiculed and. Uh, but there's no reason for that. But Bayer made headlines a year ago, um, very bold experiments, getting rid of a lot of middle managers and restructuring how work is done. So you guys are now aiming to have 5000 to 6000 self-directed teams working in projects for 90 days at a time, and you have largely junked 99% of the 1,362 pages in your former handbook, something like that. So why don't we just start by setting the scene. Can you tell us 15 months in some of the initial results and learnings from this experiment to get rid of a lot of middle management? Sure, Phil. I mean, just to set a little bit of context, as you said, 18 months ago, we embarked on a very radical transformation and leaned into a new operating model which we termed dynamic shared ownership. Uh, as part of that, uh, I eliminated here in the United States, for example, 40% of all middle managers, um, which was, uh, which was hard, um, but it was necessary to uh see our organization transform into a world that is significantly more agile and in fact empowers teams to take decisions as they see fit. Uh, we, uh, built our organization in the United States, uh, as an example, around 68 largely self-empowered customer teams, and the underlying intent was to unlock significant incremental growth. So this wasn't an effort to just, uh, slash and burn and take out cost, but this was an effort to accelerate momentum and growth across the organization. Uh, today, 18 months later, we're seeing evidence of amazing success. Uh, we just reported, uh, in our quarter one results last week, a growth of 23% in our business here in North America, uh, and, and, and while we don't break out individual countries, you can rest assured that the growth in the United States was even greater than that. Um, so we're, we're on a journey and a journey that gives us every reason to believe that that we're building a better. A faster and more successful organization that is really tuned into its core purpose of serving patients. So Edith, um, I can imagine a lot of people reading about this in the business press, other CEOs are like, oh, that's a good idea, maybe we should do it. Um, what are your reactions to this? What would you caution organizations looking to do this kind of move to think about before they take the plunge? Sure. Well, first of all, I'd like to say upfront that I'm not taking the literal don't do that. Uh, role in this conversation. I am saying that if you are looking to create more impact and productivity from your number one asset, your people, you need to do the work that Sebastian has described, which is to really look critically at how your organization works and what needs to happen to unlock the potential of all your people. How does one increase accountability, ownership, entrepreneurial, positive, uh, conflict that leads to new and edgy ideas? And if you do that work and determine that organizationally there are places in that flow that become bottlenecks, you should do the work as a first instance to understand how you eliminate those bottlenecks and what's. As just described, he identified middle managers uh as one of those points. I would suggest that when organizations do the work and conclude that managers are a place that need to be reconsidered, that's the beginning of the work because it is gonna require and should require a continued thoughtful evaluation of how people are. Going to work going forward you can hope that if you put everyone in the room that they will automatically adopt a new way of being an innovation and it's exciting to hear how Bayer has tied the increased profitability of the organization to its people. I mean an extraordinary concept actually that's fabulous, but you also have to recognize that you're going to have to give individuals. The tools to be managers themselves. Everyone's going to be a manager of themselves, of others in that scenario, and those that are now what I would call Uber managers, looking at larger portfolios, are skilled to do that effectively, right, because people still need a boss, people still need guidance, people still need coaching, and you need to make sure that those tools are available going forward. I mean my initial reactions when all this was uh I mean your CEO came to Fortu's offices a year ago and I was thinking really you're gonna get rid of, you know, I mean it just feels like there's a lot of knowledge and expertise that can be um thrown out, uh, that you could still um uh that a company could still use so how do you, how do you make sure that you're not losing a lot of that, um, brain power in your organization or how, how did you make sure that that didn't happen? You know, a couple of different things. I mean, first, we didn't necessarily terminate all middle managers. Uh, we have a number of examples of middle managers that in fact stepped back and became individual contributors uh and today. Uh, 18 months later when you speak to those colleagues that they love what they do because they came to realize that part of what they did previously wasn't actually adding as much value as they wanted to and, and I would, I would attempt to say not necessarily uh for their own fault. I mean, we created roles. As many, many large companies out there that were just fairly bureaucratic, um, we, we leaned into uh something that I would at times describe the corporate whispering, you know, you have individuals telling their manager, them telling their manager, telling their manager and ultimately someone hopefully deciding, uh, to the benefit of uh sort of the purpose of the organization and what we're wanting to achieve. Um, so, so that's uh that's one. Um, second, I think it's It, it's short-sighted to assume that eliminating middle managers is going to do the trick. To me, that is one, at least in our experience was one important component, but we didn't end there. We invested significantly uh to the earlier point in the upskilling of the managers that remain to be part of our organization. Uh, we eliminated uh traditional management targets and budgets, which was a very important unlock. We allowed teams to flow resources to where they saw the biggest impact and most importantly, we allowed teams to actually decide because we have thousands and thousands of colleagues around the world that have amazing insight and knowledge. Um, and rather than just waiting for others to decide on their behalf, uh, leaning into what they experience and see in the day to day and putting that on steroids, unlocks a ton of magic. You're nodding your head. Uh, yeah, there's so much that Sebastian shares that really resonates with me and our experience in Medley. Medley is a group coaching platform we work with companies who really want to invest in their people to develop those skills that Sebastian described, you know, how do you interact with your colleagues? How do you put forth ideas? How do you do things that are hard skills like listening, communicating, connecting, innovating, and you know, we, we have realized in the 6 years that we've. been doing this, this, this initiative, I don't say it's a business, but it's more than that, that these are things that have to actually, um, these are skills that have to be developed and the new environment that we're in where people are no doubt thinking about how work will evolve and change will actually increase the significance of these capabilities um because if you don't and you take away centers of gravity like managers. You have to have individuals who create that inertia on their own. How do they do that when they're coming from an environment where, quite frankly, that might not have been the norm. So it's really sounds quite exciting that Bear is doing the work to really create these environments where people can learn and develop these capabilities. I mean, when I think of organizations, um, bears an established company large, you know, with time it seems almost inevitable that organizations. Do develop layers of bureaucracy and also as people rise up in a rank they often get they're made bosses and managers and that involves a lot of bureaucracy so I, I feel a bit of empathy to middle managers because I'm sometimes I think well is it is it their fault or is it really the company's organization and rethinking. Uh, on how to give people, um, as they rise, not just overseeing and managing and, and, and paper, but you sort of alluded to that. That's part of what you did, uh, the Bayer did was to, to reduce a lot of the bureaucracy so that these people can actually be, um. Yeah, big time, because it also evolves, it also required us evolving what we expected of managers. I'm exaggerating, but in the old days, very often the rule in itself was focused on the approval of expense reports and and sort of the sort of managing the 1,398 pages of the corporate rule book that you alluded to earlier. Uh, I mean, just to give you an example, we processed in the United States alone 120,000 expense reports every year, and we required managers to look through those and meticulously sign off on all of those different things. When we evolved our model, uh, we transitioned, uh, significantly what we expected of managers. Today, uh, our managers focus on architecting. They focus on being a catalyst, they focused on being a coach, uh, much more than just administering the organization and that's a, that's a big unlock, but it also truthfully, um. Uh, it's, it's just joyful, uh, for those that are part of our organization today because they can contribute, um, a lot more than they did in the old world. If there's one thing that we've learned in the last few years but that's been heightened in the last months is that the narrative really matters, and I do believe that when you start an initiative with the goal of getting rid of rid of bureaucracy, if you are one of those middle managers. You know, I'm not sure that that's an exciting place to be viewed as part of the problem when in effect, I think what Sebastian has described and which I really am supportive of is that the role evolved and existed for a reason, and the reason I would suspect is that as the complexities of all businesses have grown. There has been a requirement for there to be individuals who appreciate the complexities and can be in a convening, um, feature. So if you're a 1000 person organization and you all can talk to each other every day or run into each other. That's one scenario when you're 250,000 people, you yearn for the days where everyone talked to everyone and you didn't need anyone who was an organizing individual, but the reality is, I think historically that there's been an underinvestment in the infrastructure that's been required to actually feed information into these individuals, so the role has had an increasing component of what is described as bureaucracy. You know, expense approvals, etc. Now if you said to any organization, let's get rid of expense controls, I think you probably not want to do that. But I'm sure you would want to say we can do it better than we're doing it now. We don't need to have human beings doing that, particularly in the environment that we're in. And so if you're part of the middle management ranks or you're thinking about taking steps to really understand and unraveling how you reduce those numbers. I would really encourage all of us to really do the work to create a narrative that is exciting for people going forward, not a, a, a tone that means that, you know, we don't need you anymore. I think a lot of individual contributors have grown into these management jobs when really they should be individual contributors and be applauded for those efforts. I'm gonna open it to questions, but I, Sebastian, I'm gonna ask you a bit of a provocative question, and you can tell me if I'm full of it, but, um, Bear US only or Bay bear is doing this Bayer Baa, um, so, uh. Uh, we started in the United States, uh, we've been front runners in the US, uh, but part of what I do today is to take those learnings around the world, and we're seeing significant impact across geographies and are seeing that the model that we're implementing this idea of building an organization around a network of empowered teams is one that carries not only in the United States but around the world. I mean, I, yeah, I asked you that because there's a stereotype that German companies. Sometimes in others in Europe there is um so much focus on consensus that there can be analysis paralysis that can be bureaucracy and I'm just wondering if Bayer decides to try this out in the US, almost like a shock to the system to sort of unleash, um, you know, effectiveness and innovation in the mothership as well or. I, I, I wouldn't position it as as a shock to the system. I think we, we unleashed the organization in the US first because we saw real opportunities to accelerate our momentum here in the United States, uh, and, uh, and we saw this transition as a means to do exactly that, um, um, and I think the results are proving us right. I'll give you one specific example, um, NEA. Uh, which is a prostate cancer medicine, uh, and, uh, in fact, was already the fastest growing medicines of its class, um, but, uh, we, we realized 18 months ago what the team so we all realized that an accelerated momentum in Lubecca was needed to be a cornerstone of our strategy here in the US. Um, what was impressive to me was how eliminating management targets, how willingness to move resources at rapid pace to make where they make the biggest difference and Uh, how leaning into the team's decision making allowed us to do exactly that because teams are willing and able to dream a lot bigger than their management, their managers often do and uh and we achieved blockbuster status with Nka much earlier than we would have ever uh if we had stayed in the old world. We have a question over there. Hi Dianna Dudley from El Camino Health. um, thank you for your comments, Sebastian. I have a question for you with regard to um your middle managers. You mentioned that some of them became individual contributors, and we know that if you usually are a great contributor, you do get promoted to management that level allows you to be compensated as well, more people under you. Uh, bigger bonus things like that. So did you guys adjust the compensation for these people and how did you manage that because part of this hierarchical ladder that we all climb that we have built is also tied to the compensation as well and, and, and that becomes a real critical piece when you make changes in level for people at least in America that's all I can speak to. Yeah, very important question and no we did not make changes to their compensation, uh, and did not sort of downgrade them in their compensation. In fact, we're transitioning in the way we look at careers and how we reward people away from what I describe as an eye where it's only a question of moving up sort of the the hierarchy from from individual contributor to manager to senior manager to senior senior manager to VP to Bigger VP to instead talk about careers as what we describe as a team, uh, and yes, there is still a hierarchy. I mean, we still have 3 management levels here in the United States, for example, uh, but we're also realizing and recognizing that a significantly bigger part of one's own personal development. is flexing different muscles and leaning into different experiences, uh, which is great for the results, but also needs to be rewarded appropriately. So there's a big rethink, uh, in, in, in how we model careers and reward individuals in our organization. Deanna, that's a great question, and Sebastian again is highlighting if you make a change that is significant with respect to roles and responsibility, that is the beginning of the work. If you have used management titles as many organizations have, as a mechanism for recognition and reward, and you're saying going forward we're not going to be doing that. There's the work that needs to be done in repositioning those that are no longer in those roles, but there's also work to be done with respect to creating other mechanisms, uh, that will indicate to people that they are learning and advancing and making a broader impact in their careers. It's always been important. It's very, very important now given what we know about the current generations of people coming into the workplace. More work needs to be done on that. So in our, our, uh, last moments together, um, will this idea spread? Will other large corporations, uh, try it in the same way you have? What's your prediction? I'm convinced it will, um, but it's hard work. Um, I think those that assume that it's only a question of eliminating boxes and middle managers, they will fall short. This is hard work, um, and it's hard work truthfully also on the part of senior management because knowing when to let go is a lot easier said than done. Acknowledging and bringing vulnerability into leadership, uh, acknowledging that senior leaders don't always have the answer and that in fact, it is often individual contributors and teams that have much better answers. All of that requires a significant rethink how we uh manage uh teams and organizations, how we reward uh individuals and what the future of management is. So you know who to ask if you want advice in your own organization. So thank you very much, Edith and Sebastian, for joining us. Thank you.