Middle management in a small business typically includes managers at local business units or stores. Decreasing midlevel managers through layoffs is often referred to as downsizing or de-layering. This is a common tactic used by businesses to cut costs. However, removing middle managers comes at a cost.

Less Direct Leadership

De-layering often means that a single manager will have authority over multiple business units or a larger group of employees in an office. This can lead to more detachment between managers and their employees, which goes against the basic premise of direct involvement, training and coaching from a supervisor to his employees. This separation also makes it more difficult for workers to approach the manager with issues, concerns or ideas.


Layoffs of any significance typically get noticed in communities. If a small business drops five to 20 managers, it will likely get noticed -- especially in a small town. This can lead to public image damage and potential backlash -- including from employees. Employees who were fiercely loyal to their manager may rebel against the change. While this rebellion will likely wane, as the employees want to keep their jobs, it can disrupt business for a while.

Lack of Oversight

Companies remove middle managers to save money but also because they don't believe they need such close oversight over employees. However, excessive de-layering could lead to a single area manager or company leader monitoring the work of 20 or more employees. This makes it much more difficult to spot mistakes, take corrective action, coach and train as needed and keep an eye out for illegal or unethical actions by employees. In the long run, the lack of oversight can lead to costly errors in production or customer service.

Communication Challenges

Reducing a layer of management can also lead to temporary or ongoing communication problems in companies. A more distant manager will have less ability to interact regularly with employees and to delegate and follow up on tasks. He is also less available to employees who have questions and need feedback. Cross-functional communication may lag as well, because midlevel managers in each department are often responsible for departmental interaction. This can take away from the overall team culture and the workplace's collaborative nature. Strong leadership from top managers is necessary to reestablish an effective flow of communication in the de-layered workplace.