A company with multiple layers of management often is said to have a vertical organizational structure. This means that between top management or executives and frontline employees, you have several layers or levels of middle management. While this structure may benefit you from an overall leadership perspective, multiple management layers present some distinct disadvantages for your business.
Vertical structures typically mean greater costs. This is why a common money-saving move by businesses is to lay off middle managers. When you have more managers than necessary to operate an effective company, your salary expenses are greater than they should be. Additionally, managers typically earn higher salaries than frontline employees in a department, so having multiple management levels means you pay more in manager salaries than you should relative to regular employee salaries.
Companies with many management layers can suffer from a poor organizational culture. This often stems from a major disconnect between top managers and employees at the lowest levels of the business. This distance makes it difficult for company leaders to model and instill shared values that bring together workers. Having too many managers also makes it difficult for each manager to consistently reinforce company philosophies and values with staff. In addition, employees may feel helpless to offer any ideas or feedback of their own.
Communication of decisions and changes is often more difficult when it most flow through multiple management levels. In a centralized company where most decisions come from headquarters, it can take a while for information to be shared throughout all management and employee ranks. In a more decentralized company where frontline managers make decisions for their business or unit, there is greater potential for inconsistency.
A common issue among workers is feeling as though they have too many people to whom they report. This can lead to frustration, especially when managers at different levels deliver different messages. Top managers, for instance, may convey certain philosophies or policies to regional, district and business unit managers, who then present them to employees. A frontline employee is compromised if his direct manager suggests that he does something differently than a higher-ranking manager expects. This can lead to confusion and uncertainty on the part of the workers.