Delayering: is it right for your business?

You may have just read this title and wondered what on earth delayering is and what it has got to do with your business. It sounds like something reserved for large corporates and multinationals.

But in reality, it isn’t complicated and can prove extremely useful whatever the size of your business for improving efficiency and having a positive effect on your bottom line.

What is delayering?

In simple terms, delayering is the process of removing red tape to make your organisation function better. It involves stripping out layers of management and hierarchy between the lowest and highest levels, effectively flattening your company structure to reduce your wage bill and improve efficiency. 

Getting rid of middle management is believed to offer more responsibility to workers at lower levels, greater and more efficient communication and make it easier for senior managers to oversee the business. However, this doesn’t always mean laying off staff. You can delayer by increasing the reach and remit of senior managers. 

On the face of it, it sounds pretty good – more motivated staff, greater productivity and increased efficiency, all contributing to leaner costs and a healthier bottom line. But is it right for your business?

When should a company use delayering? 

Many companies have the right level of management but some will find that they have too much and will need to delayer at some point in the future. You need to know your business really well and look at your processes to decide whether it is time to have a bit of a clear out.

If decision-making is taking too long with too many middle managers to go through before anything gets done, then it’s time to look at cutting back some of the excess. If it feels like staff are being hampered by company processes and that your company isn’t very responsive to change, then again it could be time to delayer. It could be as simple as removing area managers for example, so a shop manager goes straight to a regional manager instead. 

One the flip side, if your company is growing well you might find you need to relayer, adding in management to help drive things forward because existing management is overstretched.

Advantages for a small business

Delayering can empower your employees because you are giving them more autonomy. This in turn can be a powerful motivator which encourages your staff to be more productive and ultimately more beneficial for your business.

It can improve communication between your staff members because there are less levels of hierarchy they have to go through and it can also give senior managers more of a chance to be in touch with staff. It will also bring your senior staff into closer contact with your customers or clients which can help boost customer relations.

It can help cut costs and overheads – something which is particularly important for small businesses watching their bottom line. It can also help sort out any departmental rivalry by arranging your staff into teams instead of having a hierarchical structure in place.

Disadvantages for a small business

Not all organisations are suited to a flatter less hierarchical structure. For example, if you run a business involving mass production with low skilled employees they may simply not have the skills to make larger, more strategic decisions. It also means there is less chance for promotion than in a narrower hierarchical structure because there are less positions above. 

Just as delayering can be motivational for those that remain it can also create disruption and uncertainty if you do make job losses. Those left behind may wonder what is going on and will take time to adapt to new roles and responsibilities. You also need to be clear it is about reorganisation and not just an excuse for redundancies.

In a small business, you may not have a huge number of managers to begin with and you need to make sure you’re not increasing their workload beyond what is reasonable or manageable. You also need to be aware of getting rid of too many staff and leaving yourself with a skills shortage.