Delayering

What delayering is

Delayering (تقليص المستويات الإدارية) is the removal of one or more management layers from an organisation’s structure, so that the person who takes a decision comes closer to the person who carries it out and there are fewer links between them. The change falls on the shape of the structure, not on the number of employees: a layer disappears from the chart, and those who sat in it either stay in the organisation or leave it, according to what the organisation decides for them.

Its direct effect is that each remaining manager supervises more people, and that number is the span of control. Delayering is therefore one of the decisions of organisational design, not a procedure separate from it.

How many management posts disappear when a layer is removed

Suppose an organisation has 600 operational employees and a span of control of 5. It needs 120 direct managers (600 ÷ 5). Those need 24 managers above them (120 ÷ 5), then 5 managers (24 ÷ 5 rounded up), then one manager. The total of management posts is 120 + 24 + 5 + 1 = 150, in four layers.

If the span is raised to 9, the posts fall. 600 ÷ 9 gives 67 managers after rounding up to the next whole number, and 67 ÷ 9 gives 8, then one manager. The total is 67 + 8 + 1 = 76 posts, in 3 layers. The difference is 74 posts, which is 49.3% of the management posts that existed, and a whole layer. These figures are hypothetical, given to show the structure.

A difference of 74 posts does not mean that 74 people leave. A post is one thing and a person is another, and what is done with the holder of a post that disappears is a separate decision. The holder may return to specialist work, take another post, or end their relationship with the organisation.

What a wider span costs in a manager’s time

Every person who reports to a manager needs time. If the manager gives each person half an hour a week in a one on one meeting, a short regular conversation with the employee, a manager with 5 reports spends 2.5 hours and a manager with 9 spends 4.5 hours. The difference is two hours, an increase of 80% in this item alone. That does not yet count the time of meetings and approvals, or the work that passed to the manager from the layer that was removed. If none of this is lightened, the span has widened on paper while the manager’s capacity has narrowed in practice.

Whether delayering reduces the number of employees

It does not do so by itself. Reducing numbers is a decision that falls on people, and one form of it is a layoff, in which the organisation ends existing employment relationships for a reason that lies with the organisation. Delayering falls on posts. A reduction in numbers may accompany it, and it may also take place with nobody leaving.

Confusing the two, however, costs the organisation. If delayering is presented to employees as a restructuring and then turns out to be a disguised reduction in numbers, employees’ trust in the decisions that follow may be lost.

A move to an expert role also affects pay, and the effect should be calculated. Suppose a manager paid 18,000 is moved, after the post disappears, to an expert role whose grade maximum is 15,000. The pay is 3,000 above the maximum, which is 20% of the maximum (3,000 ÷ 15,000). This is the situation of red circled pay: pay held above the grade maximum, where the amount stays as it is and increases tied to the range stop. We suggest that every transfer of this kind be reviewed with the legal function before it is carried out.

What is lost with a layer

• The work the layer performed. This includes approving expenses, collecting reports and following daily tasks. If nobody is named to take it over, it passes silently to the remaining managers or disappears without a decision.
• A rung of the career ladder. The first promotion moves further away for those beneath the removed layer, and the seats available for promotion become fewer.
• What the holders of the posts know. This covers the condition of teams and the history of decisions. Passing it on needs deliberate work, which is knowledge transfer; otherwise it leaves with whoever leaves.
• Training and guidance. A manager who now has nine reports does not have the time that manager had with five.

When delayering suits and when it does not

The answer depends on what the removed layer does. If it passes on what reaches it without adding anything, for example by collecting reports, forwarding them and approving what was approved before it, removing it brings the decision closer and the organisation loses nothing. If the employees are skilled and their work is similar, one manager can supervise a large number of them.

When the work is new to the employees, or an error in it is serious enough to call for close supervision, a wider span means less supervision where more is needed. Each layer is asked about before the decision: what is lost if it is absent? If the answer is “nothing except passing things on”, it is the candidate for removal. If the answer is “guidance and assessment”, removing it needs a substitute for both.

Questions to ask before deciding to remove a layer

• What work does the layer actually perform? The question is not what its job descriptions say, but what passes through it each week in approvals, reports and decisions.
• How many times has it amended a decision that reached it? If it changed nothing in a hundred requests, it passes decisions on without taking them.
• How many people report to each manager in it now? If its managers have only two or three reports each, the layer deserves attention before one in which each manager has ten.
• Whose position is affected? Does each of them have an alternative place that can be offered before the decision is announced?
• How much time does the transition need? A transition in a week leaves tasks without an owner, and one that takes a year prolongs the anxiety of those who expect the change.

What changes in the career path

Removing a layer shortens the promotion ladder. In the structure of four layers there were 3 steps between the direct manager and the top, and in the structure of three layers there are two. An employee who wants to advance finds fewer steps, and unless other routes are opened, stays where they are.

For that reason alternatives are considered: a route for experts in which pay and standing rise without managing a team, and sideways moves between departments. Designing these routes is the subject of career pathing, which means setting the possible sequence of roles an employee moves between and what each move requires.

How much delayering actually saves

Delayering may be presented to management as a saving, and the calculation of the saving starts from posts, not from people. Suppose the average cost of a management post is 20,000 a month. The disappearance of 74 posts then means 74 × 20,000 = 1,480,000 a month, or 17,760,000 a year, and this is the gross figure.

But if only 30 of the holders of these posts leave and the other 44 move to specialist roles on the same pay, the actual saving is 30 × 20,000 = 600,000 a month, or 7,200,000 a year, which is 40.5% of the gross figure. To this is added the cost of ending the relationships of those who leave, and it is calculated before the figure is approved. The difference between the two figures is the difference between a post that disappears and a salary that disappears. The effect on the labour cost to revenue ratio is examined after the structure has settled, not at the moment of implementation.

What makes decisions faster after delayering

Removing a layer alone may speed nothing. Suppose that approving an expense passes through four levels, each taking one day, so it takes 4 days. After a layer is removed it passes through 3 levels and takes 3 days, which is a quarter shorter. But the day that was removed may return as waiting. If the work of the removed layer moves to a manager who now has nine reports instead of five, the queue of requests grows longer. Each remaining level may then take a day and a half instead of one, and the time becomes 4.5 days (3 × 1.5), which is longer than before.

At bottom the question is where the right to decide sits, and that is the subject of decentralized management. Removing layers shortens the distance, and moving authority is what makes the closeness useful. When approval reaches the employee within limits the employee knows, that is employee empowerment.

How to carry out delayering without it becoming a change of names

1. Define the purpose. It may be faster decisions, lower cost or closeness to the work, and each purpose has a measure that is written before the start.
2. Trace the path of decisions. Which approval passes through which layer, which approval adds value, and which only repeats what came before?
3. Set a ceiling on the span. This is a number that a manager in the new layer may not exceed, so that the span does not become 9 on the chart and 25 in reality.
4. Assign the work of the layer. Each task goes to a named person or is abolished by a decision.
5. Inform people. This is part of change management, the human side of the transition, as distinct from building the new structure.

How the effect of delayering is measured after a period

It is measured after a period, not immediately after implementation. The time of the decisions whose path was traced is measured again, the actual spans of control are reviewed again instead of the drawn ones, and attention goes to what happened to departure rates among managers and employees in the following months. The remaining managers are asked what work has passed to them, because the figures show the span and do not show the weight now on each manager. If approval time has stayed as it was and the actual span is wider than the ceiling set, delayering has not served its purpose, and a layer may need to be restored or authority moved. Revisiting the structure is not a failure. It is part of a design that is not complete at the first drawing.

This is an explanation of the concept, not legal advice.