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Critical Slot: Restructuring Alters Middle-Manager Role But Leaves It Robust

September 25, 1995

Despite years of relentless downsizing, ``right-sizing″ and re-engineering in corporate America, all aimed in part at shedding excess bureaucracy, reports of middle management’s demise are proving much exaggerated.

A Wall Street Journal study of data filed annually with the Equal Employment Opportunity Commission shows that the managerial ranks of Fortune 500 and other companies reporting to the EEOC have remained almost unchanged since they reached a record of nearly five million in 1990.

Another measure, the number of managers per 100 employees, shows a decline, but far less than reports of middle-management slaughter would suggest. There are now 11.17 managers per 100 employees, compared with 11.83 per 100 in 1990.

Corporate giants including Aetna Life & Casualty Co., American Express Co., Johnson & Johnson and Procter & Gamble Co., all of which have had layoffs since 1993, have more managers per 100 employees today than they did in 1993.

The EEOC data cover 38 percent of the work force and come from firms with 100 or more employees, or, in some cases, 50. A Bureau of Labor Statistics sampling meant to cover the whole U.S. work force recently found that its category of executives, managers and administrative personnel grew 28.8 percent from 1983 through 1993.

``The data don’t support the kind of revolutionary change reported in the media,″ says Massachusetts Institute of Technology economist Paul Osterman, author of a coming book about managerial careers in the new economy. ``Restructuring may have caused a reduction in middle managers at companies, but it’s often increased their percentage of the total work force.″

It is certainly true that tens of thousands of middle managers have lost their jobs in recent years, and many face long, painful struggles in trying to replace them. It also is true that even for many managers who stay employed, the flattening of hierarchies cuts promotion opportunities.

Yet other economic forces are offsetting these losses, and creating management work where it didn’t exist before. The ``de-layering″ seen in the great re-engineering of corporate hierarchies spreads out management work and endows some rank-and-file employees with managerial responsibilities. Technologies that supplant workers require managers to oversee them. So does outsourcing. The growing complexity of white-collar work increases the need for management in some cases. And a shift in management duties toward external dealings with customers, rather than just supervision of employees, blurs the distinction between managers and marketers.

Xerox Corp. exemplifies many of these forces. A 1993 restructuring crunched its management from 18 pay levels down to just three broad bands, while stripping away 9,500 Xerox jobs in all. The layoffs naturally reduced both worker and manager numbers, and company reports to the EEOC show the category of ``officers and managers″ declining 17 percent from 1993 to 1995. But by a more precise Xerox count of those it considers truly middle managers, the total in the core document-processing unit is 3,800, ``almost exactly the same as before,″ says Patricia Nazemetz, director of benefits.

``The reality of re-engineering is that many more people are in a decision-making mode,″ Ms. Nazemetz says. ``So more people get elevated to a management category.″

Michael J. Tiffany is an example. In some ways, his job in marketing communications hasn’t changed much. ``But I used to have to go through my manager to implement anything I needed to do,″ he says. ``Now I have a lot more latitude.″

Similarly, even as the re-engineering was bestowing greater responsibility on an upper-level manager like Arizona sales boss Jule E. Limoli, who got a bigger territory and duties beyond sales, his salespeople received authority to decide on pricing and other sales terms without seeking a boss’s approval. ``That’s given them management responsibilities,″ Mr. Limoli notes.

As part of its shake-up, Xerox farmed out its information-management operations to Electronic Data Systems. This reduced the Xerox work force by about 2,100, primarily people such as programmers, technical-support workers and network operations staffers. But Xerox retained managers from the department to plot strategy and oversee the outsourced function. ``They’ve stayed on, while their workers have left,″ Ms. Nazemetz says.

Meanwhile, EDS says it added 15 to 20 managers to oversee the Xerox account, though the General Motors Corp. unit still hopes to reduce management’s role in the operation over time.

Often changes in the marketplace create new managerial requirements. As the health-care business shifts toward managed care, American Home Products Corp. has restructured its sales and marketing. ``We’ve had a significant reduction in sales reps going to physicians’ offices and a big increase in our selling to medical centers,″ says area business director Geno Germano. While the sales force has been cut by 30 percent, managers overseeing medical-center accounts have increased fourfold, in part because such accounts require closer attention.

At Aetna, the managed-care movement has cut the ranks of managers overseeing traditional indemnity insurance claims but created management slots for people with clinical experience. Rebecca A. Kujawski says she was ``the only nurse here″ when she joined Aetna to work on catastrophic health claims in Tampa, Fla., eight years ago. Today, as a director of utilizations management, she oversees about 40 Aetna nurses in Tampa. ``You’re definitely going to see more nurses in management here in the future,″ she adds. Nationwide, the company now employs 1,300 nurses.


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