Apparently there was an EY Global all-hands today and at some point during it, leadership mentioned an important tidbit of information and then promptly breezed right past it. A tipster tells us:
EY all hands, people do not seem happy.
Staff on the call were told the firm will be focused on ‘delayering’ in fiscal 2024. And then little more was said, leaving the non-consultants to have to Google what that even means.
So what is delayering? From some HR rag:
Delayering is the process of removing layers of hierarchy between the highest and lowest levels in order to boost operational efficiency, decrease the wage bill and remove red tape. Delayering typically removes middle managers, providing senior managers easier reach over the organisation as a whole.
Commonly cited advantages of delayering include increases in engagement and motivation as more responsibility is afforded to ‘on the ground’ workers to make decisions, instead of being told what to do by middle managers. Communication may also increase as there are fewer levels of information to become lost in translation and bottom-up feedback may also increase as employees’ feel their views have more chance of being heard by decision-makers.
Despite the value of delayering, there are disadvantages. Senior leaders tend to gain more control over decision-making with reduced oversight, which means the effects of poor individual decision-making may be felt more acutely. The flatter organisational structures created by delayering may work in particular industries but may be unsuitable for others, and the redundancies associated with delayering may affect worker morale.
So layoffs then. Layoffs wearing a costume made of organizational inefficiencies.
Conveniently enough I found a Deloitte paper on the topic [PDF] and would you look at this:
Some organizations use delayering as a quick fix solution to address common organizational issues such as uncompetitive (or high) operational costs and slow organizational responsiveness. Often times, these issues are only symptoms of much bigger challenges such as:
- Weak organizational discipline in spending (e.g., weak spend policies and lack of a cost-conscious culture)
- Poor organization design (e.g., functional duplication and accountability overlaps)
- Unsuitable career development process (only creating development opportunities through layering)
- Skill gaps at critical positions
- Weak decision-making / governance model
Understanding the root cause of organizational issues requires a thorough, broad-based organizational assessment to evaluate the current state of the organization across various dimensions (e.g., cost, people, structure and processes). Delayering, as a standalone event, is unlikely to bring sustainable cost savings. This can be likened to crash dieting. One can probably shed some weight short term, but may put the weight back on, and sometimes more. Plus, it’s a lot of short-term pain, often for little to no long-term gain. And sometimes it can even do irreparable damage.
Yeah, definitely layoffs. Drop more details on today’s call if you have them.
Earlier and probably related: EY Tells Staff to Get Ready for Some Cuts After the Everest Embarrassment [UK]