Executive summary: Many organisations are cutting middle management to save cost and “move faster”, but the work does not disappear; it shifts, and the hidden operational and talent debt typically costs more within 12 to 18 months.
The pattern
Across boardrooms in Singapore, Sydney, and Hong Kong, a familiar conversation is playing out. Costs need to come down. AI promises efficiency.
The organisational chart looks bloated. Middle management becomes the obvious target.
The numbers tell the story. In Korn Ferry’s 2025 Workforce Survey, 41% of employees said their organisation had cut management layers.
Separately, Gartner predicts that by 2026, 20% of organisations will use AI to flatten structures, eliminating more than half of current middle-management positions.
The logic appears sound: fewer layers mean faster decisions, lower costs, and leaner operations. The logic is wrong.
What middle managers actually do
Middle managers occupy the most misunderstood position in any organisation. They are not a layer of bureaucracy. They are the translation layer between strategy and execution.
When functioning well, middle managers:
- Convert executive direction into actionable team priorities
- Absorb organisational pressure so frontline staff can focus
- Hold difficult conversations that senior leaders are too removed to have
- Maintain institutional knowledge that no system can fully capture
- Provide the human context that makes change initiatives succeed or fail
This is not admin. It is the work that determines whether the strategy becomes reality or remains a slide deck.
Gallup’s analysis is widely cited as showing that managers account for approximately 70% of the variance in team engagement across business units, a strong signal that manager quality is a primary driver of engagement outcomes.
The real cost of cutting
When middle management is reduced, the work does not disappear. It redistributes, usually in the worst possible directions.
1) Senior leaders lose executive bandwidth
Korn Ferry warns that when managers leave, senior executives take on day-to-day responsibilities in addition to their strategic workload. That is a trade-off between management costs and executive attention, and it tends to be a poor exchange.
2) Frontline employees lose their most trusted channel
Firstup reports that 52% of employees see their direct manager as their most trusted source for company updates, versus 10% for senior leadership. The same research reports that 86% rely on their manager to translate company updates into how those changes affect their role.
3) Communication quality drops, and change delivery fails
When the translation layer is removed, strategic initiatives fail not only because the idea is flawed, but also because no one converts it into individual action, priorities, and trade-offs.
4) The leadership pipeline weakens
With fewer management roles, high-potential employees see fewer paths to advancement and skill building. Many leave. The organisation loses current capacity and future leadership depth.
5) Turnover and replacement costs compound
Replacement cost ranges vary by role, but multiple sources cite a range of roughly 50% to 200% of annual salary, once recruitment, onboarding, ramp time, and productivity loss are accounted for. For leadership roles, the upper end is routinely cited.
Why this matters more in Asia Pacific
Asia-Pacific organisations face a distinct version of this challenge. The International Monetary Fund projected that Asia and the Pacific would account for about 60% of global growth in 2025, amid ongoing volatility and geopolitical complexity.
This environment demands more leadership capacity, not less. Yet the same efficiency targets affecting Western organisations are now shaping decisions in the Asia-Pacific region—mandating headcount targets for multinational headquarters. Regional leaders comply by cutting layers that look dispensable on a spreadsheet.
The problem is that many Asia-Pacific organisations already operate with thinner management coverage. Cutting further does not create efficiency. It creates fragility, especially in multi-market, multi-culture, and multi-time-zone deliveries.
The generation that will not fill the gap
Even if organisations want to rebuild management ranks later, they face a structural problem: many younger professionals are not interested.
Robert Walters has described “conscious unbossing”, a trend in which many Gen Z professionals actively avoid management. Their published summaries indicate that a majority do not want middle-management roles, with “high stress, low reward” cited as a primary reason.
In practice, this is not an entitlement. It is pattern recognition. Many have watched managers absorb impossible demands from above while shielding teams below, without matching authority or support. The pipeline is not only thinning but also being rejected.
The AI misdirection
Many executives believe AI will solve the “middle management problem”. If AI can handle reporting, coordination, and information flow, fewer managers may be needed.
This misunderstands what effective management requires. AI can process information. It cannot reliably hold a difficult performance conversation. It cannot detect early signs of burnout before they show up in metrics. It cannot build trust that makes people raise issues early. It cannot make judgment calls when strategy meets messy reality.
Team Simon’s 2025 report on middle managers highlights a crisis of strain and insufficient support. The key point for boards is simple: AI may change what managers do, but it does not eliminate the need for human leadership.
The question for boards
The decision to flatten management layers is often made by those least exposed to the consequences. It is made in boardrooms and executive committees, frequently based on ratios and short-term savings that exclude second-order effects.
Boards approving management reductions should be asking:
- What work will be redistributed, and to whom? If the answer is “senior leaders will absorb it”, the organisation is trading management cost for executive bandwidth.
- What is our current manager-to-employee ratio, and what will it be? Gusto’s analysis of small and mid-sized businesses shows the average manager span increased from just over three direct reports in 2019 to nearly six by the end of 2024.
- What is our leadership pipeline, and how will this affect it? If cutting removes a development path, the organisation is borrowing from its own future.
- How will we measure the true cost over the next 18 months? Include engagement, regretted attrition, escalation volume, decision cycle time, and customer impact, not only salary savings.
What effective organisations do instead
The organisations navigating this well are not choosing between cost efficiency and management capability. They invest differently and manage with clarity.
Develop managers rather than remove them
Invest in targeted manager development tied to measurable outcomes: engagement, retention, and delivery reliability. When management performance is uneven, capability building is usually cheaper than churn-and-rehire.
Clarify authority rather than cut layers
Many management inefficiencies come from unclear decision rights and overlapping approvals. The fix is explicit decision clarity, not fewer managers.
Use AI to remove admin load, not remove the role
Use AI to reduce reporting and workflow overhead so managers can spend more time on coaching, prioritisation, and risk sensing. That requires investment and operating discipline, not elimination.
Measure what matters
Headcount ratios are not a performance system. Track leading indicators that reflect management capacity: engagement trends, voluntary attrition, workload signals, escalation patterns, and decision latency.
Practical next step: If you are considering flattening, run a 30-day “work redistribution audit” first. Map which manager activities will land on executives, which will land on individual contributors, and which will not get done at all. Then quantify the risk.
The debt comes due
Organisations that cut middle management are not reducing costs. They are deferring it.
The immediate improvement in the profit and loss view is visible. The erosion of engagement, the loss of institutional knowledge, the degradation of decision quality, and the collapse of leadership development capacity accumulate quietly until they demand attention.
This is leadership investment debt. Like all debt, it compounds.
The question for Asia Pacific executives is not whether middle management costs money. It does. The question is whether you are prepared to pay the higher price of operating without it.
References
- Korn Ferry, “Workforce planning trends” (Workforce 2025 survey insights). https://www.kornferry.com/insights/featured-topics/workforce-management/workforce-planning-trends
- Gartner press release, “Gartner Unveils Top Predictions for IT Organizations and Users in 2025 and Beyond” (published 22 October 2024). https://www.gartner.com/en/newsroom/press-releases/2024-10-22-gartner-unveils-top-predictions-for-it-organizations-and-users-in-2025-and-beyond
- Firstup press release, “Shrinking Middle Management Layer Puts Pressure on Workplace Communication and Engagement” (trust and translation statistics). https://firstup.io/press-release/shrinking-middle-management-layer-puts-pressure-on-workplace-communication-and-engagement/
- International Monetary Fund, Regional Economic Outlook: Asia and Pacific, chapter 1 (published 23 October 2025, includes the 60% of global growth projection for 2025). https://www.elibrary.imf.org/display/book/9798229025881/CH001.xml
- Robert Walters, “Conscious unbossing” (Gen Z reluctance towards middle management). https://www.robertwalters.co.uk/insights/news/blog/conscious-unbossing.html
- Team Simon (Simon Sinek), PDF: “The Top 10 Things Middle Managers Desperately Need (But Are Afraid to Ask For)” (September 2025). https://s3.amazonaws.com/kajabi-storefronts-production/file-uploads/sites/2148647852/themes/2162776679/downloads/fbdd0e-e7d3-616-d480-884317b738b_The_Top_10_Things_Middle_Managers_Desperately_Need_by_Simon_Sinek_-_September_2025.pdf
- Gusto, “The Manager Mass Exodus: How SMBs Are Flattening the Org Chart” (span of control context). https://gusto.com/resources/gusto-insights/managerial-flattening-2025
- Inc., “Middle Managers’ Workloads Rise as Their Teams Get Larger” (reports the 2019 to 2024 increase in direct reports using Gusto data). https://www.inc.com/kit-eaton/middle-managers-workloads-rise-as-their-teams-get-larger/91211320
- DDI, “Global Leadership Forecast 2025” media page (includes “conscious unbossing” framing). https://www.ddi.com/about/media/global-leadership-forecast-2025
- PayScale, “The Cost of Losing Employees” (summarises replacement cost ranges attributed to SHRM and other research). https://www.payscale.com/compensation-trends/cost-losing-employees/
