Report on the paper:
Dinosaurs or dynamos? Recognizing middle management’s strategic role
In this report we present a concise description and analysis of a study by Steven W. Floyd and Bill Wooldridge. The paper’s main interest is to show a new perspective on the importance of the middle managers in an organization.
Some years ago middle managers were a critical part of the growth of a company, every time that growth or expansion was necessary top managers simply added workers at the bottom and filled in management layers above. This layering technique quickly type casted middle managers as “plan and control” employees. However since the late 1980s growth and expansion has slowed greatly and the priorities of organizations have shifted. Higher quality, lower cost, flexibility and SPEED, are now the main goals. With new priorities come new strategies and structure, thus the hierarchic or vertical model is now seen as a slow model, as the authors state, “people in the middle slow things down, increasing the distance between the customer and the corporate response”. The current wave of restructuring aims at eliminating these hierarchical levels, starting with middle management layers, and organizing work around “horizontal processes”.
The role of middle managers has been widely discussed; generally, it is defined as a part of an organization’s control system. They are known for implementing and communicating to the bottom employees the strategies defined by higher levels. Based on this view, on the reengineered organization top managers depend every day less on middle managers. The advances on information and communication technologies allow them to efficiently “plan and control” activities on the lower levels. “The withering of middle management’s operating responsibilities undeniably justifies reductions in the number of middle managers”, but does it mean that they have become dinosaurs in the firm?
Studies have shown that delayering often has negative consequences, according to the authors “the consulting firm of Towers Perrin asked 350 senior managers in 275 major firms whether hoped-for cost reduction had been achieved, and half said no.” In the case of Kodak, for example, the consequences of delayering were costly to the company, after laying off 12 000 employees between 1988 and 1992 (many middle managers among them) the innovation and creativity declined and they fell behind their competitors in the race for new products. In spite of these results, we already established that delayering is a crucial step in the restructuring of many organizations nowadays. So, how to make it work?
The paper’s principal argument is that the root of the problem in delayering is the stereotype of “plan and control employees” that top managers have on middle managers. “Seeing all middle management from an operational point of view, the top people often fail to make distinctions about the variety of contributions made by middle managers”, especially in the strategy department. Thus vital strategic capabilities are slashed in the process of eliminating middle management layers.
Many have argued that the competitive advantage of a firm comes from unique organizational resources. The authors agree with this view, and based on this they developed the main theory of their paper that “the most important strategic resources are the knowledge and skills accumulated collectively over time by organization members”. These capabilities become “core capabilities” when they make the difference between the firm and its competitors, as they can’t be bought nor copied, they are the result of a long process of interpersonal exchange and knowledge creation. This makes them difficult, almost impossible to imitate. The authors define therefore, dynamic capability as the faculty to “develop new capabilities”, and they associate this competence with the work and influence of middle...