Why do companies seem to prefer to cut middle management jobs?
Why do companies seem to prefer to cut middle management jobs?
The global shipper UPS announced Tuesday that it’s planning to eliminate 12,000 jobs over the next few months — most of them in management. The company said the move will save $1 billion in costs this year alone. It also comes following last year’s contract agreement with the Teamsters, which cemented wage gains for union workers, and slipping package volume for the company.
“Trimming the fat.” “Cutting costs.” “Right-sizing.” Those are all phrases that shareholders love to hear, said Peter Cappelli, a professor of management at the Wharton School. And when a company cuts costs by eliminating jobs, he said that managers are often a prime target.
“It’s hard to measure what they do often. If you’re cutting frontline workers, we kind of know what that does,” Cappelli said. “And for a company like UPS, you can’t easily cut those folks and deliver the packages.”
UPS says that AI might be able to pick up the managerial slack, but Cappelli isn’t so sure. “So far, you know, you can’t point to very much that says, ‘Aha, it’s taking over this function,'” he said.
There have also been layoffs recently in tech, media and finance.
That means “it’s going to become a little bit more challenging for laid off workers to find new roles just because a lot of other companies are going through a similar process,” said University of Virginia business professor Yo-Jud Cheng.
Cheng added that layoffs could turn out to be contagious: If companies see their peers cutting jobs, they might decide they need to be a little leaner themselves.
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