In a recent article in The Wall Street Journal, a stark warning was given about the future of middle management positions in Canadian companies. As we step into a new year, it’s clear that the trend of downsizing and eliminating middle management roles is not just an American phenomenon but will soon be felt across the Great White North.
The Drive for Efficiency and Profit
The drive for greater efficiency, higher profits, increased international competition, and the impact of artificial intelligence have all contributed to the elimination of many middle management positions. In the United States, managers now oversee three times the number of employees they did in 2017, according to research firm Gartner. LinkedIn’s Workforce Confidence survey found that nearly one-third of employees claim to have bosses who are too stressed to support them.
The Canadian Context
But it’s worse here. Declining productivity under the Liberal government and the resulting increased productivity gap with the U.S., along with higher taxes, reduced foreign investment, and the Trump government’s emphasis on reshoring has made the plight of Canadian employers worse – much worse – than their U.S. counterparts.
Demotions: A Viable Alternative?
The Wall Street Journal points out that many U.S. employers are demoting their middle managers. In some states, they can do so with impunity. However, in Canada, such demotions would be considered constructive dismissal, allowing the employee to resign and sue as if they had been fired. This reality makes demotions unworkable for most companies, with outright termination an untenably costly option.
Advance Written Notice: A Solution?
One viable alternative is advance written notice of a demotion. This approach provides the employer with a means to retain the employee while still addressing performance issues or changing job responsibilities. The length of notice for a demotion is identical to that of a dismissal, providing the employee with a reasonable opportunity to find new employment.
The Consequences
An abundance of management layoffs will result in far fewer comparable positions for laid-off employees to secure. This will lead to greater severance pay, further exacerbating the plight of Canadian employers and setting up an unanticipated corporate crisis for the next government to contend with.
A Call to Action
It’s essential for companies to prepare for this impending shift by developing strategies to address the inevitable consequences of downsizing middle management ranks. This includes identifying high-potential employees, providing training and development opportunities, and exploring alternative roles within the organization.
Conclusion
The writing is on the wall: the middle management cull is coming to Canada. Companies must be proactive in addressing this issue to minimize the impact on their bottom line and ensure a smooth transition for affected employees. As we navigate this new landscape, it’s crucial to prioritize communication, transparency, and employee support.
Recommended Resources
- Top 10 Employment Law Stories of 2024: Stay up-to-date with the latest employment law developments in Canada.
- 8 Tactics That Defined Toxic Bosses in 2024: Learn how to identify and address toxic leadership behaviors in your organization.