Busting Bureaucracy: Are Layoffs The Only Way To Go?
As we discuss in The Rise of the Superworker, we’ve entered a period of productivity-led growth in business. The economy is slowing (US consumer sentiment plummeted and GDP growth in the EU and China has slowed), expectations for AI are high, and CEOs are looking to redesign operating models.
Message to Federal Employees
Core to this strategy is the idea of busting bureaucracy: eliminating middle managers, reducing job layers, and shrinking teams to focus on talent density.
And as I watch Elon Musk brandish his chainsaw (an old metaphor) and hear stories of Jamie Dimon, Mark Zuckerberg, and other CEOs push to weed out low performers, I’m taken back to many years of history: this is not a new idea.
The most iconic cost-cutter in my career was Jack Welch (“neutron Jack”) who laid off 118,000 GE employees in his first few years as CEO. Welch decided that forced ranking was needed, and he introduced a two-decade trend to lay off 10% of the workforce every year, focused on using the bell curve as an organization model. And for much of Welch’s tenure GE performed well.
Later we learned, however, that much of this was a charade. The company’s focus on being #1 or #2 in each market created a company filled with financial engineering, and GE lost its focus on engineering, product fit, and quality. David Gelles, a NYT author I admire greatly, went so far to say that Welch “crushed the soul of Corporate America.”
Along came the internet and bureaucracy busting took on a new shape. Now we talked about agile teams, holacracy, two-pizza teams, self-managed groups, and Amazon’s famous “press release” culture. The Facebook approach to “move fast and break things” went viral and we all started doing innovation projects all over our companies. I interviewed many clients and found that yes, flatter companies did perform better. We could avoid bureaucracy simply by keeping teams small. (Read The Mythical Man-Month.)
But that wasn’t enough. Rather than focus on “regular layoffs” (which damage employment brand and create toxic internal competition) we realized we needed to build “growth mindset.” So companies like Microsoft (Satya Nadella’s wonderful book Hit Refresh) discovered that a focus on growth, not accountability, was the secret, because that’s the culture that creates innovation. So everything shifted again.
And here we are in 2025, ready to implement AI to speed up everything, but we still have too much bureaucracy. And the US Federal Government, which is $36 Trillion, is getting chain-sawed before our eyes.
What are we to do?
Before I share our insights, let me simply say this is a highly studied domain. I have read dozens of books on org design, leadership, and innovation strategy and they each posit models, approaches, and ideas that make sense. So as you think about your own company’s productivity journey, there’s no shortage of ideas.
As you embark on your own company’s journey, I’d like to give you our 25+ years of experience. And these fall into the category of “principles,” each of which will guide your process. Much of this comes from Peter Drucker, who’s famous book “The Effective Executive,” still sits on my desk, as well as our large body of research on Dynamic Organizations, Agile Organization Design, and Irresistible Organizations.
Fundamental Principles of Organization Design
1/ Jobs and job titles are not cast in stone. Eliminate or change them at will.
The first problem we have in business is the age-old “job architecture.” Stop thinking about jobs as containers for people: think about people as skilled resources who can do many jobs. The more job levels and specialization you create, the more bureaucracy you build. It gets in the way of agility and project based work. (Lots of companies are doing away with descriptive job titles.)
2/ Focus on accountability, not org charts.
It doesn’t really matter “who works for whom” – what matters is what we’re responsible for. If we all know our goals and measures, we can each contribute without huge amounts of management. OKRs are one tool that helps here.
3/ Managers manage work, people manage themselves.
Don’t create “manager” or “supervisor” jobs unless you know precisely why you need this role. If you hire people with ambition and skill, they don’t need a lot of “management.”
As many high performing companies tell us, great people manage themselves. If someone doesn’t know what to do, they can ask their leader, but they should not need to be “managed.”
4/ Talent density is everything. Headcount is not.
Stop the thinking that “headcount leads to growth.” It doesn’t. What matters is the skills, capabilities, accountability, and team alignment. A small highly skilled team will outperform a large, misaligned team by orders of magnitude. You have to invest in skills development, reflection, feedback, and learning. Always trying to hire the “next guru” is a poor way to build scale.
5/ Managers must be rewarded for outcomes, not power.
Reward managers for team outcomes, development, and talent growth. If a leader is only rewarded for his or her results, they’ll hoard talent and resist change.
And remember that once you anoint someone a “manager,” they want more authority. So make sure your managerial team are “doers” who share, coach, and support others. If your managers resist broader organizational change, take them out of management.
6/ It’s ok to let someone go. And it’s ok to shut down a team and redeploy the talent.
If you find a person or team who’s falling behind, damaging collaboration, or constantly making mistakes, it’s perfectly ok to let them go. Maybe they were a bad fit to being with. And don’t blame the team if a business unit or product fails – find them a new job if they have skills and culture you need.
7/ Turn talent acquisition into the “growth team” not the “hiring team.”
You should make it very hard to hire a new person. Before a headcount is opened, you should have many conversations about the 4R’s (reskill, retain, redesign, recruit). I often tell people “just come back with a plan to double output with the team you have.” And sure enough, then they think about new tools, new processes, and eliminating wasted meetings.
8/ Invest in technology, learning, and culture building.
Every week there should be a learning meeting to share what you’ve learned. Constantly talk about behaviors, teamwork, and customer focus. Invest in the best IT tools you can find, and throw away the ones that don’t work. Think about every challenge as a new opportunity to automate.
9/ Believe in the unquenchable power of human spirit.
People can do much more than you (and they) think if you inspire them. Don’t second guess someone as a “low performer” – they’ll surprise you. If you make jobs “big” people will grow to meet the opportunity. And this means age, gender, race, education, disabilities, and physical looks must be irrelevant. (Read Irresistible for more.)
10/ Remember that nobody is perfect.
Every leader, every expert, and every high performer will make mistakes. Your job is not to “prevent them” but to “quickly learn from them.” Perfection is the enemy of the good. Great organizations get better over time, not worse. If you constantly think about growth people will take more risks, work harder, and bring their best efforts to the team.
Sounds Like High Level Stuff, What About The Chainsaw?
That all sounds so conceptual, what about the layoffs?
Well if you practice these principles continuously you probably won’t need them. In the meantime if you do need to cut, call us and we’ll show you what to do. There’s a method to organizational productivity, and we are happy to help you down the path. And with our tools we can quickly help you see “where to trim,” and then help you avoid going through this in the future.
Ask Galileo for help, all our best practices and case studies are there to guide you. And if you just want to learn more, look at our Organization Design Superclass in The Josh Bersin Academy.
Additional Resources
The Road To AI-Driven Productivity: Four Stages of Transformation
Galileo™ Professional, The Essential AI Assistant for Everything HR
