To recoup $2.15 billion, the CEO of struggling pharmaceutical giant Bayer is cutting middle management and 99% of the company’s 1,362-page corporate handbook, allowing nearly 100,000 employees to self-manage.
Bayer, the 160-year-old German company known for inventing aspirin, is stuck; Its market capitalization has fallen to its lowest level in two decades – spurred by its previously disastrous takeover of Monsanto – and its CEO Bill Anderson believes that flattening the hierarchy and cutting corporate bureaucracy could be the key to the turnaround.
When Anderson took the helm last June, he learned that the company’s rules and procedures manual was longer war and peace. Because of this, he says, the same complaints kept cropping up in feedback from the company’s employees.
“They basically said, ‘More and more we can’t get anything done,'” Anderson said Business Insider. “It’s just too difficult to push ideas through, or you have to consult with so many people to make something happen.”
“We hire well-educated and trained people and then bring them into these environments with rules and procedures and eight levels of hierarchy,” Anderson added. “Then we ask ourselves why big companies are so lame most of the time.”
So the company becomes bossless, or as he calls it, “dynamic shared ownership.”
Whether or not this is a fancy metaphor for downsizing, Anderson insists this new way of working could be revolutionary. “We don’t have to be that good to beat the current system,” said the 57-year-old CEO Wall Street Journal.
In the coming years, Bayer’s workforce will consist of ever-evolving “5,000 to 6,000 self-directed teams” who work together on projects of their choice for 90 days before regrouping for the next project.
Employees in Bayer’s Consumer Health division have already gotten an impression of the new structure: They are shown how they can practically approve each other’s ideas without a manager in sight.
“Stand up, share an idea,” a corporate trainer told them during a training session, they say The diary. “You will organize yourself.”
Is it enough to be without a boss to repair the “broken” Bavarian?
Whether Anderson’s plan works or not, it will buy him time: The company is worth a quarter of its $122 billion peak value from nine years ago, its shares have plunged more than 50% in the last year, and investors are hustling to a split.
The company has accumulated debt of around 34.5 billion euros ($37.5 billion), not much less than the company’s revenue of 47.6 billion euros ($51.7 billion) last year .
Additionally, since acquiring Monsanto in 2018, Bayer has been battling thousands of claims that its weedkiller Roundup causes cancer.
Even Anderson has compared the company’s current state to the time he broke his leg skateboarding – “badly broken.” But with an eye to the future, he enrolled Assets that “our radical reinvention will liberate our people” while also saving the company about 2 billion euros ($2.15 billion) in annual organizational costs by 2026.
But eliminating middle management is nothing new
It is not clear exactly how many managers will be fired or demoted (Bayer did not respond). Fortune’s Request for comments). However, that is diary reported that in the US pharmaceutical division alone, 40% of management positions are on the way to the chopping block.
Although Anderson touts the move as an innovative way to reshape the corporate hierarchy and give employees greater choice, streamlining middle management to cut costs and increase efficiency is nothing new.
In fact, almost a third of layoffs last year were among middle managers – defined as non-executives who supervise employees.
At Meta, where Mark Zuckerberg declared 2023 the “Year of Efficiency,” middle managers were the victims of this search.
“I don’t think you want a management structure that’s just managers managing managers, managing managers, managing managers, managing people who do the work,” Zuckerberg told employees in an all-hands meeting.
After laying off thousands of workers, the billionaire tech entrepreneur said that “flattening” his internal hierarchy was at the core of his restructuring – and he cited Elon Musk as an inspiration for “fewer layers of management.”
Meanwhile, at Google – which employs more than 30,000 managers – 12,000 people lost their jobs, and at Intel Corp. Managers’ salaries were cut. Layoffs at Citi and FedEx are also having a massive impact on managers outside the tech industry.
This story was originally published on Fortune.com