Delayering
From Wikipedia, the free encyclopedia
 |
This article may require cleanup to meet Wikipedia's quality standards. Please discuss this issue on the talk page or replace this tag with a more specific message. This article has been tagged since December 2006. |
Delayering is a process for principles-based corporate restructuring and cost cutting trademarked by the Boston Consulting Group. It is a cascading organization redesign that proceeds from the CEO (Layer 1) to the CEO's direct reports (Layer 2), and so on through all employees.
Key definitions
- Layer - length of reporting chain to CEO (CEO is layer 1)
- Level / Paygrade - indication of seniority, generally tracking to title (CEO, EVP, VP, etc)
- Span of Control (SOC) - number of direct reports to a given manager, known as the manager's SOC
Key principles
- Minimum SOC / median SOC (generally 6-8)
- Maximum number of layers (generally 6-7)
- Rigorous accountability - no ringfencing or sacred cows
Key process steps for each layer
- Manager is layer n
- Manager designs positions in layer n+1, and gives an overview of positions in layer n+2
- Manager staffs designed positions in layer n+1 with employees
When a layer has been completed as described above, appointed managers in layer n+1 design layer n+2 (using the overview from their superior), and give an overview of positions in layer n+3, hence the cascading process. Employees who are not staffed into positions within a specified number of layers are outplaced from the organization, which is how the organization realizes run rate cost savings.
The term delayering refers to the goal of reducing the number of layers in an organization, thereby reducing the length of the report chain from the CEO to customer facing FTEs, allowing for a more responsive and efficient organization. Cost savings are typically realized through outplacement of redundant middle management, though it is not necessary to fire people to delayer an organization.
