A Foreboding Future for Canadian Employees
A recent front-page article in The Wall Street Journal on December 31 highlighted the massive downsizing of middle management across various industries. This trend is a harbinger of what’s to come for Canadian employees.
Declining Productivity and Rising Pressure
The Liberal government’s policies have led to declining productivity, widening the gap between Canada and its US counterpart. Higher taxes, reduced foreign investment, and the Trump administration’s emphasis on reshoring have exacerbated the situation. This perfect storm has left Canadian employers facing unprecedented challenges.
According to research firm Gartner, US managers now oversee three times the number of employees they did in 2017. Meanwhile, LinkedIn’s Workforce Confidence survey found that close to one-third of employees claim to have bosses who are too stressed to support them.
The Middle Management Cull
Middle management is a critical layer between frontline workers and executive teams. However, with increased efficiency drives, higher profits, and the impact of artificial intelligence, many middle managers are finding themselves redundant. The trend of eliminating middle management has gained momentum globally, and Canada is no exception.
In the US, demoting middle managers is becoming increasingly common, especially in states where such practices are more lenient. However, in Canada, demotions can lead to constructive dismissal, which permits employees to resign and sue for wrongful termination. This reality makes demotions unworkable for most Canadian companies.
An Untenable Option: Termination
Outright termination is an expensive option for employers. The cost of severance packages for wrongfully terminated employees can be crippling. In the face of economic pressure, many employers will have no choice but to resort to downsizing.
Advance Notice: A Viable Solution
Advance notice, where an employer provides a demoted employee with reasonable notice of their change in status, is a more palatable solution. This approach allows employees to find alternative employment, reducing the employer’s liability and preventing unnecessary litigation.
Consequences for Canadian Employers
The impending middle management cull will lead to a shortage of comparable positions for laid-off employees. As a result, severance pay will increase, further exacerbating the plight of Canadian employers. This trend sets the stage for an unanticipated corporate crisis that the next government will need to address.
A Word from the Experts
Howard Levitt, senior partner at Levitt LLP, emphasizes the inevitability of downsizing in Canada’s middle management ranks. "Despite the cost of severance, employers will ultimately have no economic choice," he notes.
Conclusion
The writing is on the wall for Canadian employees: the middle management cull is coming. As companies continue to prioritize efficiency and profitability, the role of middle managers will become increasingly redundant. Employers must prepare for the consequences, including increased severance pay and a shortage of comparable positions for laid-off employees.
Bookmark our website and support our journalism: Stay informed about the latest business news by bookmarking financialpost.com and signing up for our newsletters here.
Share this article in your social network:
Share this Story: Howard Levitt: The middle management cull is coming to Canada, too
Copy LinkEmailXRedditPinterestLinkedInTumblr
Comments: You must be logged in to join the discussion or read more comments. Create an AccountSign inJoin the ConversationPostmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site.
