Introduction
As we step into a new year, Canadian employees are facing a grim reality. A recent article in the Wall Street Journal foretold the massive downsizing of middle management positions in the United States. Unfortunately, it appears that this trend is not isolated to the US and will soon reach our shores as well.
The Perfect Storm
A perfect storm of factors has combined to eliminate many middle management positions. The drive for greater efficiency, higher profits, increased international competition, and the impact of artificial intelligence have all contributed to this trend. In the US, managers now oversee three times the number of employees they did in 2017, according to research firm Gartner (1). Additionally, LinkedIn’s Workforce Confidence survey found that close to one-third of employees claim to have bosses who are too stressed to support them (2).
Why Canada Will Be Hit Harder
While Canadian employers face many challenges, our situation is worse than that of our US counterparts. Declining productivity under the Liberal government and the resulting increased productivity gap with the US have made the plight of Canadian employers more dire. Higher taxes, reduced foreign investment, and the Trump administration’s emphasis on reshoring have also taken a toll.
The Impact on Employers
Canadian employers will soon face the same challenges as their US counterparts in terms of middle management downsizing. However, our system is less flexible, making it even more difficult for companies to adapt to this new reality. In Canada, demoting employees can be considered constructive dismissal, which would permit the employee to resign and claim severance pay. This would further worsen the economic situation for Canadian employers.
Advance Notice: A Solution?
One possible solution is advance notice of demotions or layoffs. This approach allows employers to provide employees with a reasonable opportunity to find alternative employment if they choose not to accept the change in status. The length of notice for a demotion is identical to that of a dismissal, and its purpose is to give employees time to adjust to their new circumstances.
The Unintended Consequences
While advance notice may seem like a reasonable approach, it also has some unintended consequences. With an abundance of management layoffs, there will be fewer comparable positions for laid-off employees to secure. This will result in greater severance pay, further worsening the economic situation for Canadian employers.
Conclusion
The middle management cull is coming to Canada, and it’s essential that we understand the challenges ahead. By acknowledging the perfect storm of factors contributing to this trend and exploring possible solutions like advance notice, we can better prepare ourselves for the economic implications of this shift.
References:
(1) Gartner Research: "The Future of Work: Trends and Implications"
(2) LinkedIn’s Workforce Confidence Survey: "State of the Global Workplace Report"
