McKinsey reportedly has a new leadership playbook for the AI era and its message is clear: It’s time for companies to cut the extra layers in management. According to a Business Insider report, as companies embed AI agents into their workflows, consultants are exploring how it can be used to “cut the fat”. During a recent episode of “The McKinsey Podcast”, McKinsey & Company senior partner Alexis Krivkovich said there’s “real hope” that AI can help firms streamline their organizational structures. She said that AI has enabled company leaders with “more of a superhuman capacity to manage across bigger scopes, which would allow companies to flatten their structure and get faster in the process”.
How AI may help companies in cutting layers
Over the past one decade, Krivkovich said that companies have added at least one organizational layer in their management structure between the CEO and the front line. Any, she added, have 2-3 extra levels. “Not only is that expensive, but that slows companies down from a decision-making standpoint because it just means you have more people, more layers at which somebody has to weigh in before any decision can get made,” she said.AI, she noted, can be used to facilitate decisions and connection points. Krivkovich said that AI agents can automate work in departments like human resources, finance, and legal. It can also aid in reallocating resources to other parts of the business, she added.
Rise of “The Great Flattening”
Other companies are also exploring similar ideas. Tech leaders say AI-driven systems could change how managers operate, especially as digital workers become more common.At IBM, senior executive Mohamed Ali said companies may need new systems to manage AI tools alongside human employees. “There’ll be systems to manage these things. There’ll be systems to set up the guardrails,” he said.Experts are calling the AI-related shift in the workforce as the “”The Great Flattening”. The BI report cite Eno Reyes, the chief technology officer and cofounder of Factory who said “Your org chart is probably going to start condensing into becoming more flat horizontally”.
