A flatter hierarchal structure leaves less room for salary increases and promotions.
Wage growth remains stubbornly low — and one trend across many U.S. companies could be contributing to the problem: Cutting middle managers.
Assistant store managers and department managers may have to apply for new roles at the company, but new second-tier “business leads” will earn 10% more in starting salaries than assistant store managers, a spokesman for Walmart told the paper. Companies are eliminating hierarchies to cut costs Indeed, companies like Zappos AMZN, +3.24% and Tesla TSLA, +4.48% have continued to reduce middle management positions. In a memo reviewed by the Wall Street Journal in May 2018, Tesla chief executive Elon Musk wrote, “We are flattening the management structure to improve communication, combining functions where sensible and trimming activities that are not vital to the success of our mission.
Stuck in a role, with nowhere to go The major unintended consequence of corporate flattening has been a lack of opportunities for career advancement within companies, Kropp said. And promotions have long served as a major conduit for raises, he added. What’s more, employees are staying at their companies longer. The median tenure n 2000 was 3.5 years, according to the BLS. In 2016, it was over 5 years.
Changing jobs is many workers’ only choice Workers are not without tools in their arsenals — and a growing number are choosing to use them. With persistently low unemployment and companies competing for skilled labor, workers who don’t feel appreciated can leave their company. “If you want to get a significant wage increase, one of best strategies you have as an employee is actually to change jobs,” Kropp said.
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