As we bid adieu to the year 2022, a front-page article in the Wall Street Journal on December 31 predicted a massive downsizing of middle management in the coming year. This ominous forecast is not just an American phenomenon; it’s a warning sign for Canadian employees as well.
The Rise of Efficiency-Driven Downsizing
The drive for greater efficiency, higher profits, and increased international competition has led to the elimination of many positions between front-line workers and executive teams. Artificial intelligence (AI) has further accelerated this trend, automating tasks and making certain jobs redundant.
In the United States, managers now oversee three times the number of employees they did in 2017, according to research firm Gartner. LinkedIn’s Workforce Confidence survey found that nearly one-third of employees claim to have bosses who are too stressed to support them.
The Canadian Context: A More Challenging Environment
While the situation in the United States is dire, Canada’s plight is even more severe. The declining productivity under the Liberal government has resulted in a significant productivity gap with the U.S., making it increasingly difficult for Canadian employers to remain competitive.
Higher taxes, reduced foreign investment, and the Trump administration’s emphasis on reshoring have further exacerbated the challenges faced by Canadian employers. The Wall Street Journal points out that many U.S. employers are demoting their middle managers, a strategy that is not feasible in Canada due to our more stringent employment laws.
The Consequences of Downsizing: A Perfect Storm
As downsizings become more prevalent, employees will face an abundance of management layoffs, leading to far fewer comparable positions for laid-off workers to secure. This, in turn, will result in greater severance pay and further worsen the plight of Canadian employers.
Advance Notice as a Viable Solution
In the context of demotions, advance notice can be a reasonable solution for both parties involved. By providing employees with adequate notice, employers can retain valuable talent while also giving them a chance to find alternative employment. This approach reduces the employer’s liability and avoids the costly process of wrongful dismissal cases.
The Unintended Consequences: A Corporate Crisis Looms
As downsizings continue to plague Canadian businesses, an unanticipated corporate crisis is looming on the horizon. The next government will be faced with the daunting task of addressing the resulting economic fallout.
Conclusion
In conclusion, the middle management cull is indeed coming to Canada, too. Employers must prepare for the challenges ahead by exploring viable solutions like advance notice and retraining programs. As we navigate this uncertain landscape, it’s essential to prioritize employee well-being while also ensuring business sustainability.
About the Author
Howard Levitt is a senior partner at Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta, and British Columbia. He practices employment law in eight provinces and has authored six books, including "The Law of Dismissal in Canada."
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