In a bid to claw back $2.15 billion in costs, the chief executive of struggling pharmaceutical giant Bayer announced in early April that the company was eliminating middle managers and allowing nearly 100,000 employees to self-manage under a new model dubbed Dynamic Shared Ownership. In the process, it’s also ripping up 99% of the company’s 1,362-page corporate handbook.
For CEO Bill Anderson, cutting bureaucracy is vital to getting Bayer out of its long rut.
Bayer is worth a quarter of its $122 billion peak from nine years ago, its shares have tanked by more than 50% in the last year, and it’s been fighting thousands of weed killer cancer claims since its so-far-disastrous acquisition of Monsanto in 2018.
When announcing the cuts, Anderson did not specify exactly how many of the organization’s 17,000 managers will be laid off or demoted in Bayer’s quest to trim red tape, but now a Bayer executive has suggested that those impacted will be in the thousands, not hundreds.
“Our CEO has said there will be significant changes. My definition of a significant change wouldn’t be hundreds out of 17,000. That wouldn’t be significant,” said the Bayer executive, who spoke on the condition of anonymity.
“The associated job cuts are to be implemented swiftly over the coming months. It will be largely decentralized, meaning that its scope cannot be quantified for the time being.”
In some departments, the executive told Fortune, there are currently more than 12 tiers between management and customers.
Its new model aims to reduce that to around five or six. Meanwhile, there will be no less than 15 workers to each manager.
The Wall Street Journal reported that Bayer’s workforce could become 5,000 to 6,000 self-directed teams in the near future, with 40% of management positions headed for the chopping block in the U.S. pharmaceutical division alone.
Bayer aiming to lean on ‘brilliant’ Gen Z hires
Despite the manager cuts, the 160-year-old German company, known for inventing aspirin, says it isn’t worried about having unaccountable workers running around like headless chickens.
Why? Because it hires “the best graduates from universities,” the Bayer executive told Fortune.
“These are well-qualified people. They have a brilliant qualification, and then they are hired and [traditionally] they have someone who tells them what to do—who has someone who tells this person what to do and another one who tells this person what to do,” the spokesperson said. “[That] doesn’t really make sense.”
The company declined to comment on how many graduates it has hired in recent years or what it’s doing differently to recruit only “the best.”
On how it’ll ensure that young grads with little to no work experience will get the direction needed, the Bayer executive suggested that Gen Zers—and any employee for that matter—could develop quicker under a flatter structure.
“If we give more freedom, more liberty to people, then the span of coaching, as we call it, instead of span of control will be broader than before.”
Pointing to the vision of CEO Anderson, who took the helm last June, the Bayer exec added that “95% of the decisions should be taken by the people who are affected by them.”
That in itself can be a steep learning curve: By eliminating the many layers currently needed to sign off on training programs or ideas, Bayer’s young staffers may enjoy more innovation, but it also exposes them to more risk when things go wrong.
Trusting pandemic-era grads to self-manage may be risky
Bayer is not the first firm to give more control to its young staffers in a bid to drive efficiency.
In fact, middle managers made up almost a third of layoffs last year as firms like Meta flattened their hierarchy.
Moreover, many office workers effectively self-managed during the pandemic when they were forced to work remotely.
But here’s the catch: During that time, graduates missed out on vital shadowing experience and have been slammed for lacking the “basic” social skills needed to navigate the working world.
It’s why, instead of leaving graduates to self-manage à la Bayer, many other companies have been closely monitoring—perhaps even micromanaging—their youngest recruits.
Take the world’s Big Four consulting firms, for example.
Deloitte, PwC, KPMG, and EY offer specialized training for pandemic-era graduates, including how to talk to people in person, speak up in meetings, and make eye contact.
Similarly, the consulting company Protiviti has expanded its training for new hires to include a series of virtual meetings focusing on issues like making authentic conversation and how to tone an email, according to the Wall Street Journal.
Meanwhile, other companies, like KPMG and Cisco, are creating comprehensive hybrid-work policies requiring new hires to come into the office more than their seasoned peers to fill that knowledge gap.
For instance, David Meads, Cisco’s U.K. and Ireland CEO, told Fortune that the tech giant isn’t mandating people come to the office—except for Gen Zers, who are expected to show face three days a week or more.
Some universities are even taking it upon themselves to urge employers to provide specific guidance to recent graduates on things that may seem obvious to others, like what to wear and where to get lunch.
