As we enter a new year, Canadian employees would do well to be aware of a trend that has been foretold by a front page article in the Wall Street Journal on December 31. The massive downsizing of middle management positions is no longer just an American phenomenon; it’s coming to Canada as well.
The Perfect Storm
The drive for greater efficiency, higher profits, and increased international competition have combined with the impact of artificial intelligence to eliminate many of the employees occupying those positions between front line workers and the executive team. In the United States, managers now oversee three times the number of employees they did in 2017, according to research firm Gartner. Meanwhile, LinkedIn’s Workforce Confidence survey found that close to one third of employees claim to have bosses who are too stressed to support them.
Why Canada is Worse Off
It’s worse here in Canada. Declining productivity under the Liberal government and the resulting increased productivity gap with the U.S., along with higher taxes, reduced foreign investment, and the Trump government’s emphasis on reshoring has made the plight of Canadian employers worse — much worse — than their U.S. counterparts.
The Impact of Artificial Intelligence
Artificial intelligence is changing the way we work. With automation and AI-powered tools becoming increasingly prevalent, many jobs that were previously considered secure are now at risk. According to a report by Gartner, 85% of companies believe that AI will significantly change their business operations in the next five years.
The Middle Management Cull
But what does this mean for middle management positions? In short, it means that many of these roles will be eliminated as companies strive to streamline their operations and become more efficient. This is not just a matter of cost-cutting; it’s a fundamental shift in the way businesses operate.
Advance Notice: A Solution or a Temporary Fix?
So what can employers do to mitigate the impact of this trend on employees who are facing demotion or layoff? One option is to provide advance notice. This makes a lot of sense in the context of demotions, where the employer wishes to retain the employee and is providing them with advance notice of their change in role.
The Length of Notice
But what about the length of notice for a demotion? Is it identical to that of a dismissal? According to employment law expert Howard Levitt, the length of notice for a demotion is indeed identical to that of a dismissal. Its purpose is to provide an employee with a reasonable opportunity to find a job they wish elsewhere.
The Incentive to Find New Employment
If the employee finds new employment, it reduces the employer’s liability and eliminates any incentive to stay unemployed longer if the employee is going to be working anyway in a job that is undesirable because it is coming to an end.
Downsizing: A Corporate Crisis Waiting to Happen?
An abundance of management layoffs will mean far fewer comparable positions for the laid-off employees to secure. That will result in greater severance pay, further worsening the plight of Canadian employers and setting up an unanticipated corporate crisis for the next government to contend with.
Conclusion
As we enter a new year, it’s clear that the middle management cull is coming to Canada, too. Employers would do well to be prepared for this trend and to consider providing advance notice to affected employees. For Canadian employers who are not prepared for this shift, it will result in greater severance pay and an unanticipated corporate crisis.
Recommended Reading
- Top 10 Employment Law Stories of 2024: A list of the top employment law stories of 2024.
- 8 Tactics that Defined Toxic Bosses in 2024: A look at the tactics used by toxic bosses in 2024 and how they can be avoided.
About the Author
Howard Levitt is a senior partner of Levitt LLP, employment and labour lawyers with offices in Ontario, Alberta, and British Columbia. He practices employment law in eight provinces and is the author of six books, including the Law of Dismissal in Canada.