Bloated U.S. management costs over $3 trillion annually

"The cost of excess bureaucracy in the U.S. economy amounts to more than $3 trillion in lost economic output, or about 17% of GDP," write Gary Hamel and Michele Zanini in Harvard Business Review. Their recommendation? Cut management in half. The don't specify if that's crosswise or lengthwise.

They identify 7 companies that are at the vanguard of this movement: Nucor, Morning Star, W.L. Gore, Svenska Handelsbanken, Sun Hydraulics, Valve, and a General Electric jet engine plant in North Carolina:

The experience of the vanguard suggests it should be possible to double the ratio of employees to managers and administrators, from 4.7:1 to 10:1. Doing so would free up 12.5 million individuals for other work that is more creative and productive.

They also examine time lost to "low-value management processes" like budgeting and performance review, concluding that "as much as 50% of all internal compliance activity is of questionable value."

While it's nice to have some data to back it up, this has long been obvious to anyone who has worked in a soul-crushing large company. An earlier version of this report appeared here:


Excess Management Is Costing the U.S. $3 Trillion Per Year (Harvard Business Review – images h/t Mike Judge & Roz Chast)