The Middle Management Cull is Coming to Canada, Too
As we bid farewell to the old year and hello to the new one, a stark reality looms large over Canadian employers. A front-page article in The Wall Street Journal on December 31st revealed the massive downsizing of middle management positions in the United States. This ominous trend has left many wondering: is Canada next?
Declining Productivity and Higher Taxes Worsen the Plight
It’s worse here, indeed. Declining productivity under the Liberal government has resulted in a widening productivity gap with our American neighbors. To make matters worse, higher taxes, reduced foreign investment, and the Trump administration’s emphasis on reshoring have made Canadian employers’ lives even more challenging.
The Impact of Artificial Intelligence and Global Competition
In an era where technological advancements like artificial intelligence are transforming industries at breakneck speed, many organizations are struggling to adapt. The pressure to stay competitive has led to a seismic shift in organizational structures, with many middle management positions becoming redundant. It’s no wonder that U.S. managers now oversee three times the number of employees they did in 2017, according to research firm Gartner.
One-Third of Employees Claim to Have Bosses Too Stressed
But it’s not just about numbers; it’s also about human relationships. LinkedIn’s Workforce Confidence survey revealed that close to one-third of employees claim to have bosses who are too stressed to support them effectively. This toxic environment can lead to decreased morale, productivity, and overall job satisfaction.
Advance Written Working Notice: A Rare but Effective Solution
In Canada, demoting middle managers is not a straightforward process. Unlike in the United States, where employers can often afford to absorb the costs of downsizing, Canadian employers are faced with the daunting prospect of paying significant severance packages. However, there is a glimmer of hope: advance written working notice.
This lesser-known solution allows employers to provide employees with advance notice of their demotion, giving them time to find alternative employment. The length of notice for a demotion is identical to that of a dismissal, and its purpose is to provide the employee with a reasonable opportunity to secure new employment.
The Rise of Severance Pay: A Looming Corporate Crisis
As an abundance of management layoffs looms on the horizon, it’s likely that far fewer comparable positions will be available for laid-off employees. This will result in higher severance pay, further exacerbating the plight of Canadian employers and setting up an unanticipated corporate crisis for the next government to contend with.
Conclusion: Downsizing is Coming, But There are Solutions
Make no mistake; downsizings are coming to Canada’s often long-tenured middle management ranks. Despite the costs associated with severance packages, employers will ultimately have no economic choice but to adapt to this new reality. However, by embracing innovative solutions like advance written working notice, employers can mitigate some of the risks and consequences associated with downsizing.
Recommended Reading
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As we navigate these uncertain times, one thing is clear: Canadian employers must be prepared to adapt to a changing landscape. By staying informed and exploring innovative solutions like advance written working notice, they can not only survive but thrive in the years to come.
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