Google’s Management Cuts: Lessons in Organizational Efficiency
Google recently announced plans to reduce roughly 35% of its managers. At first glance, this might look like just another round of corporate downsizing, but the precision of Google’s approach makes it worth studying. The company wasn’t simply cutting costs—it identified managers who were overseeing fewer than three direct reports, and offered them the opportunity to take a career break.
This move highlights one of Google’s longstanding management principles: the “Rule of Five.” Years ago, Google established that the maximum number of direct reports a single manager can handle effectively is five. Once that number creeps higher, performance and engagement tend to break down. Conversely, when a manager has just one or two directs, they are likely underutilized, creating inefficiencies in the system.
When I first learned about this ratio during my time running gap intelligence, I immediately applied it to our organizational chart and saw dramatic improvements. Today, when I coach CEOs and leadership teams, the very first thing I ask to see when there are signs of operational inefficiency is the org chart: How many directs does each manager have? Time and again, I find problems in companies where managers are stretched too thin (sometimes overseeing as many as 14 people) or are underloaded, creating waste in the structure.
To put the math into perspective: if Google had 1,000 managers overseeing fewer than three directs, and 35% chose to leave, the resulting reshuffle would lead to a 54% increase in organizational efficiency. That’s a powerful reminder of the impact structure alone can have on performance.
Two Filters for Reviewing Your Org Chart
At the Esteemed MBA, we teach that reviewing your organizational structure should be a regular exercise—at least once a year. And when you do, there are two filters you should apply:
The Future State Filter: Look at your chart like a hermit crab eyeing a bigger shell. If you anticipate 35% growth, what resources—human, financial, structural—will be required? What new roles will appear? How will your current staff need to evolve? This is where career growth planning, coaching, and succession planning take root.
The Current State Filter: Review where bottlenecks exist. Which managers are overwhelmed with more than five directs? Which are underloaded with one or two? This is also the time to give your best managers more responsibility. Great leaders want the biggest opportunities—so give them teams that match their capability.
The Takeaway
When it comes to organizational behavior and management best practices, Google continues to be a true north. They remind us that efficiency doesn’t come only from budgets or headcount reductions—it comes from thoughtful structure and ensuring that the right people are in the right roles with the right span of control.
For Esteemed members and MBA students, the lesson is simple: your org chart is not just a diagram—it’s one of the most powerful levers of performance you have. Review it often, adjust it with intention, and give your best people the room to thrive.
