By: Michele McGovern

The Great Flattening is expanding and its impact could be detrimental to workplaces.

The flattening — eliminating middle managers to cut costs, reduce red tape, and/or simplify organizational charts — started in the tech industry and is now creeping into many more.

Tech giants such as Amazon, Microsoft and Google started flattening their corporate profile last year. Retailers such as Walmart, Wayfair and Starbucks and finance corporations such as HSBC and Ernst & Young, followed suit this year.

And then there’s the federal government’s flattening: the Department of Government Efficiency’s (DOGE) work to maximize the efficiency and productivity of the government.

Data on the Great Flattening
To put the private sector’s changes in perspective, consider this: In 2024, middle managers made up 29% of all layoffs, according to job-tracker Live Data Technologies. That was a 30+% spike from 2018 to 2022, when middle managers consistently represented about 20% of annual layoffs.

2 Takes on the Great Flattening
So, there are two ways to look at the Great Flattening.

On a positive side, it’s a way to save money, resources and time. It disassembles overly bureaucratic organizations and processes. In theory, things get done more efficiently and quickly. People who might have been stifled under management get a chance to shine.

On the other side, when you remove a layer of management, you also remove a layer of certainty. Some employees need guidance, encouragement and/or a prod to get things done. So in a flattened organization, there are higher risks for miscommunication, mistakes, lost productivity and lower morale.

“Beyond the direct negative impact to middle managers who have to compete for a new job in an already challenged labor market, the greatest suffering will be among individual contributors on teams where middle managers have been made obsolete,” says Brad Smith, Chief Science Officer at meQuilibrium (meQ). “Beyond the negative impact on team mental well-being …. execution of corporate strategy is also likely to suffer. Middle managers have historically been the filterers and translators into action of senior executives’ business-speak.”

What’s the Impact?
The Great Flattening will have consequences. In fact, meQ had some insight before this became a trend.

“meQ’s State of the Workforce studies over the last five years consistently show the pivotal role of the middle manager,” says Smith. “Whether the outcome is burnout, depression, turnover intent, engagement, incivility, hope or any of a number of other indicators of workforce mental well-being, the most consistent predictor of a positive outcome is having a manager who is intentional about looking after team mental well-being.”

So middle managers were already burned out. And when their well-being suffers, their employees will likely, too. Take them out of the picture and everyone suffers more.

“The great flattening is likely to be highly disruptive to direct human contact between employees and leaders,” says Smith. “These changes will disrupt organizational social support networks and place ever-greater demands on remaining leaders.”

Must You Flatten?
While every organization must do what it needs to do to stay afloat, there are things you’ll want to consider before pulling managers from the front line:

Can other managers absorb some of the management duties?
Are the employees impacted by the layoffs prepared to navigate work with less guidance?
How will the layoffs affect morale, productivity and turnover?
Will employees be able to coordinate and cooperate to meet goals?
How much realignment will we need to do to ensure we meet goals — and are we able to scale up in time?
What technology changes will we require, and can we train employees to handle those changes?
What are we willing to give up to make a flattening work?
“Employers should work to strengthen teams to pave the way for intensified employee-to-employee cooperation,” says Smith. “In addition, employers must ensure that the workforce has adequate access to digital resources and EAPs that can help maintain workforce resilience and mental well-being, and preserve current levels of performance.”

How to Handle the Great Flattening
Now, let’s say you must flatten. How do you make it work?

Experts at Korn Ferry looked at several medium-sized businesses that learned how to survive — even thrive — without traditional managers. Here’s what they’ve found works:

Accountability. Employees and senior-level leaders remain accountable to each other and customers. For this to fully work, though, employees must hold themselves accountable to others and be willing to call on colleagues to be accountable or call them out for failing to be.
Transparency. All information remains transparent to all employees. Through technology, meetings and constant updates, employees and leaders share information they have and seek what they don’t know.
Incentives. Most — if not all — rewards are team-based. When the team succeeds, the team is rewarded. When there is a failure, everyone knows it, feels it and pays the consequences.
Skills. Flat companies often push aside egos, degrees and tenure when it comes to keeping and hiring employees. Instead, they focus on problem-solving skills, practical experience and competent decision-making.
Growth. Despite the structure, successful flat companies emphasize growth and reward employees with opportunities to further succeed.

By: Ginger Christ

By letting workers convert unused PTO into cash, student loans or 401(k) contributions, more employers are giving workers choice. Goldman Sachs Ayco’s 2025 Benefits and Compensation Trends report, published earlier this year, showed some employers even permit workers to convert their time into health savings account contributions; into charitable giving, including donating time off to co-workers; and into 529 plan, or qualified tuition, programs.

“This really kind of fits in with the overall trend we’ve seen the last few years about large employers specifically really trying to provide as much flexibility in their PTO programs as possible,” said Kris Battistoni, vice president, compensation and benefits solutions at Goldman Sachs Ayco.

Jonathan Barber, vice president and head of compensation and benefits solutions at Goldman Sachs Ayco, called the benefits situation a “perfect storm.” Workers, often in hybrid and remote roles, are taking less PTO and want flexibility, and companies are willing to offer flexibility using dollars they’ve already set aside, Barber said.

“We’re seeing that across the board with employee benefits,” Barber said.

However, it’s not a free-for-all, they warned. The benefits and compensation trends report shows that most companies limit how many hours can be converted annually; the limit typically is 40 hours per year.

Employers have a “balancing act,” Battistoni said, of providing flexibility but also making sure employees are actually taking time off.

There are some things employers need to keep in mind when implementing a conversion program, Barber warned. Employee paid leave laws vary by state and even sometimes by municipality, so they need to ensure workers still get the legally required amount of vacation and sick time, he said.

While the PTO conversion trend is emerging, the number of companies offering such options is still in the single digits percentage-wise, said Battistoni, who called PTO “the next frontier” for flexibility in benefits.

“The purchase programs are probably more popular than the conversion programs at this point,” Battistoni said. “I think we’ll see an increase in both.”

The company’s trends report shows that about 25% of its corporate partners offer PTO purchase programs, which allow workers to buy and sell vacation days, typically up to five days.

“We might be in the single digits now, but that’s certainly not going to be the case, probably two, three, four years down the road,” Battistoni said of PTO conversion programs.

By: Philip Watson

Editor’s note: Philip Watson is CFO of Payscale, a Seattle, Washington-based SaaS company which provides compensation data and software. The views are the author’s own.

Many companies lack a comprehensive compensation strategy. By “comprehensive compensation strategy,” this means a structured, data-driven approach to designing and managing all forms of employee compensation — base pay, variable pay, equity and benefits — aligned with their business goals, talent philosophy and financial realities.

As we are all aware, once the economy absorbed the shock of the COVID-19 pandemic, the early 2020s were a fluid boom time for employees and hiring. Buoyed by 0% interest rates, businesses raced to lock in and lock down talent. Inevitably, compensation spending ballooned as companies placed concerns about workforce efficiencies on the back burner. Free money created a labor market bubble, and as interest rates rose, companies that over-hired in 2021 found themselves in a bind. Stakeholders and shareholders demanded more and more financial discipline starting in 2023, resulting in layoffs and a sharp drop in job openings.

Businesses will always be subject to macroeconomic swings. Having (and executing against) a comprehensive compensation strategy can’t completely ward against those natural ups and downs, but can leave you better positioned to weather them. Ultimately, you want to get to a place where you are taking charge of the things you can control.

Managing your talent bench
One key aspect is ensuring your top performers are recognized and rewarded appropriately. These top performers are the rock you rely on regardless of market conditions, and even more so in bad economic times.

At the same time, it’s important to support underperformers with clear expectations and opportunities to improve. When improvement doesn’t follow, organizations must make thoughtful decisions that align with long-term goals.

Compensating resources correctly in each of these two situations is vital to helping your business have the best chance of success in any economic environment. As such, effective compensation planning requires a chisel, not a hammer. Organizations that master this are able to strategically reward talent and surgically cut waste, enabling them to emerge from any economic cycle with their competitive advantage intact.

Using market uncertainty to your advantage
The struggle for great talent is fierce in both good times and bad. As our current labor market continues to loosen, savvy organizations will seize the opportunity to scoop up top performers at potentially discounted rates.

Companies will be focusing on attracting high performers before or as they hit the market, as well as retaining their own top talent and refining their performance review processes to understand their talent bench.

There will always be budgetary constraints, regardless of the market. But it’s how you maximize the efficiency of your largest expense that matters. Hiring freezes and layoffs can be blunt instruments that undermine long-term employee sentiment. Finely tuned plans for paying the right employees the right amounts is a much more precise approach. It’s important to think consistently about how your actions are part of a broader compensation strategy where you’re in constant competition for talent.

The costs of an inefficient comp strategy
Turnover of top talent is bad, regardless of the market. Some estimates put the total cost of replacing an employee at three to four times their salary. When you lose an employee, you’re not only on the hook for the direct costs of recruitment and hiring, but experience even greater financial losses in productivity.

Ramp times obviously vary by position and level. One thing is constant: When top performers, with their wealth of institutional knowledge, close client relationships and skills walk out the door, it jeopardizes future performance. The costs of retaining these employees almost always provide a better return than the immediate savings of a lower head count.

If budget constraints limit your ability to offer top performers higher pay increases, creativity becomes your competitive advantage. Consider variable pay incentives tied to individual performance, flexible working arrangements and other meaningful perks.

Figuring out the right mix of fixed, variable pay, and other incentives for talent is not easy. And many organizations lack the data confidence to get it right.

Payscale’s Compensation Best Practices Report shows 60% of organizations are confident their pay increases are competitive. Another 63% express confidence in their job pricing to attract and retain talent. That’s the good news. But we should also pause. After all, 40% of companies admit they aren’t confident in their market competitiveness.

These data confidence gaps translate directly to inefficient spending. Organizations uncertain about their competitive positioning cannot allocate constrained compensation dollars strategically, often underinvesting in critical talent attraction and retention. The most successful compensation strategies start with market intelligence, transforming uncertainty into targeted investment and ensuring every dollar works hard for employees that drive results.

Building a resilient compensation strategy
Our current economic environment requires moving beyond reactive responses to market conditions by embracing a sophisticated approach to talent investment. This means developing a comprehensive compensation strategy that flexes with the market while keeping close tabs on top talent. It also means using data to make informed decisions about where to invest.

Organizations that are able to successfully strike the right balance between rewarding and retaining the right talent and hitting more and more difficult budget targets will thrive under any market conditions. Seize the current market uncertainty as an opportunity to build a stronger, more resilient comp strategy, while your competitors struggle with the whiplash of boom-and-bust pay tactics.

By: Dave Zielinski

The job descriptions of front-line and middle managers across industries are about to undergo an extreme makeover. When the next generation of artificial intelligence technology emerges, managers will need to be able to oversee intelligent systems and lead people. They’ll be expected to master change management, navigate complex automation, and assess workflows to determine which tasks are best handled by AI and which still require the human touch.

Agentic AI, in which autonomous agents execute multistep processes on their own, will function as virtual co-workers to human employees in the near future, experts say. The projected ability of agentic AI to set its own goals, conduct high-level reasoning, and learn quickly from mistakes will have vast implications for how organizations recruit and develop managers at all levels.

When agentic AI gains a foothold in organizations, managers in both white-collar and blue-collar jobs will find themselves overseeing not just evolving generative AI (GenAI) tools that produce content in response to prompts, but autonomous agents that can execute complex, multistep processes on their own. In a nutshell, agentic AI will perform tasks rather than just answer questions like current GenAI assistants, which are more passive.

Gartner forecasted that by 2028, one-third of worker interactions with AI will feature the use of autonomous agents and action-based AI models for task completion. The Microsoft 2025 annual Work Trend Index also found that almost one-third of executives said they’re planning to hire managers specifically to oversee hybrid teams of humans and AI agents. The Microsoft study also predicted the imminent rise of the “agent boss,” a worker who builds, delegates to, and manages AI agents to amplify their impact.

Agentic AI vs. AI Agents: Know the Difference
Understanding the new competencies required of managers as agentic AI takes root starts with a base knowledge of the technology. The terms “AI agent” and “agentic AI” are often used interchangeably, said Craig Le Clair, vice president and principal analyst at Forrester, when, in fact, there is a significant difference between them. Le Clair described the distinction this way: AI agents are the applications that perform specific functions, while agentic AI comprises the architecture, models, and systems that underpin the applications.

While the term “AI agent” is often used loosely by technology vendors to describe their AI tools, Le Clair said most so-called agents in operation today lack the true hallmarks of agency: adaptability, learning, and autonomous action, along with the ability to make plans, reason through scenarios, and leverage external tools to achieve goals without human intervention. There is a hierarchy of agents including “worker,” “solver,” and “executive” agents that have varying degrees of autonomy, Le Clair said.

It’s rare to see true agentic AI operating in organizations today, said Emily Rose McRae, a senior director analyst with Gartner. Some vendors claim their tools are agentic when in fact they’re more rudimentary forms of AI, a practice she calls “agent washing.”

“What many people are calling AI agents are really just chatbots,” McRae said. “The kind of agents capable of setting their own goals, learning from their actions, and making decisions with full autonomy aren’t really on the market yet.”

True agentic AI will soon arrive, experts say, and organizations that aren’t preparing their leaders now to manage amid that transformative technology environment will find it difficult to catch up once the wave hits.

“We’re not far from agentic systems,” Le Clair wrote in a recent report he co- authored with Forrester colleagues. “Within the next three to five years, agents will be trusted to control critical enterprise processes. They will also disrupt traditional enterprise apps by replacing their static interfaces and rigid, rule-based logic. Agents will absorb data, learn from it, and dynamically adapt to changing business needs with intelligent, self-evolving solutions.”

Needed: New Managerial Skill Sets
Within HR, agentic AI will complete end-to-end tasks such as creating training videos, cleaning and analyzing job candidate data, or managing an onboarding process. In the broader organization, advanced agents will be used for tasks like handling supplier invoices, obtaining pre-treatment authorization for health insurance coverage, making trading decisions in finance, or managing complete life cycles in software development.

Redefining Managerial Responsibilities
Experts say agentic AI will require more collaborative human-AI relationships in which employees not only oversee AI actions or outputs but treat the AI like a “digital colleague” they can pose questions to or brainstorm with. Organizational charts of the near future will likely include not just human workers but agents stationed throughout a company.

Managers will need new competencies that enable them to oversee intelligent systems, teach human team members how to work alongside AI agents, troubleshoot these tools if there’s problems, and ensure a base level of cybersecurity as AI agents begin to access sensitive company data without human oversight.

“”These tasks will be the responsibility of managers as they shift into becoming managers of automation, not just humans, and will become standard parts of job descriptions,” Le Clair said.

Leading and Coaching People
Sarah Maris, technical learning lead for Udacity, a division of consulting firm Accenture, said that when agentic AI becomes a standard part of the workplace, middle-manager roles will shift away from overseeing workflows and tracking performance to guiding collaboration between humans and AI agents and managing complexity.

Administrative tasks such as assigning work, monitoring progress, and compiling reports will increasingly be handled by AI agents, Maris said, which will allow managers to spend more time coaching employees, supporting growth, and addressing challenges that require human judgment and emotional intelligence.

“Managers’ primary responsibility will no longer be managing the routine but handling the exceptions, which include interpersonal issues, novel problems, and the key decisions that demand human judgment,” Maris said. “Managers will become the essential human checkpoint, shaping how people and AI work together and knowing when to trust automation and when to step in.”

Hiring for What Machines Can’t Do
Like Le Clair, Maris said these new requirements will soon begin to show up in managers’ job descriptions. Requirements like “experience leading a hybrid human-AI team” will become a common qualification.

“”Companies will hire managers based on the very things a machine can’t do: connect with, develop, and truly lead people,” Maris said.

Managers also will need to collaborate with learning and development groups to teach people on hybrid human-AI agent teams new critical thinking skills, experts say.

“The importance of critical thinking will no longer just be for the ‘digital elite’ or white-collar jobs, where much of the focus has been in the past,” Le Clair said. “It also will become key for blue-collar jobs in warehouses and on factory floors where both front-line workers and managers are reviewing outputs or actions of AI-driven tools. For example, a manager might oversee four or five robot janitors. Humans will need the skills to challenge the actions of autonomous agents when necessary.”

Change Management as a Core Competency
Agentic AI also will elevate the importance of another leadership skill: change management. Employees who already have fears about GenAI taking over their jobs may see those concerns escalate as fully autonomous agents are introduced into the workplace. Others may lack confidence in their ability to oversee or work alongside these sophisticated tools. A recent study from Kyndryl, a technology services company, found that 45% of CEOs said most of their employees are still resistant or openly hostile to AI.

“Managers will need to have change management skills embedded as a core competency in their job descriptions,” Le Clair said. “It used to be change management was relegated to HR or geared only toward bigger disruptions like merging with another organization. But agentic AI brings a different type of change that requires a more continual and subtle type of change management. Leaders will need to become skilled in communicating with their teams about how they’ll need to collaborate and interact with AI agents, how AI agents may impact their career paths, and more.”

Le Clair recently delivered a presentation on agentic AI to representatives of 30 government agencies in Washington, D.C. The most frequent question asked concerned change management strategies. “Leaders wanted to know how to talk to their employees about how AI agents would impact their jobs,” Le Clair said.

Rethinking Leadership Development
The disruption that will be caused by agentic AI — and the new skill sets required to manage in more automation-dependent environments — should cause organizations to rethink their leadership development training, experts say.

“The old leadership playbook doesn’t fit the world we’re heading into,” Maris said. “Companies need to take a hard look at how they’re developing managers and make some fundamental changes.”

Rethinking manager development should start with doubling down on teaching what Maris called “critical” human skills.

“Leaders need deeper training in coaching, creating psychological safety, and showing high emotional intelligence,” she said. “These things can no longer just be annual seminar topics, they have to be at the core of leadership development. In an AI-powered workplace, managers’ value lies in their ability to elevate people, not just oversee their tasks.”

Managers across functions also will need technical training in how agentic AI works, Maris said, but the goal shouldn’t be to turn them into data scientists.

“”The objective instead should be strategic AI fluency,” she said. “Leaders need to understand how to collaborate with AI systems. That includes understanding what agentic AI can and can’t do, how to ask the right questions of the technology, and how to recognize when outputs might be biased or flawed.”

Bryan Ackerman, head of AI strategy and transformation for consulting firm Korn Ferry, said agentic AI represents the kind of digital transformation yet unseen by many senior leaders — one that requires a fundamental change in leadership development practices.

“This is happening faster and with more substantive steps in improvement than we’ve seen in previous digital transformations,” Ackerman said. “There are unique elements to this AI transformation that have to become part of an organization’s development plans for its leaders. If executives try to manage this in the same way they’ve managed previous transformations or disruptions, they’ll quickly find they’re moving too slowly.”

Ackerman said executives will be faced with decisions such as deciding what the optimal mix of AI agents and humans in the workplace is and where uniquely human skills will remain a competitive advantage to their companies.

Leadership training tied to agentic AI also should get managers comfortable with being in a state of constant transformation, Maris said.

“The introduction of agentic AI isn’t a moment in time — it marks the beginning of continuous transformation,” Maris said. “Leaders need the skills to guide teams through ambiguity, build cultures of resilience, and normalize constant learning and adaptation.”

Le Clair said another essential component of management development should focus on how to build trust with workers.

“Managers will need to become trust officers in this new environment,” Le Clair said. “The biggest inhibitor to the adoption of AI agents as co-workers will be creating trust in the workforce in these new tools.”

By: Carolyn Crist

The issue of candidate fraud may only be growing worse. Within three years — by 2028 — 1 in 4 candidate profiles worldwide could be fake, according to a July 31 report from Gartner.

In a survey of 3,000 job candidates, 6% said they participated in interview fraud, either by posing as someone else or having someone else pretend as them. Burgeoning artificial intelligence use during the hiring process will likely increase concerns among recruiters, Gartner found.

“It’s getting harder for employers to evaluate candidates’ true abilities, and in some cases, their identities. Employers are increasingly concerned about candidate fraud,” Jamie Kohn, senior research director in the Gartner human resources practice, said in a news release. “Candidate fraud creates cybersecurity risks that can be far more serious than making a bad hire.”

For instance, when candidates believe they’re being assessed by AI, they distort certain skills, adjusting to what they think AI prioritizes, according to research published in the Proceedings of the National Academy of Arts and Sciences. This can pose problems for hiring teams, who may not be able to accurately assess applicants’ capabilities and personalities, the researchers said.

Across other Gartner surveys, candidates expressed concerns about employer AI use as well, with only a quarter saying they trust AI to fairly evaluate them. Half also believe AI screens their applications, and a third expressed concerns about AI failing their applications. In addition, only half of candidates said they believed the jobs they were applying for were legitimate.

Even so, 4 in 10 candidates said they also use AI during the application process, primarily to write text for their resume, cover letter, writing samples or assessment questions.

To screen for candidate fraud, employers can create a multi-layered fraud mitigation strategy, Gartner said. For instance, companies can set clear expectations around acceptable AI use and communicate about their fraud detection efforts, including legal consequences if fraudulent behavior occurs and is detected.

Recruiters can also use assessments to detect fraud, including in-person interviews. In another Gartner survey, 62% of candidates said they were more likely to apply to a position if it required in-person interviews.

After the initial hiring phase, employers can also deploy system-level validation to detect fraud, such as tighter background checks, risk-based data monitoring, identity verification and anomaly alerts in recruiting systems.

By: Carolyn Crist

As today’s college graduates struggle to start a steady career, 1 in 2 Americans say their college major didn’t prepare them for the job market, according to a June 18 report from Preply.

Beyond that, 1 in 6 Americans who went to college said they regret it. When thinking about their college experience, college graduates said their top regrets included taking out student loans, not networking more and not doing internships.

“One of the main concepts of seeking higher education after high school is that college will prepare you for the rest of your life. While some graduates leave their alma mater feeling prepared to enter the workforce and begin their career, others feel underprepared,” according to the report.

In a survey of more than 1,700 Americans with an undergraduate degree, 29% said they wished they picked a different major, and 18% said they regretted the institution they attended.

College graduates said they felt unprepared in numerous ways, especially finding a job after graduation and navigating student debt and personal finances.

Americans also said they don’t feel college gave them real-world work experience, practical or technical skills or a professional network. In fact, only 5% reported feeling “adequately prepared” for life and the workplace.

On the other side of the hiring table, more than half of hiring managers say recent graduates appear to be unprepared for the workforce, and 1 in 6 say they’re reluctant to hire them, according to a report from Resume.org. Their top complaints included excessive phone use, a lack of professionalism and poor time management skills.

Within the workplace, executives and workers alike say entry-level workers seem unprepared for their jobs, particularly compared to five years ago, according to a General Assembly report. Although leaders said workers don’t have enough training to be hired, employers also don’t offer adequate training, the report found.