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When Mike Mayo, the long-time analyst at Wells Fargo Securities, reflects on the turnaround CEO Jane Fraser has engineered at Citi, one decision stands out: her restructuring of the bank into five divisions that report directly to her.\u00a0<\/p>\n
\u201cWhen you look back in 10 years, you\u2019re likely to say this was the most powerful change made at Citi,\u201d he said. Now, Mayo told me for a profile of Fraser in the current issue of Fortune, \u201cthere\u2019s nowhere to hide.\u201d<\/p>\n
There are fewer dark corners in lower levels of the company too. As part of the overhaul, Fraser cut Citi\u2019s layers of management from 13 to eight, a move she said at the time would result in a \u201csimpler firm that can operate faster, better serve our clients and unlock value for our shareholders.\u201d\u00a0<\/p>\n
So far, it\u2019s hard to argue with the results. Fraser is five years into her plan to remake the bank that has long been a Wall Street laggard. In April, Citi logged its highest quarterly revenue in a decade, with all five divisions recording gains. The bank\u2019s return on tangible common equity hit 13.1% in the first quarter, the highest since 2021. Citi stock is up about 80% since Fraser took over as CEO. The comeback this week earned Fraser the top spot on Fortune\u2019s Most Powerful Women list.\u00a0<\/p>\n
It is, of course, difficult to prove a purely causal relationship between Citi\u2019s de-layering and its recent earnings. In fact, research on whether \u2018flatter\u2019 organizations perform better than \u2018taller\u2019 ones is mixed, says Clifford Oswick, professor of organization theory at Bayes Business School. De-layering truly works, he says, when it\u2019s a means to other \u201cpurposeful ends\u201d that \u201cpeople can buy into and commit to, and which is going to improve organization performance long term.\u201d<\/p>\n
The great flattening<\/p>\n
The business world cycles through periods of tight and \u201cloose\u201d or flat culture, the latter being more popular when the economy is relatively good, Andr\u00e9 Spicer, executive dean of Bayes Business School, previously told Fortune. And flatter structures are all the rage right now.\u00a0<\/p>\n
The average number of people reporting to managers rose from 10.9 in 2024 to 12.1 in 2025, according to a January Gallup report. Last year\u2019s figure represents a nearly 50% increase in team size since Gallup first measured, in 2013.<\/p>\n
Meta, for one, is reportedly employing an ultra-flat 50-to-1 employee-to-manager ratio in its new applied AI engineering team. Earlier this month, Coinbase CEO Brian Armstrong said he was laying off 14% of the company\u2019s workforce and increasing employee-to-manager ratios to as many as 15 to one.\u00a0<\/p>\n
The theory is that a flat organization boosts agility by shortening decision chains and putting leaders closer to frontline employees and the customer experience. With fewer layers, new ideas move more quickly. When employees have more direct access to decision\u2011makers, they tend to feel more engaged and develop a stronger sense of ownership over outcomes.<\/p>\n
AI seems to be supercharging the \u2018great flattening\u2019 by giving leaders the sense that they can do more with fewer people and introducing the possibility of automating some middle-manager duties like task allocation and employee counseling.\u00a0<\/p>\n
Workplace culture is also experiencing a generational shift toward flatter orgs as millennials seek more \u201cparticipative or inclusive forms of management\u201d versus the \u201ccommand and control\u201d models that Gen X was accustomed to, Oswick says.\u00a0<\/p>\n
The limits of a flat org<\/p>\n
But flat orgs can sometimes cause problems in practice. Less experienced workers can get lost on sprawling teams, line managers can get overwhelmed, and everyone in between can feel rudderless. In many cases, Spicer says, teams give into the natural urge to divide into smaller, easier-to-govern groups; in the absence of former hierarchies, they establish makeshift ones.\u00a0\u00a0<\/p>\n
But rather than get bogged down in the perfect team size (research suggests it\u2019s around seven or so), there\u2019s a larger principle that CEOs should keep in mind as this trend continues, says Oswick: flattening an organization should drive a larger agenda. It cannot just be a cost-cutting exercise or an attempt by a new CEO to \u201cdemonstrate impact,\u201d he says.\u00a0<\/p>\n
At Citi, de-layering was part of Fraser\u2019s broader effort to slim the bank down from the gargantuan \u2018financial supermarket\u2019 it had grown into and to streamline its focus. She also divested numerous businesses and cleaned up internal controls.\u00a0<\/p>\n
\u201cThe thing about the structure is [that it\u2019s] one of the least important parts of an organization,\u201d says Oswick. \u201cIf you\u2019ve got really good relationships, really strong culture aligned to the organization\u2019s mission, you\u2019ll succeed in spite of the structure.\u201d<\/p>\n
#part #Citi #turnaround #Jane #Fraser #cut #management #layers<\/p>\n","protected":false},"excerpt":{"rendered":"
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