The ten functions of middle managers – Identifying their functional substitutes in a decentralized organization without traditional middle managers

Abstract Middle managers play a crucial role in decision-making, coordination, change management, and leadership in organizations. Decentralized organizations with little to no hierarchy, however, challenge the necessity of having managers as the cornerstone of organizing. In this case study, we focus on a Finnish IT services company, Reaktor, with 500 + employees but no traditional chain-of-command middle managerial layers. Synthesizing existing literature and drawing especially from functional leadership theory, we identify ten task-oriented, people-oriented, and systems-oriented managerial functions that middle managers typically fulfil to keep organizations operational. We then proceed to examine our case using an abductive, qualitative inquiry, investigating how our case company fulfils these functions without having traditional middle managers. The organization was built around autonomous self-managing teams with substantive authority and independence. However, we discovered that the teams were not able to take care of all managerial functions, and thus the fulfilment of these functions required purpose-built supportive structures, including a number of supportive managerial roles, such as coaches, client managers, and a salary team, each having one narrow slice of the authority a typical middle manager would have. Our investigation thus identifies decentralized functional substitutes for middle managers, while offering a new way of understanding how decentralized organizations lacking traditional chains of command remain coordinated.