Getty Images; Tyler Le/BI
- Consulting firms are using AI to streamline operations by reducing management layers.
- AI is helping leaders manage larger teams and improve decision-making.
- Companies like IBM and Factory are also adopting AI to reshape management structures.
For consulting firms, shredding season is coming: It's time to take AI and cut the fat.
As companies embed AI agents into their workflows, consultants are exploring how it can be used to flatten management layers — helping leaders oversee increasingly wider teams.
McKinsey & Company senior partner Alexis Krivkovich said there's "real hope" that AI can help companies streamline their organizational structures during a recent episode of "The McKinsey Podcast."
AI has equipped leaders with "more of a superhuman capacity to manage across bigger scopes, which would allow companies to flatten their structure and get faster in the process," she said.
Over the past decade, she said, companies have inserted at least one organizational layer in their management structure between the CEO and the front line. In some, it has been closer to two or three layers.
"Not only is that expensive, but that slows companies down from a decision-making standpoint because it just means you have more people, more layers at which somebody has to weigh in before any decision can get made," she said.
AI, instead, can be used to facilitate decisions and connection points.
The way organizations will change is likely to vary from industry to industry. In the life sciences, "squads of agents" can supercharge innovation. At the same time, AI agents can automate work in departments like human resources, finance, and legal, and even reallocate resources to other parts of the business, Krivkovich added.
Some have dubbed this "The Great Flattening," the restructuring of corporate hierarchies in the wake of AI.
"Your org chart is probably going to start condensing into becoming more flat horizontally," Eno Reyes, the chief technology officer and cofounder of Factory, told Business Insider in March.
Factory is an AI-native software development platform that builds and deploys autonomous coding agents for consulting firms like EY and companies like Nvidia and Adobe.
At IBM, too, which has its own consulting arm, senior vice president Mohamed Ali expects new management structures to emerge as it embeds "digital workers" alongside its 150,000 human consultants.
"I don't think human managers are going to manage these things in the same way as we manage people," Ali told Business Insider. "There'll be systems to manage these things. There'll be systems to set up the guardrails."