Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What does delayering refer to in an organization?

1. Increased management levels

2. Reduction of management levels

3. Creation of new management positions

4. Expansion of service departments

The correct answer is: Reduction of management levels

Delayering in an organization refers to the process of reducing the number of management levels within the organizational hierarchy. This approach aims to flatten the organizational structure, which can enhance communication and decision-making efficiency by reducing the layers of management that information must pass through. With fewer levels of management, organizations often aim to speed up responses to market changes, reduce bureaucracy, and empower employees at lower levels by giving them more responsibility and autonomy. In practical terms, delayering can lead to cost savings, as it typically involves less spending on management salaries and associated costs. Additionally, by simplifying the structure, organizations can foster a more agile environment, which is crucial for adapting to the fast-paced business world. This strategic move can also improve employee morale by creating a more collaborative culture, as teams work closely together without the barriers of multiple management layers.