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Layoffs are routinely used as an opportunity to flatten organizations by removing layers of management.

I don't think I've ever seen a corporate reorg where middle management wasn't amongst the hardest hit groups. They're expensive, and you can usually fire a huge swath them without thinking, tell the remaining ones to start working late and limp along until times get better.

No thats what it becomes, not what it should be.

Are you kidding? Middle Management are often the first to go. They produce no real work, they just provide less work for upper management.