I've seen a similar idea implemented with a lot of tech teams. In particular, I've seen companies try to be "flat," meaning that the software developers don't have managers, but instead, the software developers are expected to self-organize.

But all of the normal tasks of a manager still exist: someone has to coordinate the work of multiple teams when those teams have zones of concern that overlap, and someone needs to be able to assign a budget, spend a budget, and take full responsibility from both the good and the bad that arises from spending that budget. If money is spent poorly, someone has to take the blame. If money is invested wisely, someone has to get the credit.

What tends to happen (in "flat" organizations) is that a lot of the coordination work gets pushed down to the individual software engineers, so that they now need to spend more of their time on coordination activities, and they spend less time actually writing code. I've seen "flat" organizations where senior engineers spend as much as 25 hours a week in meetings, because they've taken over all of the coordination work that would have previously been handled by an engineering manager.

Decisions about budget are rarely extended down to individual software engineers, so instead those decisions go up the hierarchy: you've now got the CEO making small-scale spending decisions that should have been passed down to some middle manager. For instance, at Futurestay.com, the CEO was dragged into an argument about what managed hosting service to use for MongoDB, a decision where the difference was maybe $200 a month. Obviously the CEO should not get dragged into spending decisions of that scale (unless you're talking about a 5 person startup that is just getting started).

If it was possible to wave a magic wand and make all management work cease to be necessary, then every company in the world would do that. But instead, many companies will make the managers cease to exist, while the management work is still there. And the overall result tends to be a loss of productivity, either because essential coordination activities are left undone, or because talented specialists are forced to do management work for which they have no training.

Also, if I might comment on a controversial issue, so-called "flat" organizations tend to be especially weak at enforcing discipline. If a worker is lazy, or if a worker does poor work, then they would normally run the risk of being fired, but in a "flat" organization they can often get away with poor performance for a long time, because fewer people are tracking their performance.

But I do think Bayer has a grasp on a thread of at least one important idea: they claim they are doing this to save $2.5 billion. That implies they think the management work can be done by other employees who are paid less money than the managers. And that implies that the managers were overpaid, relative to the value they delivered. While I think Bayer is making a mistake by getting rid of its managers, I also think that managers are probably overpaid relative to the value they deliver.

When I was at ShermansTravel.com we had a very competent project manager who oversaw the tech team. She did a fantastic job of estimating tickets, prioritizing tickets, and keeping engineers focused on the right tickets. But she was paid less than any of the software engineers. And I think that is the right model for most companies, including Bayer. The default assumption, everywhere, is that managers need to be paid more than the people they manage, but why is that? I think there are many cases where the managers should be paid less than the people they manage.