As part of her Citi turnaround, Jane Fraser cut management layers from 13 to 8. But the ‘great flattening’ doesn’t always work as intended

When Mike Mayo, the veteran analyst at Wells Fargo Securities, looks back at the turnaround Jane Fraser has engineered at Citigroup, one decision stands out above the rest: her restructuring of the bank into five divisions that report directly to her. “When you look back in 10 years, you’re likely to say this was the most powerful change made at Citi,” Mayo told Fortune. Now, he added, “there’s nowhere to hide.” That sentiment extends deep into the organization. As part of the overhaul, Fraser cut Citi’s layers of management from 13 to eight. At the time, she said the move would result in a “simpler firm that can operate faster, better serve our clients and unlock value for our shareholders.” So far, the results are hard to argue with. ## Why This Move Matters The reduction from 13 layers to 8 is not just a cosmetic change. It represents a fundamental shift in how decisions are made at one of the world’s largest banks. Fewer layers mean fewer bottlenecks. Information flows faster. Accountability becomes clearer. For a bank that has long been criticized for being slow and bureaucratic, this is a significant departure. The goal is to make Citi more agile, more responsive, and more competitive. But the strategy, often called the “great flattening,” is not without risks. ## The Risks of Flattening While cutting layers can speed up decision-making, it can also place an enormous burden on senior leaders. With fewer managers to delegate to, top executives may find themselves overwhelmed with operational details. There is also the risk of losing valuable institutional knowledge. Middle managers often serve as the bridge between strategy and execution. Removing them can create confusion about roles and responsibilities. Employees may also feel less supported. Without clear reporting structures, career paths can become murky. This can lead to disengagement and turnover. ## What Experts Are Watching Analysts like Mayo are watching closely to see whether the benefits of the flattening outweigh the potential downsides. The early signs are positive, but the real test will come over the next few years. If Fraser can maintain the momentum while avoiding the pitfalls, her restructuring could become a case study in how to successfully flatten a large organization. But if the cracks begin to show, the “great flattening” could become a cautionary tale. ## What Remains Unclear It is still too early to know whether the new structure will hold up under pressure. A downturn in the economy or a major market shock could test the resilience of the flatter hierarchy. There are also questions about how the changes will affect Citi’s culture. A leaner organization can be more efficient, but it can also feel more demanding. Fraser has not publicly addressed these concerns in detail, but the bank’s performance in the coming quarters will provide more clues. ## What Happens Next The next phase of the turnaround will likely focus on execution. With the structure in place, the emphasis will shift to whether the bank can deliver on its promises. Investors and analysts will be watching for signs of improved profitability, faster growth, and better client outcomes. If Fraser’s bet pays off, Citi could emerge as a stronger, more nimble competitor. If it doesn’t, the “great flattening” may be remembered as a well-intentioned experiment that fell short.