Instead of managers occupying a level above front-line workers, why not have them work under and for them?
The problem is lack of employee engagement as they feel dis-empowered due to top-down strategy setting.
In a recent presentation given by Gary Hamel, he commented on a survey result that only 20% of employees feel are engaged in their work. This is not due to the nature of the work being performed since 80% enjoy their work and believe it to be interesting. The problem lies in a lack of empowerment and a closely linked connection between the work being done and its contribution to overarching company goals. One example is an investment management firm with corporate goals of increasing assets-under-management. An employee in the operations department sees this as the job of the sales team and not a direct result of his/her processing and reconciliation of orders.
My solution is to change the organizational structure so that employees no longer report "up" to a manager, but "sideways." In such a way, the manager becomes a peer instead of a boss. A key component would be to change the managers role from one of pushing down corporate strategy and directing from above to one where his/her key role is a facilitator. Instead of "telling people what to do" the job requires asking "how can I help you do your job?"
The practical impact of this change in structure would be a greater feeling of empowerment by employees. With a manager working FOR employees instead of the other way around, employees can ask for and receive authentic feedback and support without having to be concerned about the political maneuvering around this manager. I believe that employees have a greater sense of loyalty to their peers than to superiors, so this structure would result in intrinsic motivation being a more important driver of performance and improve employee engagement.