The short answer – yes they do.
Within Agile there is a heavy stress on servant-leadership, self-organizing teams, and emergent leadership. The belief is that through the use of those things, management is unnecessary.
The manager of the past has a negative association with authoritarian leadership that dictates all aspects of your work. It would be too idealistic to believe that most companies would be willing to give that up; even though most job roles (even outside of Project Management) could get along fine without it. Teams do not need someone who sits above them telling them how to do their work and babysitting them to make sure that it gets done.
Most organizations, unfortunately, end up with something that kind of looks like the below:
They get managers who manage managers who manage supervisors of teams. This creates a heavy silo effect, walling off functional groups from other groups. The silo effect may not be a bad thing, but it can be if it is not carefully controlled. You would think with all the managers that this could be better controlled than it is in actual practice. The only people adding measurable value to the organization tend to be the direct reports, the same direct reports who are sick of 10 different people creating rules that hinder their job progress.
The worst part about this system is that it often creates management by proxy. A manager tells someone else to implement something, that someone else has to go out and get help with no authority to pull someone off of other work to get that help, then the manager gets upset that they gave someone this job and it wasn’t completed (or they completely forget – I can tell you some stories there).
So now that I have argued against managers, why do we need them?
We need less dictatorial managers and less management of managers. We need fewer managers who sit on a team dictating the work to be done. We need fewer managers passing down rules to jobs they have never performed. But we do still need managers.
What is needed from a manager is a focus and continuous alignment to the business objectives with the work one produces. A business wouldn’t pay people to do whatever they want. A direction or objective for the work is needed. For Scrum teams, this direction can come from the Product Owner; but even the Product Owner has to go out and find this direction to bring it back to the team and ensure that the product the team is building aligns with the needed business goals.
So yes, we do need managers. They still have a place. They need to manage who we do things less and worry more about what we need to focus our energy on and doing what they can to help achieve it. We need managers to become servant-leaders and facilitate resolutions rather than dictating actions. We need managers who work as an extension of the team, learning from the team what is needed to accomplish tasks and working to aid them in any way that they can.