The way that we've achieved this is using the Position hierarchy to restrict the reports contents rather than the management hierarchy. To set up a report, inn the Content tab of the report, under Show by the user's current position, tick the Show records from staff in the user's position option and select Just staff below the user's position.

To make it work, you also need a Position hierarchy that mirrors your management hierarchy. You should be able to create the structure using a report containing user ID numbers, manager ID number and ensuring that everyone is assigned to a position. In our case, every position id is the same as the user id number (to keep things simple), so we know that the parent of every position equals that user's manager ID. We use Totara Sync and a report of users and their managers to keep the Position structure up to date so that any staff who move between managers also have their position moved the next time an update is run.

Hope that helps, can try and clarify if anything is unclear. Ideally it would be possible to do the same thing with manager, but that would require some modifications from Totara's end so that the content restrictions for reports included that option I think.

Dan