Wednesday, January 23, 2008

Do You Have Too Many Direct Reports? -- Six Questions to Consider

This is a topic that came up in a recent Chief Executive Boards International meeting. A member said he was just "burned out" by the continuing pressure of "fire fighting" and "having to do everything myself". He said he had trouble "holding managers accountable" and getting his key managers to do handle their responsibilities themselves, rather than delegating them upward to him.

When asked "How many people do you have reporting directly to you?", he answered "Ten". Bingo. Few, if any, managers can manage ten people -- let alone more. And if, in fact, you can manage ten people, what will you do when the company reaches twice its current size -- manage twenty people? If you're having trouble growing your company or seeing too many things falling through the cracks, have a look at the span of control at each layer within your company.

Span of control (how many people report to a given manager or supervisor) varies, inversely with the complexity of the job being supervised.
See a great Wikipedia article on this topic here:

In short, the more diverse (less homogeneous) the functions managed, the fewer people most managers can manage. At the top tier of a mid-sized company, that number should be no more than five or six. Functions like Sales, Finance, Marketing, Operations, HR, etc. are highly diverse -- being a CEO and looking after 8 or 10 such functional managers is a job Superman wouldn't sign up for.

On the other hand, as the jobs being supervised become more homogeneous, such as a group of delivery drivers, machine operators, etc., a span of 10 or 20 is not beyond imagination. The work is routine, the exceptions few, and the "face time" between the supervisor and the work is minimal.

What happened to this CEBI member was that he was trying to manage ten managers, each with substantially different responsibilities -- a span of control beyond most CEOs' abilities & energy levels. This super-human effort caused him to be unable to spend enough "face time" with each to define expectations, and as a result their accountability slipped. To solve that problem, our member found himself fighting fires -- reaching around his managers, making diving catches of things falling through the cracks. A downward spiral, resulting in his feelings of burnout and overload.

He's presently reassessing his organization, considering breaking it up into three or four smaller units, managed by his three or four most capable managers. This strategy repositions him to grow, as well. It's easy to imagine extending this structure to handle double the amount of business by adding 1 or 2 additional managers at the top level and still maintaining a reasonable span of control for himself.

As a quick "check up" on your own organizational chart, look for situations where spans of control exceed six. Are those situations working, and are they explainable, perhaps because those supervisors are managing highly homogeneous jobs? Or is there, in fact, a "superhuman" manager (perhaps yourself) in a position where he's become irreplaceable? Would it be better to break that job into parts that a couple of "ordinary" managers could handle?

Here's a checklist you can use:

  1. Is it really clear to each person in my company who they report to?

  2. Is it really clear to each person in my company what their direct manager/supervisor expects?

  3. Where do I have more than 5 people reporting to a single manager or supervisor?

  4. Could he handle twice as many? If not, it's a growth bottleneck that will soon need a second manager to share the load.

  5. Do I have more than 5 people reporting to me? If so, what would happen if our business doubled? What do I need to do to plan for that and build my management team's capacity?

  6. Do I do lots of fire fighting myself -- catching things "falling through the cracks"? Do I have enough time to hold my key managers accountable, instead of myself?

An always-useful organizational design question is "What would the organizational chart need to look like if our business doubled"? Putting the question this way makes "we'll work harder" an unlikely answer. Yet, if you ask "what would happen if our business increased at 15% per year?", "we'll work harder" is a more-than common answer. At that rate, a business doubles in only 5 years, and generally overwhelms a management team that hasn't planned for it. It takes awhile to grow and develop a management team, and running them at their maximum span of control is a subtle, yet inevitable limitation to growing the business.

Take a hard look at the way your organization is structured and at spans of control at each level. You may discover one of the things that's getting in the way of your growth and perhaps also getting in the way of your own satisfaction with the way the organization works.

These kinds of ideas surface at every meeting of Chief Executive Boards International. If you have an interest in ideas that will accelerate your business and provide you more fulfillment, more wealth and more time to enjoy it, contact me at:

To forward this to a friend, Click Here

Terry Weaver

Chief Executive Boards International
864 527-5917

Chief Executive Boards International: Freedom for business owners & CEOs -- Less Work, More Money, More Freedom to enjoy it

No comments:

Post a Comment

Comments to CEBI Blog articles are moderated to ensure member privacy and control spam. All comments except those deemed inappropriate should post within 24 hours.