What’s Your Ideal Span of Control?
Span of Control
In a recent blog post, we discussed the five most common types of business organizational structures. We highlighted the differences between the more traditional hierarchical structure with clear reporting structures and the flatter structured organization where those lines are a little blurred. Why am I bringing it up again? Because being in the organizational chart software business, I occasionally get asked about my opinion as to the magic number of direct reports and my answer always comes back to organizational structures.
The number of direct reports is such a common topic, it’s been given a term: span of control. Span of control actually doesn’t provide us with an ideal standard number of direct reports, it simply begs the discussion as to what really makes sense for an organization.
How many people can one person efficiently and effectively manage? Organizational structures help us visualize what’s going on in a company. The hierarchy organizations have these lines of command clearly illustrated and it is easy to see where a single manager may be overwhelmed. Flatter organizations give employees more of an equal footing, making it more challenging to identify who reports to who. The number of direct reports, if they can be determined at all, may vary widely.
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Variables to Determining Span of Control
Just as with most things in life, every situation is different. We do know that the span of control has doubled in the past 20 years from an average of five direct reports to nearly ten.
Can one person really manage 10 people well? Here are a few factors that have to be considered before that question can be answered:
Diversity of Job Functions
Managing people whose job functions are the same (homogenous) is obviously more manageable than managing multiple people with vastly different job functions (heterogeneous). A CEO, for example, may only manage three to four direct reports, namely the heads of finance, sales, and operations. These job functions have little correlation with each other but are equally integral to the business. These three reports are a manageable span of control for a CEO, even though they are heterogeneous.
The head of sales, however, may have many sales managers reporting to him or her. Even though he or she may have double the direct reports as the CEO, all of their direct reports are doing the same thing, perhaps just in a different geographical location or product group.
The more diverse the job functions, the more managers are likely required in order to manage effectively. Each job function will need the right level of support and requires a leader who not only has the time to give them, but the specific expertise required to lend that support. This leads me to the next variable.
Any manager can say they can handle managing multiple direct reports from varying job functions, but it really comes down to face time. Each direct report, no matter their job function, requires some level of face-to-face interaction with their leader. Without it, it is easy to become lax, operate too independently, or miss the mark when it comes to aligning job performance with department or company strategy. We all need to be held accountable for the jobs we do. Working independently is great but you must understand the connection between outcomes and expectations.
We only have 24 hours in a day. Obviously, the wider the span of control, the more those minutes have to be divided. Eventually, something has to give and either one or more direct reports won’t receive the support they need, or something will have to give with the management itself. Either way, performance will suffer.
A company’s growth rate is critical to determining span of control. What may work right now will be grossly inefficient if the company experienced rapid growth. When managers are already at full capacity, it’s almost cruel to add more to their plates, simply because the growth wasn’t properly planned for.
Looking at the current capacity of management and understanding if there is room to expand their span of control is the only way to truly know if more managers are required. Remember, it takes time to build a management team and get them rowing in the same direction. The best time to hire new managers from outside or from within is before you really need them. No one wants to be thrown into a fire for the first time and be expected to survive. Anticipating future needs by looking at current growth patterns is the best way to ensure you’ll have the management structure in place when you need it.
Sometimes it’s not as easy as looking at an organizational chart to identify where the span of control may be too wide. Like I said previously, it really depends on the job function. One effective way to know if the span of control needs narrowing is to check for bottlenecks. Often when managers are overwhelmed, things can either slip through the cracks or slow to a crawl. Frequent delays in management decisions, required support, and needed resources are red flags.
Product development, for example, is highly dependent on the efficiency of the process. From innovation and design, to resource allocation and management, one unexpected delay in the process can trigger a snowball effect where front-end interruptions impact every subsequent step. These kinds of hiccups often spell disaster for even the most well-designed product. If, however, the bottleneck is identified and addressed early, either through re-allocation or adding management, products can progress smoothly through each gated process.
When looking at an organizational chart, are the direct reports answering to a manager who really understands the job function? The experience and expertise of the manager should directly align with the job expectations of their direct reports. A person in marketing, for example, should not be reporting to a CFO. As strange as that sounds, I’ve actually seen this happen when the growing company didn’t have a dedicated marketing manager. As anyone in either of those departments knows, marketing and finance are not only heterogeneous, but they are often at complete odds with one another. Misaligning managers with direct reports is often a sign you don’t have enough managers.
Any manager, from the executive level on down, should at the very least appreciate the daily challenges, support requirements, and resource needs of the people they manage. Without this understanding and the time required to effectively manage, there will be bottlenecks as the direct reports must constantly justify their every need. The most efficient companies ensure management has direct reports whose expected output neatly fall under their areas of expertise. They can (and have the time to) provide the necessary support, as well as guidance and encouragement with opportunities to grow.
3 Questions to Ask
Here are additional questions that might be helpful in determining your organization’s ideal span of control:
1. How Many Direct Reports?
Look at org chart to see where the number of direct reports is at or above six. The bigger the number, the more likely something needs to be adjusted. Start by talking with that manager to gauge their perception of expectations, demand and capacity, and KPIs. Talk with their direct reports to get a sense of how they feel as far as support and growth opportunities. Assess whether dividing their job responsibility into two management roles would bring greater efficiencies, improve performance, or speed output.
2. How Much Capacity?
Is there a single person who is indispensable because they do too much? While you may have hired the best manager in the world, you never want the success of your company to ride on one person’s shoulders. It’s asking too much of them and puts you at constant risk that their departure would devastate the company, even if only temporary. Be sure you divide up responsibilities and have solid processes in place so another person could rapidly step in to take over if necessary.
3. How Much Salary?
Salaries alone aren’t always the best indicators of a span of control that is out of control, but when combined with other factors mentioned above, they can be an indicator that costs are out of alignment. Paying one person a high salary to manage six or more people may be more expensive than having two lesser-paid managers split the span of control.
However your organization is structured, use your org chart as a tool to define the best span of control for each layer of management and to monitor it. The sweet spot is likely a moving target, but once you put a process in place, you can depend on it as your company grows.