Leaders of thriving firms focus on creating and seizing opportunities to fuel their growth. They often overlook the power that resides in thoughtful organizational design. As a result, their companies may get bigger but not necessarily better.
This month I begin a series that outlines the basics of organizational design that can make your company more successful.
Let’s start with spans of control — that is how many direct reports does each manager have? The range can run from narrow (3-6) to wide (8 or more). Each has its benefits and risks.
▪ Narrow spans produce tall, steep organizations with more managers. A major advantage of this design is that more management positions offer advancement opportunities. The career path may start as an individual contributor, then perhaps lead, supervisor, and then manager. The increase in job responsibilities between each step is incremental.
The downsides here are that power is spread over many people, which can lead to bureaucracy, increased cost, slower communication and work flow.
▪ Wide spans of control result in a flat structure with fewer management positions. The big advantage here is that manager time is highly leveraged and thus reduces overhead costs. The increase in responsibilities between steps is much greater than in a steep design, so preparing future leaders is critical.
In a small firm or startup, it is common for everyone to report to the CEO. As the firm grows and new hires join, the organization chart may start to look like a Ferris wheel. If so, the CEO can be spread too thin and may become a bottleneck.
In larger organizations, overloaded managers may risk burnout. Furthermore, if talented employees feel neglected and see little opportunity for advancement, they may leave.
Many factors determine the appropriate span — for example, complexity and interdependency of work, skills and experience of manager and team, and geographical dispersion. The sweet spot for spans of control is generally 6-8, but the factors will change over time. So, it makes sense to revisit your structure once a year to ensure ongoing success.
Next month we will look at other elements of organizational design that can make a real difference.
Linda Clark-Santos is a consultant and executive coach. email@example.com.