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span of control: what is the optimum and what are the drivers?

Published by Rupert Morrison 

Almost no question is asked more than what the ideal span of control should be. There are those that believe the answer is pretty simple – 8. You should have no more than 8 layers and no fewer than 8 direct reports. This is easy to understand and I’m sure there are situations where 8 is the ideal.

Our view is it all depends. It depends on a large number of factors and dogma is incredibly dangerous. Believing there is a simple answer is a classic example of a rightsizing magic number.

So, if it all depends, are we just stuck? Or is there a minimum and maximum? The answer is no, no and probably yes but we can’t say with certainty what that exact maximum is. By the way, the minimum is a bit of a cop out – 1.

delayering

By increasing the span of control, you reduce the number of managers and layers in the organization. This gives, all things remaining equal, significant cost savings and improves communication from the top.

In our standard orgvue demo dataset, we have an organization with 1,505 people and 229 managers, or an average span of control of 6.6. The person at the top of the organization (depth 1/the CEO) has 6 direct reports. The CEO’s reports (depth 2) have an average span of control of 4 while their reports 5.76 and so on, as shown in the below graph.

Span of Control Graph - CEO Report - OrgVue

The actual layout can be seen in more detail in the icicle chart below. Each direct report is pictured below the boss. For fun, I have coloured this by age. From Green to Grey.Span of Control Graph - Icicle Layout - OrgVue

Each of the 7 layers can clearly been seen and it’s immediately obvious that being at level 7 is quite an outlier and some functions only go to depth 3.

The graph below shows this same data but a histogram of the average depth by department, with the distribution of the age in colour still there.

Span of Control Graph - Histogram - OrgVue

Understanding this pyramid is useful when thinking through possible delayering savings. It identifies gaps and possible inefficiencies. The simplistic logic of having an average span of control of 8 would decrease the number of managers by 41 to 188. This would mean you only need 5 layers (max depth of 5). This theoretically perfect pyramid would look like the below Excel table.

Span of Control - OrgVue

So, in theory, if you would give us a file with Employee ID, Manager ID (and Employee cost) we would, within seconds, be able to tell you the saving in terms of managers (and likely cost saving/savings range). But reality doesn’t fit such a simple theoretical model. This doesn’t mean such a simple exercise is a waste of time, more that it is useful for highlighting areas to focus in on and a way to raises questions, not answer all those questions.

a framework for thinking through an ideal span of control

Like most problems, it is useful to break it down into various parts. There is the nature of the subordinates, the boss and the overall context of the organization. Each of these have various drivers. Understanding these drivers should help to answer what the span of control ought to be.

Span of Control - Drivers

nature of the subordinates

Level of self direction of work and amount of supervision required:

Degree of similarity of task. The more similar the tasks are, the easier it is to manage more

nature of the boss

Trust and relationship: The greater the trust, the better the relationships then the easier it is to supervise more

Capability of boss: Does the boss have a good understanding and knowledge of the required work. Think of those new to managing or those who are more junior. Management is a competency like many others and it takes time to develop it

How much ‘task activity’ versus ‘management activity’

 context of the organization

It would clearly be possible to define each group of subordinates and bosses into dimensions based on these drivers. From this, it’s a relatively easy step to deduct which areas should have a higher or lower span of control. High could mean 12 or even 15. Low could mean 5 or even 3 -> with how extreme being determined in part by the organizational context. From this, a gap analysis can be performed and deeper, more meaningful questions asked. Equally, if it is a priority to reduce cost, delayer and increase the average span of control, then why not focus more on the underlying drivers. It is ‘leveraging the drivers’ that will enable an improvement in the span of control ratio. By doing something to improve the drivers e.g. reduce the amount of admin takes; improve trust or knowledge of managers, then any possible theoretical saving might just become a reality.

Written by Rupert Morrison

CEO, orgvue

Rupert is an economist, recognized author, and leader in organization design, human capital management, and analytics. Formerly a strategy management consultant, Rupert is now CEO of orgvue and Concentra Analytics. His book "Data-Driven Organization Design" was shortlisted for the "2017 Management Book of the Year Award". He has dedicated his entire professional career to helping businesses revolutionize the way they see, plan, and manage their organizations through the innovative use of data and analytics.