Friday, March 22, 2024

SPANS AND LAYERS ANALYSIS FOR ORGANIZATION EFFECTIVENESS


Spans and Layers Insights

How many employees do your supervisors manage?
Has your organization considered the effects of what narrow or wide supervisory and managerial spans of control mean for your employees and the levels of support and empowerment they receive on-the-job?
Have you considered how your decisions regarding the number of levels of reporting in your organization and given to your supervisors and managers influence job satisfaction, communication practices, and your overall organizational culture?
The structure of your organization matters for these reasons and more.

Defining span of control
Span of control refers to the number of subordinates that can be managed effectively and efficiently by supervisors or managers in an organization. Typically, it is either narrow or wide resulting in a flatter or more hierarchical organizational structure. Each type has its inherent advantages and disadvantages.

Narrow Span

Advantages
Disadvantages
Have more levels of reporting in the organization
Resulting in a more hierarchical organization
Supervisors can spend time with employees and supervise them more closely
More supervisory involvement in work could lead to less empowerment and delegation and more micromanagement
Creates more development, growth, and advancement opportunities
More expensive (high cost of management staff, office, etc.)

Tends to result in communication difficulties and excessive distance between the top and bottom levels in the organization

Wide Span

Advantages
Disadvantages
Have fewer levels of reporting in the organization, resulting in a more flexible, flatter organization
May lead to overloaded supervisors if employees require much task direction, support, and supervision
Ideal for supervisors mainly responsible for answering questions and helping to solve employees problems
May not provide adequate support to employees leading to decreased morale or job satisfaction
Encourages empowerment of employees by giving more responsibility, delegation and decision-making power to them

Tends to result in greater communication efficiencies and frequent exposure to the top level of the organization




Optimal span of control
Three or four levels of reporting typically are sufficient for most organizations, while four to five are generally sufficient for all organizations but the largest organizations (Hattrup, 1993). This is consistent with ERC’s survey findings as well. Ideally in an organization, according to modern organizational experts is approximately 15 to 20 subordinates per supervisor or manager. However, some experts with a more traditional focus believe that 5-6 subordinates per supervisor or manager is ideal.

A common prescription is that the ratio of spans to layers should be greater than one to one — in other words, the organization should be flatter than it is tall.

Traditionally, eight was viewed as the gold standard span to shoot for – no more, no less.

In general, however, optimum span of control depends on various factors including:

Organization size: The size of an organization is a great influencer. Larger organizations tend to have wider spans of control than smaller organizations.

Nature of an organization: The culture of an organization can influences; a more relaxed, flexible culture is consistent with wider; while a hierarchical culture is consistent with narrow. It is important to consider the current and desired culture of the organization when determining.

Nature of job: Routine and low complexity jobs/tasks require less supervision than jobs that are inherently complicated, loosely defined and require frequent decision making. Consider wider for jobs requiring less supervision and narrower for more complex and vague jobs.

Skills and competencies of manager: More experienced supervisors or managers can generally be wider than less experienced supervisors. It’s best to also consider to what degree supervisors and managers are responsible for technical aspects of the job (non-managerial duties).

Employees skills and abilities: Less experienced employees require more training, direction, and delegation (closer supervision, narrow); whereas more experienced employees require less training, direction, and delegation (less supervision, wider).

Type of interaction between supervisors and employees: More frequent interaction/supervision is characteristic of a narrower. Less interaction, such as supervisors primarily just answering questions and helping solve employee problems, is characteristic of a wider. The type of interaction you want your supervisors and managers to engage in with their employees should be consistent with the control they are given.

In addition, special consideration should be given to the direct reports of executive and senior management levels. Typically, the number of direct reports for these individuals are lower than supervisors and managers as too many direct reports at these levels can complicate communication and lengthen response time for crucial decisions.  

Understanding five managerial archetypes can help.

Throughout the 20th century, many organizations chased the notion of finding and using one ideal universal “span of control” (SOC)—the magic number of employees a manager could oversee to achieve optimal effectiveness and efficiency. However, over decades of supporting the world’s leading organizations in their redesign experiences, McKinsey has found that there is no single magic number that fits all types of managers and the work that they do. In fact, chasing one single number can actually reduce effectiveness.

Some practitioners have attempted to identify the “right” number by industry or segment, using benchmark or peer comparison methods. Our analytical evidence and experience indicate that while a peer-benchmark approach may seem appealing, it often causes new problems, heavy handedly applying structures that work for the strategy of other organizations. The top-down assignment of managerial span of control, based on external comparisons, misses the specificity critical to designing something that is right for each company’s context and strategy. It doesn’t take into account how each department and team should perform their work to accomplish their collective performance and health goals.

McKinsey propose a new way to set target spans of control for our clients, one that enables companies to build organizations that are “fit for purpose” to their context and strategy. We have found that optimizing for managerial span requires an understanding of the complexity and the nature of the work done by both the manager and their direct reports. By studying thousands of individual managerial jobs, we have categorized them into five different archetypes that reflect the most typical types of managerial work: player/coach, coach, supervisor, facilitator, and coordinator. By applying these managerial archetypes to current manager roles, you can identify opportunities to right size their spans of control, ultimately increasing the effectiveness, efficiency, speed, and productivity of the entire organization.

The five managerial archetypes, basing the target number of direct reports on the actual work done by a manager’s team produces the best outcome. In doing this across hundreds of organizations McKinsey has identified five managerial archetypes to guide the process: player/coach, coach, supervisor, facilitator and coordinator. These archetypes cover spans ranging from three to five to more than 15 direct reports per manager. McKinsey uses ranges to allow for flexibility in strategy and execution, as we know that not every individual in a given manager cohort will have the same managerial capabilities. Ranges give room for managers both new to the role, who are still upskilling, as well as for high-performing managers, who are at the top of their game.
Each role in an organization can be mapped to one of the five managerial archetypes depending on four aspects of managerial complexity:

Time allocation. How much actual time is the manager spending on her or his own work versus time spent managing others?
Process standardization. How standard and formally structured is the work process?
Work variety. How similar or different is the work of individual direct reports?
Team skills required. How much experience and training do team members’ jobs require? How independent are the direct reports?

Player/coach
A player/coach has a significant level of individual responsibility. There may not be guidelines or standardized processes in place for this work. The teams conduct different types of work, and those work activities are rarely repeatable. Self-sufficiency can be achieved only after several years because work requires skills developed over an extensive apprenticeship.

Example: Functional vice president

Such a role typically needs a great deal of experience in the industry and business, and they bring their experience to bear. Strategy work, by its nature, is unique and not repeated. Team members are apprenticed to the leader, and build their expertise over a long period of time, which requires the manager to provide constant guidance and apprenticeship. Other roles that typically fall into this category include areas with expert knowledge or skill—a consulting engagement manager falls squarely into this bracket.

The typical managerial span for a player/coach is three to five direct reports.

Coach
A coach archetype has a substantial level of individual responsibility and executional support from others. Process guidelines are in place. Subordinates typically conduct more than one type of work. Additionally, for a given type of work, coach activities are conducted differently. Self-sufficiency can be obtained typically within a year because work requires skills developed during a substantial apprenticeship in a structured way.

Example: Customer-analytics manager in a marketing group

The customer-analytics manager has a substantial level of individual responsibility. While process guidelines may be in place for standard analytics, this role will also be responsible for developing new analytics based on best practices. Subordinates join with some level of analytics background, but need support and apprenticeship to become familiar with the business, the strategy, and the customers for this company to be effective at their work.

The typical managerial span for a coach is six to seven direct reports.

Supervisor
A supervisor archetype has a moderate level of individual responsibility and has leadership from others for execution. A standard work process exists. Direct reports conduct the same type of work but activities may be conducted differently. Self-sufficiency can be achieved more quickly (for example, within six months) because work requires skills developed through a moderate apprenticeship in a standardized way.

Example 1: Accounting manager

Typically, the accounting manager will handle exceptional situations, however standard company-wide processes and guidelines for accounting already exist. Direct reports are typically all accountants who manage the books but activities may differ by jurisdiction. Accountants come in with basic training but need apprenticeship to understand the company-wide processes and procedures that may be specific to their company.

Example 2: Senior vice president of finance

This is a senior leader in finance in a large organization who has direct reports at the vice president level. He or she may do a large amount of individual work and be responsible for situations where there are no clear guidelines, while direct reports are typically also very senior and independent. As a result, the archetype tends toward supervisor.

The typical managerial span for a supervisor is eight to ten direct reports.

Facilitator
A facilitator archetype has limited responsibility for individual delivery, with primary accountability for managing the day-to-day work of others. Work is mostly standardized. Teams conduct the same type of work and similar activities. Self-sufficiency can be achieved within one to two months because skills can be acquired quickly or direct reports have the majority of skills before starting the job.

Example: Accounts receivable and payable managers in a large finance organization

There’s one clear process established for all activities, with adjustment for some exceptions. All vendors follow the same process, and it is repeated at a fixed time interval. The direct reports can be self-sufficient within a month and the manager then has to handle only the exceptions.

The typical managerial span for a facilitator is 11 to 15 direct reports.

Coordinator
A coordinator archetype spends nearly all of his or her time managing day-to-day work. The work is highly standardized or automated. Direct reports perform the same essential work and activities. Self-sufficiency can be achieved in a couple of weeks because work requires few specific skills or people have the skills before entering the role.

Example: A manager in a call center

A call-center manager typically handles only escalation calls; all other calls are handled by the operators. The work, especially in billing call centers, is very standardized, and people can start in a call center with only a week or two of training.

The typical managerial span for a coordinator is 15 or more direct reports.

Use managerial archetypes to drive efficiency and effectiveness
By better understanding the managerial archetypes in the organization you can set specific guardrails for each managerial cohort. Using rigorous analytics and evidence, targeted actions can be taken to either streamline or increase the spans of control for each group.
By rightsizing your managerial spans of control, companies can dramatically improve the productivity and speed of their organization. McKinsey has seen that increasing spans of control for managers with few direct reports (for example, replacing coaches with facilitators) can eliminate subsize teams, helping to break down silos, increase information flow, and reduce duplication of work. By increasing the span of control for managers who could or should take on more, you can actually decrease the amount of micromanagement in the organization, creating more autonomy, faster decision making, and more professional development for team members. Correcting spans that are too narrow can also reduce the total number of layers of an organization—decreasing the distance from senior leaders to the front line and, in many cases, to their customers. Typically, comprehensive span exercises reducing at least one layer in an organization. Finally, by rightsizing spans of control, you can free up resources to invest in higher value activities. We typically see an opportunity to save between 10 to 15 percent of managerial costs by rightsizing spans and layers.

Historically, optimizing SOC has often been seen as primarily a cost-management exercise. However, companies can also use the opportunity to better structure their organizations, increasing productivity and efficiency. Ultimately, smarter and more efficient management will drive value.

In some cases, too-small spans of control have proliferated because managerial designation has been perceived as the only—or easiest—way to recognize and promote high performers. In other cases, narrow spans occur because an organization has been slow to invest in its systems or digital enablement, requiring manual work—and human quality control—in places that could be largely automated. Correcting spans without addressing the underlying sources of inefficiency is, at a minimum, a short-term fix.  It is important to set targets for managerial work as it could get done but recognize understanding how it currently gets done helps identify sustainable ways to correct spans for the long term.

Evolution of thinking on managers and management
As more of the workforce has moved from manufacturing and production industries to service-driven and knowledge-based sectors, the old-school notion of span of control has become increasingly challenged. Its very concept is being rethought and reimagined to exist in a modern, digital workforce, where people work remotely, globally, independently, and collaboratively, while doing a wide variety of analytical and creative jobs.
The top-down autocracy where managers would give orders to get work done is increasingly seen as a relic of another era. Today, managers are expected to provide guidance, apprenticeship, and expertise. Instead of it being about “control,” real leadership is more about managing through empowerment to drive productivity in teams that is greater than the sum of their parts. In agile organizations, where teams function as self-managed units, collectively setting team goals and leading themselves to achieve those goals without most of that leadership coming through the line manager, spans can sometimes be much larger than those mentioned here, given the reduced need for managerial oversight.

Ultimately, in increasingly competitive landscapes, where consistent variability across the entire value chain can pose a risk to productivity and profitability, adopting the right organizational structure can help boost productivity via faster decisions, increased transparency and improved communication. While organizational structure is just one lever of change, the long-term impact is arguably the most profound, leaving your organization well-positioned to achieve future goals.

Sources: Bain, McKinsey, West Monroe Partners articles



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