Layers and spans

I was in a phone discussion last week with someone who wanted to know how many layers their organisation should have and what the right span of control should be for each manager. (Layers in an organisation refer to the number of levels of staff there are from the most junior to the most senior. A span of management is the number of employees that a single manager is responsible for, usually in terms of allocating work and monitoring performance.)

It's a question I get asked frequently and people want to know the 'right' answer. I'm usually a bit flummoxed by this need for a formula when there are so many variables. Some organisations e.g. the US Government has 21 layers while others organisations e.g. Valve, a software gaming company, have one or two – they cheerfully say that 'nobody "reports to" anybody else'. This is likely to be the difference between being an established 'analogue' organisation and being a newish 'digital' one (See the white paper 'Building a Digital Culture ' from PWC) although that's a bit glib. Digital organisations are more recently established than most analogue ones and thus haven't had the time to accrete the trappings of bureaucratic infrastructures.

However, since almost all organisations are aiming to move from analogue to digital (including government organisations) surely organisation designers and developers should be looking again at the layers and spans accepted wisdom? This established approach is typified in the information I found when I scanned my 'layers and spans' folder. It comes from the Arizona National Guard Human Resources Office, and unfortunately is undated. It firmly states:

Basic requirements:
(1) First level supervisors over a General Schedule (GS) position should supervise 6 to 8 positions.
(2) First level supervisors over trades and crafts, wage grade (WG) work should supervise 8 to 15 positions.
(3) Second level and higher supervisors (WS or GS) should have no less than three (3) subordinate supervisors reporting to them.
(4) Deputy and full assistant positions should be used only in large, complex organizations.
(5) When two (2) or more employees occupy identical additional (IA) or almost identical positions, each employee must work at least 50 percent of his or her time at the grade level of the position. Where many employees in the same organization are classified to the same type and level of work, the percentage of time spent working at the classified grade level should substantially exceed 50 percent.

This prescription was probably ok in an era (or organisation) of command and control, but this has been eroded by all kinds of factors: easier access to information, employment patterns, technology, societal changes, and so on. Looking for a prescription on layers and spans is not going to give a 'right' remedy.
But because we seem wedded to layers and spans (see the article 'Equality may be cool but staff still like the security of hierarchy') I have a section on them in the forthcoming second edition of my book on organisation design. Here's an extract:

'Layers and spans are structured to help managers get work done, so the first part of an organisational decision on the number of management layers and the span of a manager's control requires discussions and agreement on what managers are there to do. In general, managers plan, allocate, co-ordinate and control in order to achieve what the late Peter Drucker described as their three tasks:

1 To contribute to the specific purpose and mission of the enterprise.
2 To make work productive and the worker achieving.
3 To manage the social impacts and social responsibilities of the organisation.

Clearly, determining what configuration of layers and spans is likely to work in a given organisation depends on the situation, organisational purpose and a host of other factors related to the interpretation of what the three tasks entail and the weighting given to each of them.

Multinational conglomerate General Electric (GE) has learned that as situations change so does the need to review layers and spans. Its annual report 2013 (p.8) states that

'To achieve our goals we must simplify GE … Having lived through multiple crisis events in the past decade we attempted to manage volatility through layers and reviewers. Like many companies we were guilty of countering complexity with complexity. … We are transforming GE around the 'culture of simplification' … We are driving a leaner structure … We have learned that fewer layers, simpler rules and more field empowerment improve execution and accountability. … At GE, we think simpler is better. Simplification means quicker execution and closer collaboration with customers. It's a focus on efficiency, speed and market impact. '

To help get a good enough answer to the "how many layers " question, there are four rules of thumb (related to the four management activities of planning, co-ordinating, controlling and allocating). Each layer should:

  • be flexible and adaptable enough to enable managers to forward plan in a context of constantly changing operating environments;
  • facilitate co-ordination between business units (Michael Goold and Andrew Campbell suggest there are six forms of business unit to unit co-ordinating activity: leveraging know-how; sharing tangible resources; delivering economies of scale; aligning strategies; facilitating the flow of products or services; creating new business);
  • have appropriate control and accountability mechanisms (note that any task, activity, or process should have only one person accountable for it and accountability and decision-making should be at the lowest possible level in the organisation; overlap and duplication, fuzzy decision-making and conflict resolution processes are all symptoms of lack of adequate controls);
  • enable its managers to allocate effectively the range of resources (human, time, equipment, money, and so on) they need to deliver their business objectives.

If these four attributes are working well, it is likely that the layer is adding value to the organisation, in that it is facilitating speed of operation, innovation, integration, flexibility and control. If it is not evident that the layer is doing this, it may be redundant and the reason for its existence should be questioned.

Determining a sensible span of control is possible (though infrequently done) both for an individual manager and for the type of work carried out in a business unit or organisation. The method involves considering the following:

  • The diversity and complexity of the work performed by the organisation
  • The experience and quality level of the workforce
  • The extent to which co-ordination or interdependence is important between employees and groups
  • The amount of change taking place in the work environment
  • The extent to which co-ordinating mechanisms exist and are effective, geographic dispersion
  • The extent to which job design and tools allow direct performance feedback to the employee
  • The administrative burdens on each level of management
  • The expectations of employees regarding development and career counselling.

Robert Simons suggests that any job comprises four different spans: control (including people, working capital, facilities, infrastructure and intangibles), accountability, influence and support. Each of the spans can be adjusted to reflect the business strategy and meet current organisational requirements, but to ensure high performance the spans related to the supply of resources (control and support) must be in equilibrium with the spans related to demand for resources (accountability and influence).

There is no right number of people that one person can manage (though a commonly held view is that five is the optimum – but that could well be a myth) as various factors affect a manageable span. The relationship between spans and layers is not straightforward either, although wide spans of management are typical of organisations that have few layers.'

What's your view on layers and spans? Let me know.

PS When I scanned my 'layers and spans' folder I found a guide from Booz, the consulting company, Managing Spans and Layers (Booz is now part of PWC). Bain, another consulting company, has one too Streamlining Layers and Spans.