Span of control analysis
Span of control analysis refers to assessing the structure of a company by analyzing the number of individuals who report to a manager. Span is the average number of direct reports per supervisor while layers are the number of levels within an organization.
Recently across industries, trends have been moving toward C-Level Executives (CEO, CTO, etc.) taking on a broader span. The average number of direct reports to the C-Suite has increased from less than five in the 90s to as many as 10 today. Across all departments in a company, common spans range anywhere from 6 to upwards of 12. In general, the more complex the work of employees, the more supervision is typically required – resulting in a narrower span of control and fewer direct reports. For example, a call center (repetitive and requiring less supervision) likely has a wider span of control (up to 20) while an in-house legal department (specialized teams) may maintain a purposefully smaller span of control (e.g. 2 or 3).
Currently, there is an ongoing trend towards flattening organizational structure. The recommended number of layers for an organization ranges between 3 and 6 depending on the overall size of the company. Delayering helps the C-Suite to better connect with its internal operations. Flattened firms exhibit increased control and decision making at the top in addition to more direct access to division managers.
Why is this important?
A sub-optimal span of control leads to inefficiencies. At a departmental level, too many reports separate managers from operations, while too few reports may encourage micromanaging. Looking at the organization overall, too many layers slow decision making and indicate a swell in mid-level oversight. Fewer layers lead to fewer managers, which in turn results in lower costs. Fewer layers to coordinate also drive quicker decisions and a nimbler organization that is better adapted to tackling the challenges of change.
What is the ideal span of control for your company?
There is no one-size-fits all solution. The ideal span of control is influenced by multiple factors such as the complexity of work and the variation of tasks being performed by the employees. To start, examine the organization chart and consider questions like:
- Do we have the appropriate number of layers for quality and efficiency?
- Given the type of work, does this department/function have an appropriate number of reports?
To truly identify the optimal organizational structure, a comprehensive review of the departments and roles is required. To find out more about how RSM can assist you with your business needs, contact RSM’s management consulting professionals at 800.274.3978 or email us.