Have you ever wondered if your organizational structure is hurting your process improvement efforts? Well, chances are your organization chart is having a dramatic effect. It’s not so much your org chart or structure that is the problem but rather the issue is the evolutionary process that your organization has gone through to produce your chart.
Company growth, from a smaller organization into a bigger one, occurs through evolution. Companies evolve, aligning by department or function to save money, and they never seem to stop to look at the TCO – Total Cost of Ownership.
If your organization is like most, then it has grown through an evolutionary process that has resulted in your current process improvement organizational structure. Over time, your structure has probably been re-engineered to be more effective and address your changing business needs. New managers added, teams created and people downsized, re-arranging your org chart repeatedly. So, why are you still waiting for that boost in performance?
It’s probably a matter of conflicting goals, measures, and incentives that are preventing your organization from dealing with the real issues. Lawrence Miller wrote the book on business evolution called Barbarians to Bureaucrats: Corporate Life Cycle Strategies. In it, he explains some of the nascent issues of evolving organizations and proposes specific action steps to correct them. In his discussion of structure, he highlights the 20th century’s focus on span of control as one of the causes of organizational dysfunction today.
The number of employees directly reporting to you, as a manager, represent your “span of control”. So if you have five people reporting to you then your span of control is five. Miller questions why most companies are built based on the idea that it is the manager’s job to define, measure, and control the work of employees.
Note the focus on control versus creativity or commitment. This has lead to the notion, taught in most MBA programs today, that an appropriate span of control is seven (this number came from empirical studies of US companies). The reason being that a manager cannot control the work of more than seven subordinates.
If the workers are competent then there is truly little need for a manager to guide them. Therefore, span of control is inversely proportional to subordinate competence, trust and layers of management. The higher your span of control, the fewer the layers of management you need for your process improvement organization structure.
The funny thing about all of this is that your layers of management are a lot more expensive than improving workers effectiveness through increased training performance, and yet we focus on adding management layers instead of worker performance.
The average span of control in Japanese chemical companies is 20 versus 8 at similar US plants. It is even worse for the US government (non-military).
Employees Aren’t the Cause of Inefficiency, Management is…
Low spans of control indicate that employees are being micro-managed, and there is too much emphasis on hierarchy in getting work done. By increasing the number of employees each manager supervises, an organization “flattens” the structure, which empowers employees and allows productivity to increase. But, to realize this increased productivity, you will need to make sure your workers are competent through training and aligned to the product flow instead of by function.