GM543 Unit 8 Span of Control and Layers Review Example

Half the Managers Supervise Three or Fewer: A Unit 8 Span and Layers Review of a Furniture Maker

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Purdue University Global

GM543: Strategic Organizational Design and Architecture

Unit 8 Span and Layers Review

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Harrow Contract Furniture, its chart and every figure are composite and illustrative; the frameworks and studies cited are real.

How the Figures Were Produced

The review starts from Harrow Contract Furniture's current chart and payroll list, which together show every employee and the person each reports to. A manager is anyone with at least one direct report. Span of control is the number of direct reports a manager has. A layer is one level of reporting, counted from the CEO at layer one.

One choice changes the results more than any other. The plants have 30 team leads who work on the line for most of each shift, assign tasks and cover absences, but who cannot hire, discipline or approve time off. They can be counted as managers or as lead operators. The review computes every figure both ways. The method follows the logic of span studies such as Meier and Bohte's, which show that how a span is counted shapes what it seems to show (Meier & Bohte, 2003).

Headcount, Managers and Spans by Function

Counting team leads as managers, Harrow has 94 managers and a mean span of 5.3, with a median of 4. Counting them as lead operators, it has 64 managers and a mean span of 7.8, but a median of only 3.5, and 32 of the 64 managers supervise three people or fewer. The mean is pulled up by the ten area supervisors, whose span becomes 30 when team leads are counted as operators, and by the coordination supervisor with 19.

By function, counting team leads as lead operators, the picture is uneven.

Operations has 341 people and 23 managers. Its mean span is high, about 15, because area supervisors oversee whole production areas. Counting team leads as managers, the mean falls to about 6.4.

Sales has 37 people and 7 managers, a mean span of about 5. The four regional directors supervise 22 territory managers between them.

Engineering has 40 people and 13 managers, a mean span of 3. Nine engineering group managers each supervise three engineers, and three directors each supervise three group managers.

Customer operations has 41 people and 8 managers, a mean of 5, but the figure hides the widest range in the company: the vice president has one direct report, the director and the customer operations manager each have two, and the coordination supervisor has nineteen.

Supply chain has 22 people and 5 managers, finance 13 people and 4 managers, and human resources 7 people and 3 managers. Each has a mean span of about 2 to 4.

Layers From the CEO to the Front Line

The plants have seven layers: the CEO, the vice president of operations, a plant manager, a production manager, an area supervisor, a team lead and an operator. Customer operations has six: the CEO, the vice president, a director, the customer operations manager, the coordination supervisor and a coordinator. Sales has four: the CEO, the vice president of sales, a regional director and a territory manager.

For a company of 502 people, seven layers is a tall structure. Raghuram Rajan and Julie Wulf found that large United States firms removed layers between the CEO and division heads through the 1990s and widened the CEO's span (Rajan & Wulf, 2006). Harrow's layers sit lower in the structure, in the plants and customer operations.

The question for each layer is not whether it has a manager in it but what work it does that the layer above and below cannot.

Finding One: Production Managers With Two Reports

Each of the five production managers supervises two area supervisors. Each area supervisor runs a production area with three team leads and about 27 operators. Interviews with three production managers found that most of their time goes to collecting reports from area supervisors and passing them to the plant manager, and to attending the Tuesday order review. Area supervisors already plan the work and handle staff issues; plant managers already set targets.

This layer does little distinct work. Removing it would let each plant manager supervise five or six area supervisors directly, a span well within the range Lyndall Urwick suggested for managers whose reports' work interlocks (Urwick, 1956). The plants would drop from seven layers to six.

Finding Two: Three Managers With One Report

Three managers have a single direct report: the vice president of customer operations, who supervises only the director; the planning and analysis manager in finance, who supervises one analyst; and the HR manager, who supervises one specialist. A manager with one report is usually doing the same work as that report or is checking it. In customer operations, the vice president and director attend the same meetings and approve the same exceptions. In finance and HR, the single reports could move to the controller and the vice president of HR.

Finding Three: Nineteen Coordinators Under One Supervisor

The coordination supervisor carries the widest span outside the plants. Wide spans suit routine work, where a supervisor needs little contact with each person. Coordinators' work is the least routine in the company: every large project raises new questions about fabric, dates or installation. The supervisor reports spending most days answering escalations and has not held regular one-on-one meetings in a year.

This finding runs the other way from the first two. Harrow does not have too many managers in customer operations so much as managers in the wrong places: two layers above the coordinators supervising one or two people each, and one supervisor below them stretched across nineteen. Julie Wulf's later study found that flattening often moved decisions up to the top rather than pushing them down (Wulf, 2012). At Harrow, removing a customer operations layer should come with more supervision close to the coordinators, not less.

What the Three Findings Add Up To

Taken together, the findings suggest about eight manager roles that add little distinct work: the five production manager roles and the three single-report roles. Removing them would save roughly $900,000 a year in salary and benefits, but the review recommends spending part of that saving on a second coordination supervisor, so that coordinators have a manager with time for them. The plants would lose a layer, customer operations would lose one at the top and gain supervision at the bottom, and the company would have fewer managers placed closer to the work.

Appendix: Calculation Notes

Total direct reporting links equal headcount minus one, or 501. Mean span is 501 divided by the number of managers: 501 over 94 gives 5.3, and 501 over 64 gives 7.8. The median is taken from the list of every manager's span. When team leads are counted as operators, each area supervisor's span is three team leads plus their 27 operators, or 30. Function counts include each function's vice president.

References

Meier, K. J., & Bohte, J. (2003). Span of control and public organizations: Implementing Luther Gulick's research design. Public Administration Review, 63(1), 61-70. https://doi.org/10.1111/1540-6210.00264

Rajan, R. G., & Wulf, J. (2006). The flattening firm: Evidence from panel data on the changing nature of corporate hierarchies. Review of Economics and Statistics, 88(4), 759-773. https://doi.org/10.1162/rest.88.4.759

Urwick, L. F. (1956). The manager's span of control. Harvard Business Review, 34(3), 39-47.

Wulf, J. (2012). The flattened firm: Not as advertised. California Management Review, 55(1), 5-23. https://doi.org/10.1525/cmr.2012.55.1.5