If leaders feel stretched today, it's only going to get worse in the future, indicates new research by the Institute for Corporate Productivity (i4cp). Finding structural efficiencies by expanding spans of control has become a necessity in the current economic climate. However, the i4cp study shows that flattening organizational structure doesn't necessarily result in a competitive advantage. While there are advantages, organizational restructuring may lead to greater stress, disengagement and burnout among middle managers.
The member-requested Organizational Structure and Spans of Control study reveals little difference between high-performance organizations and lower performing ones. Most companies are responding to the realities of the economy and won't see a competitive advantage from flattening their structure. Still, the shift represents a matter of competitive necessity and, in many cases, survival.
According to the study, leaders at all levels are dealing with larger teams than five years ago and many companies expect the number of reporting employees to increase in the future. Over 35% of managers in large companies already have 11 to 25 employees reporting to them, and 75% of companies expect those numbers to rise or remain the same in the future.
"Companies looking to further flatten their organizational structures need to weigh efficiency and agility gains against disengagement and burnout among middle managers - or all managers, for that matter," said David Wentworth, Senior Analyst at i4cp.
Middle managers are often the hardest hit since expanding spans of control at multiple levels of the organization exponentially enlarges the number of people they are both directly and indirectly accountable for managing. Middle managers, the key players for successful strategy execution, "report dramatically lower levels of contentment than their more senior colleagues do, as well as less of a desire to stay with their current employers," according to a 2009 McKinsey report.
Through its research, i4cp uncovered important benchmarking data for effective spans of control, which is now available to i4cp member companies. The benchmarks examine the average number of vice presidents, directors and managers based on organization size as well as the median spans of control for each of these management layers. This data is currently available to i4cp member companies via the Corporate Restructuring Knowledge Center.
For example, the study determined that the average number of management levels in large companies (10,000 employees or more), from the CEO down to individual contributors, is seven.
The i4cp Organizational Structure and Spans of Control study was conducted in August 2010. The full results of this survey are available to i4cp member companies in both report and Interactive Data format.