Organisation Design and Development
How Many Layers of Managers Do We Need? Dynamic Link can help you answer this vital question The Key Question Let us address a key question that Executives ask but specialists often fail to answer, namely; ‘How many layers of managers do we need?’ This question in fact is easily answered but firstly it requires a brief overview on the nature of hierarchies and the introduction of a specific measurement system that can be summarised as ‘Work Levels’.
have flat organisations. However, hierarchies are not bad in themselves. All organisations whose purpose is to produce some kind of useful output are hierarchies. If they were not, they would not function effectively. This means that several people are responsible for related work at different levels in the organisation, but the nature of their responsibility changes with their level of seniority.
The Nature of Hierarchies High Performance organisations do what they set out to do without wasting resources, time or effort. Key to this is the laying down of the cascade of accountability and is one of the key responsibilities of top management in the organisation. This cascade is what turns organisational purpose into action. As organisations grow and mature, this cascade of accountability can become overdeveloped and wasteful.
The hierarchy is essential. The cascade of accountability within this is what turns organisational purpose into action.
Much work has been done over recent years to ‘delayer’ what have appeared to be inefficient organisations. However, de-layering has generally been done arbitrarily with the result that there is no indicator to show whether enough layers have been taken out, or to show that there are now too few layers.
Each level or layer, to be useful and of addedvalue, has to:
Too many layers and the organisation becomes over managed and slow. It can be said to have an inefficient cascade of accountability. Where there are too few layers, the organisation runs the risk of becoming ineffective through losing essential capability. One of the more radical approaches to delayering has been an attempt to smash the hierarchy and 1
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Work Levels The required number of layers or levels of management depends on the challenges faced by the organisation and the complexity of the environment in which it operates. Clearly a local garage will require fewer layers than the Ford Motor Company.
Connect the organisation to its environment and deliver services in line with the strategy whilst supporting the key process flows, Be the point of focus for authority and accountability and to clarify where decision taking belongs - where they will be most effective (in outcome and cost), To provide the conditions - including understanding of values and purpose - for other levels to be effective. If we take sales for example, up to four levels of an organisation are likely to be involved in generating sales in a consumer goods company.
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Organisation Design and Development
The Sales/Marketing Director will set the operational strategy which includes which markets to target with which products; the Regional Sales Controller will allocate the customers and support the sales team in handling problems, perhaps selling direct to the biggest account; the Sales Manager will handle large accounts and supervise the Field Sales people who will sell direct to allocated customers and/or prospect for new customers. The breadth of the jobs at these four levels in the organisation is different even though all of the jobholders have responsibility for sales. At each level there are specific accountabilities and these are not simply passed down the organisation ‘undiluted’. Organisational Efficiency Principles Whilst a hierarchy is an essential part of organisational life it can become inefficient. The efficiency of the hierarchy, and within this the cascade of accountability, can be determined by reference to the following two principles. 1 EVERY JOB IN THE ORGANISATION CAN BE ASSIGNED TO ONE OF A SPECIFIC NUMBER OF DISTINCT TYPES OF WORK EACH WITH ITS OWN THEME, PURPOSE AND CORE CONTRIBUTION. 2 IN ANY ORGANISATION, A LAYER OF MANAGEMENT IS ONLY JUSTIFIED WHERE THE TYPE OF WORK UNDERTAKEN IS GENUINELY DIFFERENT FROM THE LEVELS UNDERTAKEN ABOVE AND BELOW IN THE ORGANISATIONAL HIERARCHY.
When people effectively operate in the same value-adding area, they feel compressed and accountabilities become defused. Structural Efficiency Indicator Based on identifying the highest level of decisionmaking complexity within an organisation, the Work Levels methodology provides a Structural Efficiency Indicator. This Indicator identifies the efficiency of the cascade of accountabilities.
Applied rigorously, these two surprisingly simple principles provide the basis for a comprehensive analysis of structural efficiency.
Using this Indicator helps establish the optimum layers of management in the organisational hierarchy and reduce costs.
Structural efficiency analysis involves identifying the gaps and overlaps in the cascade of accountability using these principles.
When this information is aggregated for a number of organisations it generates a Structural Efficiency Index that can be used for comparison and benchmarking purposes.
Generating specific job profiles along key spines of accountability provides a clear measure of structural efficiency such as in the following diagram.
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