Thinking about your organisation for a moment, which of these phenomena are prevalent? ‘Personality clashes’. Employees being micromanaged by their bosses. Slow and bureaucratic decision-making processes. Poor communication.
If these issues are part of the daily fabric of your organisation it simply highlights how hard it is to find ‘good’ employees, right? Well, probably not. There is every chance that the culprit is a low profile and oft neglected aspect of the company – the organisational structure.
It’s not a popular thing to say out loud but the majority of organisations out there have too many reporting layers. Way too many, in fact.
Why does this occur? It is partly simply because of the lack of thought and planning that goes into organisational structures. Organisational structure is a critical enabler or blocker with respect to achievement of a company’s strategic objectives. Therefore it is perplexing to see how often structure is overlooked by senior leadership teams as an area requiring their focus, and then evolves haphazardly, and ultimately hinders organisational performance.
Another reason for having too many reporting layers in an organisation is people underestimating the number of direct reports that any one person can effectively manage. Many people, especially in white collar functions, apply a rule of thumb of a maximum of approximately 5 or 6 direct reports for each manager (note: in most circumstances managers can effectively manage significantly more people than this), and when the number of a manager’s direct reports grows beyond that, what happens? Of course another manager is added to the structure. If that number of managers continues to grow another manager is needed to manage the managers, and therefore the number of reporting layers increases over time.
An increasingly prevalent practice appears to be some senior or middle managers devolving or ‘delegating’ their managerial accountabilities. They create a direct report beneath them to manage a team of people, who were formerly reporting in to them. The rationale for this appears to be that the managers are so busy that they need to shed some of their managerial work. Why? Because they need to get through a mountain of their technical work. Prima facie this indicates that technical work is being done at too high a level, dragging down the level of work (and engagement and development) of those below them in the structure. Hence the need, as discussed in the previous blog post, for managers to shift their role balance more away from technical work and to focus much more on people management work.
How many reporting layers from top to bottom are there in your organisation? Ten? Fourteen? Nineteen? The numbers never cease to amaze. Now think about people who work in the first few layers of the organisation, or frontline roles. How much information actually gets to them and how accurate is it? The large number of layers that the information must cascade down through to reach the frontline means that a lot of relevant information never makes it that far and that which does is often filtered or incorrect. Imagine the impact that this has on the engagement of frontline employees.
Then there are the inefficiencies. Too many reporting layers typically means that there are jobs within the structure that are adding little value to the organisation, or in some cases, subtracting value. For example, a couple of years ago a government department undertook a study of what people at each level of the organisation did and how they added value. The study clearly showed that there were several layers that lacked a real purpose. Managers in those roles spent a lot of time micro-managing, red penning their team’s work and served as a superfluous link in a slow and bureaucratic decision-making process. It wasn’t the managers’ fault, they were doing their best to work hard and make a contribution but their talents could have been much more productively employed in another role.
This leads to a critical point. In this era of skill shortages and challenges that most organisations face in finding enough of the right people for roles, why are more companies not looking within for people who are in roles that aren’t adding value or who could be more productively utilised in another role? No, this is not a cost saving measure as such nor is it about individual performance. It is, however, an efficiency measure. Surely one of the easiest efficiency gains that a company can make is to remove unnecessary reporting layers and reassign employees from those roles into other unfilled critical roles or new roles which could add value to the organisation but for which funding hasn’t been available?
Organisational structures need to be owned and managed by senior leadership teams. They should be reviewed at least annually. By keeping the number of reporting layers to the minimum required organisations can increase efficiency, effectiveness and employee engagement.
So, going back to the ‘personality clashes’, micromanagement, slow decision-making and poor communication, the cause of which is often attributed to individual employees, just how much of that would disappear if your organisation had the right number of reporting layers in place? The obvious caveat here is to plan, manage and communicate such a process very carefully, as power, the need for status, and resistance to change can be powerful oppositional forces in the face of organisational structure change.