Tag Archives: organizational layers

How Many Layers?

From the Ask Tom mailbag –

Question:
You say that management initiatives (like communication, efficiency, goal setting and teamwork) will flounder if laid on the wrong structure. How do you get your structure right?

Response:
There are a number of steps, let’s take them one at a time.

Limit the number of layers to the minimum required. Layers are necessary, but no more than necessary.

Stephen Clement (co-author Chris Clement) in their book It’s All About Work, describe the non-warfighting side of the US Army with 12-15 layers, but the warfighting side only seven layers. Tested in the crucible of combat, too many layers between the top and the bottom got people killed. The US Army is a very large organization and only needs seven when it counts.

S-I organization, typically a Mom and Pop who are self-employed only need one layer.
S-II organization, is a Mom and Pop, self-employed, but want a day off. They need two layers.
S-III organization, contains a single core function, does it well, with only a skeleton of support functions. Three layers.
S-IV organization, has a robust internal core function with healthy, mature support functions, integrated together. Four layers.
S-V organization, robust internal core function, integrated internal support functions, sensitive and responsive to external systems like market, regulatory, finance, labor, technology. Five layers.

Most domestic small to medium size businesses up to several thousand employees can be managed with no more than five layers between technical production (S-I) and the business unit president or CEO (S-V). Limit the number of layers to only what is necessary.

Maximum Number of Team Members

1 Reply

From the Ask Tom mailbag –

Question:
I read with interest your response on the number of levels in an organization. It sounds good, but as the organization grows, we need more and more managers. It is difficult for a single manager to handle more than 6-7 people on the team. With more managers, don’t we end up needing more layers.

Response:
I would first challenge your assumption on the maximum number of team members for whom a manager is accountable. Your number of 6-7 has no basis in theory or fact. Elliott was often asked this question, let me whisper his number, 70. It is likely that a single manager will begin to struggle when the number of team members reaches 70.

I know the blood just drained out of your face, so as your brain is restoring its circulation, let me explain. The maximum number of team members a manager can effectively be accountable for depends, not on an arbitrary number like 6 or 7, but, rather on the variability in the work.

Large call centers may easily have 70 people on the floor at any one time, with a single supervisor. How can a single supervisor be accountable for the output of 70 people? Look at what those people do. Most of the time, those call center team members do the same work day after day, there is little variability.

How many people on a Navy Seal Team? I would guess six. Why such a small team? The variability of the work is high. The number of people a single manager can be accountable for depends on the work.

Without a frame of reference, organizations do get bloated. I once worked with a company with 12 layers, but only needed 5. Levels of work creates the frame within which we can determine not only who should be whose manager, but how many managers are at the same level. The objective measurement of timespan takes out the guesswork and bias that inevitably creeps in. About once a year, you should round up your managers for a calibration meeting to make sure the bloat is not settling in.

How Many Organizational Layers?

From the Ask Tom mailbag –

Question:
When you talk about context, organizational context, I assume you mean organizational structure. We have team members and supervisors, managers and executive managers. How many layers should we have? Is it best to have fewer layers, a flat organization or more layers?

Response:
As any good consultant knows, it depends. First, an organization should have no more organizational layers than is necessary, so, it depends on what is necessary. And what is necessary depends on the complexity of the problems to be solved and the decisions to be made to effectively deliver the product or service to the customer.

I watch organizations blow up into morbid obesity because they have no framework on which to base that decision – how many layers? And, who should be who’s manager? How many team members can a manager manage? What do we expect from this manager vs that manager?

Timespan.
What is the timespan of the decisions to be made and the problems to be solved? Think about this pattern –

1 day to 3 months – Level I
3 months to 12 months – Level II
12 months to 24 months – Level III
2 years to 5 years – Level IV
5 years to 10 years – Level V

That’s how many layers you need, and only as many as you need. But, now you have a framework in which to make that decision.

Most entrepreneurs stay within the first two levels, with goals and objectives that rarely extend beyond 12 months. Those with aspirations for larger organizations, with higher revenues, more market clout, have to consider the impact of decisions and problems that extend two years and beyond.

There is a subtle seduction that occurs, however. Any entrepreneur with the intent to take their company to the next level, must first achieve mastery at their current level while sowing the seeds of problems for the next level.