Overseeing More Employees -- With Fewer Managers

Since the 1930s, business researchers have maintained that bosses optimally should manage about seven to 10 people. But many companies have boosted that average substantially -- and scholars and consultants are reconsidering their views of maximum team size.

Assigning more workers to each boss started catching on during the corporate restructuring pushes of the late 1980s and early 1990s, when flatter organizational models took hold. Now some consultants are urging companies to loosen their views of supervising, so organizations can run with fewer bosses. Research in Europe suggests that a manager can oversee 30 or more employees, in part by using technology to communicate and help monitor work.

'If you're stuck with the traditional emphasis on checking, controlling and intervening, it takes real heroics to push as far as 12 direct reports,' says Michael Hammer, a leadership coach in Cambridge, Mass. 'You need to change what it means to be a manager.'

Mr. Hammer was a controversial advocate of restructuring initiatives in the 1990s and co-author of the 1993 bestseller 'Reengineering the Corporation.' He now favors giving front-line workers more responsibility. Bosses then exercise influence by training and supporting larger numbers of subordinates. As a result, he says, 'You need fewer bosses.'

Mr. Hammer cites PepsiCo Inc.'s Gemesa cookie business in Mexico as a case in point. There, workers have been briefed on company goals and processes so that they do more themselves to keep production running smoothly. New pay systems reward productivity, quality, service and teamwork while penalizing underperformance. That promotes efficiency, PepsiCo says, while letting managers function more as coaches of self-motivating teams.

Gemesa last year ran its factories with 56 employees per boss, PepsiCo says, instead of the 12:1 ratio that prevailed in the mid-1990s. The changes have helped Gemesa improve its business results, the company adds.

Valerie Smeets and Frederic Warzynski, associate professors at the Aarhus School of Business in Denmark, recently analyzed management arrangements at a major Scandinavian company. Their findings, being published in Labour Economics, show an increasing ability for bosses to manage more workers.

At the unnamed high-tech manufacturing company, bosses supervised an average of 30 workers in 2004, up from 24.4 in 1997.

The researchers offered several possible reasons for managers' increased span of control, the technical term for how many workers are being supervised. Improved communications techniques may 'help managers leverage their knowledge, solve more problems and supervise larger teams,' they wrote.

In addition, managers with wide spans of control tend to get paid more and are promoted to run larger groups, the authors found. That could lead ambitious managers to look for ways to widen their spans of control.

The diversity of work settings means there's no universal recommendation for the number of subordinates that a manager should oversee. A manager in a factory or call center may be able handle a relatively large group, because jobs are more similar and employees can be briefed in groups. But a boss supervising people with sharply different duties may reach capacity faster. At the extreme, a chief executive overseeing the heads of finance, operations, sales, research and the like must spend time on time-consuming, one-on-one dynamics.

Not all companies are eager to give bosses more subordinates. Sun Microsystems Inc. prefers work teams of 10 people or fewer, says Ann Bamesberger, vice president, Open Work Services group, at the Santa Clara, Calif., computer company.

Sun lately has put more energy into redesigning work environments, so that teams can expand or contract more easily as projects evolve, says Ms. Bamesberger. Among those initiatives: better support for engineers who sometimes work from home and flexible seating so that growing teams can fit in new members without losing proximity.

One boss with more than two dozen people reporting to her is Cindy Zollinger, president of Cornerstone Research, litigation-consulting firm.

'I don't really manage them in a typical way,' Ms. Zollinger says. 'They largely run themselves. I help them in dealing with obstacles they face, or in making the most of opportunities that they find.'

Cornerstone provides expert testimony in court cases. Its officers and project managers have a clear enough sense of how to tackle each project, Ms. Zollinger says, that she doesn't need to micromanage the process.

'We do have executive-committee meetings,' where major policy matters are discussed face-to-face, she says. 'But most routine issues can be dealt with by email. That's a time-saver.'

George Anders
WallStreet Journal 2008-03-26