Span of Management
Another part of establishing reporting relationships is determin-
ing how many people will report to each manager. This defines the
span of management
(sometimes called the span of control). For years, managers and researchers sought to
determine the optimal span of management. Today, we recognize that the span of man-
agement is a crucial factor in structuring organizations but that there are no universal,
cut-and-dried prescriptions for an ideal or optimal span.
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Tall Versus Flat Organizations
In recent years, managers have begun to focus
attention on the optimal number of layers in their organizational hierarchy. Having
more layers results in a taller organization, whereas having fewer layers results in a flatter
organization. What difference does it make whether the organization is tall or flat? One
early study at Sears found that a flat structure led to higher levels of employee morale
and productivity.
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Researchers have also argued that a tall structure is more expensive
(because of the larger number of managers involved) and that it fosters more communi-
cation problems (because of the increased number of people through whom information
must pass). On the other hand, a wide span of management in a flat organization may
result in a manager having more administrative responsibility (because there are fewer
managers) and more supervisory responsibility (because there are more subordinates
reporting to each manager). If these additional responsibilities become excessive, the
flat organization may suffer.
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Many experts agree that businesses can function effectively with fewer layers of orga-
nization than they currently have. The Franklin Mint, for example, reduced its number
of management layers from 6 to 4. At the same time, the CEO increased his span of
management from 6 to 12. The British firm Cadbury PLC, maker of Cadbury Dairy cho-
colates, Trident gum, and other confectionary products, recently eliminated a layer of
management separating the CEO and the firm’s operating units. The specific reasons
for the change were to improve communication between the CEO and the operating
unit heads and to speed up decision making.
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The “Leading the Way” feature provides
another recent example of a CEO leading a firm toward a flatter organization. One addi-
tional reason for this trend is that improved communication technologies such as e-mail
and text messaging allow managers to stay in touch with a larger number of subordinates
than was possible even just a few years ago.
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