As we have seen in Parts One and Two of this series, organization design is a field based on scientific research, and CEOs play a crucial role in establishing and implementing the best design for their organizations. A CEO is accountable to build an effective organization that aligns the complexity of work with the problem-solving capabilities of staff; he or she is the only person with the ultimate authority to ensure these organization-wide systems are put in place.One of the most common challenges CEOs – and most organizations – face with organization design is that of too many layers of management. This article dissects the issue and provides some suggestions on how to resolve it.
It Happens Organically
Too many layers is a typical occurrence in many organizations because of the way businesses tend to grow organically over time. Consider the Director who, as the company ages, finds himself overwhelmed with more tasks and accountabilities than he can accomplish; perhaps he once managed eight Managers and now manages 15. He feels justified in asking his Vice President for an assistant to share the burden, so that he can be more productive. The Vice President obliges. Before long, the Director begins to delegate accountabilities to his assistant for the management of some of the Managers. In effect, he has created a new level – a new level of managerial authority – in the organization.
In this new situation, the Director no longer oversees all of his Managers: the Assistant is accountable for some of them. This can rapidly spiral out of control and undermines the system that was in place: people who were once ideally positioned with the right authority and capability for the role have now been shifted into alternate roles that are less effective.
New Strata Means Diluted Authority
Why is the additional layer such a problem? Because the unintended growth does not take into account the hierarchy of the organizational structure. In the previous example, the Assistant effectively becomes a manager of some (or perhaps even all) of the 15 Managers; and yet that Assistant’s role, authority and the Assistant’s capability may not be aligned to allow him to properly fulfill his duties. To the Managers, the Assistant may at the same level as they are in terms of capability, and is not able to add the appropriate value to their work, or to set context and boundaries sufficiently well for them to make decisions. Thus, they still look to the original manager as the “real boss” who can resolve problems that the run into.
Take it a Step Further
You’re reading the article and recognize there’s room for improvement, now what? It’s time to talk to Dwight. In one phone call you can learn how Organization Design can benefit your organization.
This situation creates redundancies and wastes resources without adding relative value. Additionally, it decreases employee satisfaction, because the Managers do not have enough direction or communication with the proper authority, and feel micromanaged by a “false” Director who is not “above” them on the hierarchy.
Avoid Additional Strata
The solution to the scenario above is simple, but critically different from the Director / Assistant scenario played out above. Instead of adding a layer of authority by giving the Director an Assistant who was in essence “below” the Director but working “above” the Managers, the Vice President should have divided the Director’s accountabilities into two separate, specialized roles. In this way, the Vice President does not add a layer; instead, the second Director works at the same level as her counterpart, but the two handle different accountabilities am have managerial authority for different Managers by dividing the 15 Managers into two separate departments within the same stratum.
In any organization, additional layers of authority are bound to pop up – it happens when organic growth is left unmonitored. But these additional layers can cause significant problems: from decreasing productivity to demotivating employees, too many layers creates confusion and inefficient work-around solutions. From the outside, the difference in solutions might appear minimal; what’s the difference between a second Director and an Assistant-Director? But within the field of organization design, the totality of these inappropriate positions can have a massive detrimental impact on the company’s overall success.