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Wednesday, April 25, 2012

Diagnosing Your Top Team’s Span of Control

strategy + business magazine:


What is the right number of direct reports for any incoming C-level executive? A new diagnostic tool can provide the answer, based on each leader’s situation and strategy.

Harvard Business School
Harvard Business School (Photo credit: Wikipedia)
Choosing the right executive leadership team is one of the most important decisions that a C-level executive can make. ... In our article on top teams (“How Many Direct Reports?Harvard Business Review, April 2012), Harvard Business School professor Julie Wulf and I advised executives to turn this logic on its head: “Start with the capabilities and roles needed to push your company’s strategy forward.” In other words, your top team’s members — drawn from some of your current direct reports, along with appointees to new positions that you create — should together be accountable for all the capabilities that shape your company’s distinctive edge and enable you to win in the market. ...
If you are a senior executive pursuing a coherent strategy, you need a span of control that is “fit for purpose.” Each voice at the table is a signal to the rest of the organization about what you consider important. Each represents a strategic capability needed to drive success for the company, or for the portion of it you lead.
choice and context
choice and context (Photo credit: Will Lion)
... Identifying the right number of people, articulating the roles and functions that have strategic importance, figuring out who should be a direct report, and deciding whether you need an operations chief are vital decisions that impact your effectiveness. An important first step is determining the right number of team members. Booz & Company’s C-Level Span of Control Diagnostic Tool, at booz.com/c-levelspan, enables you to determine a target span for your top team, based on the criteria most relevant to your particular situation. This insight can replace some time-honored conventions that have little to do with your actual challenges. For example:
  • The assumption that seven constitutes a kind of magic number, when the particulars of your situation may actually require a larger or smaller leadership team
  • The common practice of using metrics such as the number of employees or total revenues of a unit to determine whether its head should be your direct report
  • The belief that appointing an operations chief will buy you breathing room so you can focus on the big picture
These conventions are largely irrelevant when it comes to assessing your real needs, and they may draw attention away from the factors that matter most. For example, where you stand in the executive life cycle needs to be a key consideration. ...


Another key consideration is the amount of cross-organizational collaboration your enterprise requires. ...


This level of cross-organizational collaboration is also influenced by global reach. If your company has widespread business operations, with offices in a number of countries, it will require more integration and collaboration (and therefore a larger span of control) than if you do business in a limited number of locales.
You also need to consider the proportion of time you spend externally. ...
If you’re a CEO, you’ll also need to decide whether to appoint a chief operating officer. COOs are often put in place for succession reasons — the position is used as the grooming post for the next person to step into the top job. They have also served as span breakers, managing specifics so the CEO can focus on the big picture. Key considerations when deciding whether to appoint a COO have traditionally been the organization’s culture and the CEO’s individual style, although the most relevant consideration is whether you also hold the job of chairman. If so, a COO can make sense. If not, you may find the role less than helpful. A span breaker can also serve as a filter and a way of insulating the CEO from direct managing responsibility, as well as needed information. To make the right decision, you need to take all these factors into account.
As you work with the span-of-control tool, bear in mind that, in addition to being a diagnostic, it has been designed to help you learn. Answering the questions in the drop-down menus under each bar gives you a way to think about what criteria are most useful, given your particular challenges. The diagnostic is useful in helping you determine the target size of your leadership team. Its real purpose is not to give you a more customized number but to provide you with a way to assess what parameters should shape your decisions. ...
Some questions in the tool are more important than others in helping you determine the size and composition of your leadership team. We’ve designed the algorithms to reflect the relative importance of these factors, based on evidence of what has worked best for CEOs and other top executives.
Determining the right span of control — the right people, the right number of people, and the right structure — is vital to your success on the job, but it is only the first step. In implementing the right balance, even the most skillful executives can make mistakes. But a diagnostic like this can help you avoid many of them. Top team design is not an exact science, but there’s no need to fly blind. As you answer the questions and consider the results, you’ll get a clearer sense of what matters most.

AUTHOR PROFILE:

  • Gary L. Neilson is a senior partner with Booz & Company based in Chicago. He focuses on operating models and organizational transformation and is a leader of the firm’s work on organizational DNA.
  • Editor’s Note: This article, along with one in the April 2012 Harvard Business Review (“How Many Direct Reports?” by Gary L. Neilson and Julie Wulf), is drawn from an ongoing inquiry into the appropriate structure for C-level top teams. For more information, see Booz & Company’s diagnostic span-of-control profiler at booz.com/c-levelspan.
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