Spans and Layers: A Word of Caution

›Among the ways an organization looks at efficiency and effectiveness is to analyze its spans of control and layers, which deal with two interrelated dynamics. Spans refer to the number of subordinates reporting to a specific manager and are presented as ratios. If one manager has five people reporting directly to them, the ratio is 5:1. Layers are the number of levels an organization has from top to bottom. Practically speaking, spans and layers inform how an organization communicates and how it delegates tasks.

Whenever an organization goes through a period of financial hardship or decreasing revenue in an effort to cut costs, the questions arise: Where and how can I get savings in my organization? Should I look at my spans and layers and find opportunities for savings and efficiency? The thinking is, if your span of control is increased from five to seven, you could conceivably reduce the number of managers needed. Similarly, if you look at your organizational hierarchy and decide you could eliminate one layer of structure, that could be another way to reduce costs.

But be aware that evaluating spans and layers is not a strategic way to look at an organization. In terms of whether or not you’ll be able to achieve your strategy, it doesn’t matter whether you have 10 direct reports or two. Examining spans and layers should be considered a purely analytical exercise that looks at those variables and asks: Are there opportunities to be more efficient?

Another thing to note is that every organization has strategic work activities. You need to identify those activities and make sure you’re not disabling that work. Let’s say you want to increase the spans of control or decrease the number of layers in your research and development department to improve efficiency. You might achieve some efficiencies you can take to the bank, but if that ultimately slows down or reduces your ability to deliver winning products to the market, then that may not be the most effective way to save a few dollars.

The airline industry provides a real-world example of how increasing spans or decreasing layers does not always equate to strategic success. Every airline has operations people who work at each gate to coordinate the arrival and departure of flights. Southwest Airlines’ business model is highly dependent on fast airplane turnarounds. After the plane lands, it needs to get unloaded, get reloaded with passengers, and take off again as quickly as possible. The airline industry’s average span of operations managers to gates is typically 1:8. But Southwest’s ratio is 1:1, which enables them to turnaround planes much more quickly than other airlines can because there is no time spent waiting for personnel to get positioned. They are there waiting for a plane’s arrival and eventual fast departure.

In this case, if someone sought to reduce the number of operation managers to cut costs and come more in line with industry norms, it would end up costing Southwest more money in the long run, as flights wouldn’t come and go as quickly. Add up all those extra minutes over the course of the day for each flight, and that’s a lot of potentially productive and revenue-generating time lost in the hopes of saving a few dollars.

The final thing to consider is that when spans and layers are adjusted primarily as a cost‑cutting move without fundamentally changing how the work is done, it can end up being a math exercise and not a true savings. Suppose your shipping department has four people loading boxes into trucks. To save money you let go of one worker, cutting the payroll by 25 percent. But if the work remains the same, the money saved by removing one worker is offset by increased overtime payments because it will take the three remaining workers longer to load the trucks.

However, if you change the work, say by adding automated loading capabilities, then you can expect to sustainably improve efficiency while also cutting costs. The point being, by looking at spans and layers in a more thoughtful, integrated way, you can manipulate them to the strategic benefit of your organization.



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