What Is Organizational Structure?
Span of Control
Span of control deals with the number of subordinates a manager can effectively direct. The wider an organization can make its managers' spans of control the more efficient it will be. Wider spans of control save money.
Consider the span of
control of the company represented in the drawing above in blue. The
blue company has 5,461 employees and six levels of managers to manage
them (all but the bottom layer of 4,096). Let's say those managers make
$50,000 apiece. The total payroll for 1,365 managers making $50,000
apiece is $68,250,000.
If we look at the green company, we still
have a bottom layer of 4,096, but less managers overall managing them.
If the green company's 585 managers each make $50,000, the green
company's total payroll for those managers is $29,250,000. That's a huge
savings.
Small spans of control are not only expensive, but they
tend to complicate communication up and down the organization. The more
layers, the more the message has to travel from manager to manager.
Narrower spans of control also encourage overly tight supervision and
less employee creativity and empowerment. In recent years, the trend has
been toward wider spans of control.