Another key consideration is the amount of cross-organizational collaboration your enterprise requires. If business units are highly related, there will be more collaboration and joint issues that come up to the top. If the units in your organization operate more independently — for example, if yours is a large and diversified holding company — this structure would enable you to handle more direct reports. The units themselves would act as relatively self-contained businesses, and your role should be focused on longer-term direction and financial investment choices and performance reviews.
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 direct interaction with customers, industry associates, or regulators is a major part of your job, you’ll want a smaller span of control, allocating more responsibility to your direct reports to free you to assume a more external role. If most of your time is spent on working internally with the team, you’ll be set up to handle a broader span so you can keep on top of what your units are doing. This is particularly important if you’re undertaking a transformation.
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. You can also use the tool to revisit your needs as your situation and goals change over time.
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.