Problems with organization levels


There is a tendency to regard organization and setting up departments as end in themselves and to gauge the effectiveness of organization structures in terms of clarity and completeness of departments and department levels. Division of activities into departments, and hierarchical organization and the creation of multiple levels are not completely desirable in themselves.

In the first place, levels are expensive. As they increase, more and more effort and money are devoted to managing, because of the additional managers, the staffs to assist them, and the necessity of coordinating departmental activities, plus the costs of facilities for the personnel. Accountants refer to such cost as “overhead,� or “burden,� or “general and administrative,� in contrast to so-called direct costs.

Real production is accomplished by factory, engineering, or sales employees who are, or could logically be accounted for as, “direct labor.� Levels above the “firing line� are predominantly staffed with managers whose cost it would be desirable to eliminate, if that were possible.

In second place, departmental levels complicate communication. An enterprise with many levels has greater difficulty communicating objectives, plans, and policies downward through the organization structure than does a firm in which the top manger communicates directly with employees. Omissions and misinterpretations occur as information passes down the line. Levels also complicate communication from the “firing line� to the commanding superiors, which is every bit as important as downward communication. It has been well said that levels are “filters� of information.

Finally, numerous departments and levels complicate planning and control. A plan that may be definite and complete at the top level loses coordination and clarity as it is subdivided at lower levels. Control becomes more difficult as levels and managers are added; at the same time the complexities of planning and difficulties of communication make this control more important.

Operational–Management Position: A Situational Approach

The classical school approach to the span of management deals with specifying numbers of subordinates for an effective span. Actual experience does support the classical school opinion that at upper and top levels the span is from three to seven or eight subordinates. However, more recent operational management theorists have taken the position that there are too many underlying variables in a management situation to specify any particular number of subordinates that a manager can effectively supervise.

Thus the principle of the span of management states that there is a limit to the number of subordinates a manager can effectively supervise, but the exact number will depend on the impact of underlying factors. In other words, the dominant current guideline is to look for the causes of limited span in individual situations, rather than to assume that there is a widely applicable numerical limit.

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