Scale and scalability

A phrase used as long ago as 1952 was ‘span of control’ and it is quite a simple concept in terms of management and leadership and the number of people you actually can influence in an organisation.

In essence it has its roots in Taylorism and an idea that there is a set of principles to organisational design. In terms of scaling an organisation and managing growth it is worth bearing in mind some oft quoted work of Graicunas which states that there is a limit to the number of direct reports you can actually supervise effectively. This supervision also acknowledges not only the relationship between the leader and direct reports but also the relationships of sub groups. Graicunas calculated that the with four direct reports, the number of group and cross relationships is 44, with six reports this number increase to 222.. Additional studies last century have suggested these ratios vary slightly based on different sectors and the cultural/ lateral relationships of the formal and informal work groupings.

Nevertheless it would seem that the optimum/average number of direct reports is about 8, after that leadership becomes unwieldy but can be helped by having ‘Executive Assistants.’

Where we also find further confirmation is work done by Dunbar who has the idea that 150 people is about as much as we can ‘manage’ or relate to within our social or work groupings and again, after that keeping up to date with events in other people’s lives becomes more difficult for our brains to cope with. This particular number was taken at a point between 100 and 250, so in some respects it resonates with the work of Graicunas.

The issue then becomes in small organisations with direct chains of command is how many people can a leader effectively lead before we get into more defined hierarchical structures, de centralised decision making and cultural issues about communication, common values and direction, all stuff that maybe prevents organisations scaling up and failing to preserve these success factors.

Comparing Graicunas and Dunbar seems to reinforce a ‘span ‘ or limit to how effective leaders are but there are a great deal of other variables to consider such as the use of IT, social media, physical location, informal customs and practices , recruitment policies and talent management. Size does matter in organisational structure simply because of the inertial effect on decision making process and the additional layers of bureaucracy required to exercise a span of control over large numbers of people.

Therefore to combat this in built frustration that comes with scaling and growth, leaders have to encourage the relational side of enterprise and ensure that the cultural and decision making structures don’t become barriers to growth and that skilled and professional leaders acknowledge that structures need to become much more people friendly rather than rely on IT, processes and bureaucracy to achieve scale. Pumping volume into an organisation means creating capacity for people to grow with the firm and not be left behind and frustrated. It also means that leaders recognise the importance of the limit of their own abilities and the number of people for whom access is granted and that alternative ( sub) structures are put in place to ‘manage’ groups ( of 150 people)

So, if we throw  some further research and talk about Brooks Law ( The Mythical Man-Month -1975) we talk about how adding more man power to teams slows down projects rather than assist completion and as an added piece of research  by Lawrence Putnam concluded that teams of 8 people were optimal.

All this is probably due to the size of the human brain , the George Miler study in 1956 showed that the maximum number of items a person can retain in short term memory is seven – hence the length of telephone numbers ( analogue kind) This was later overruled by Nelson Cowan of the University of Missouri who thought it was four. There are tools you can use like mnemonics or acronyms but he concluded the part of the mind can only hold about four items at once. That is probably also the reason multi-tasking is a myth.

Throwing more people at projects or expanding your social networks or span of control doesn’t necessarily give you direct proportional benefits.

Dr. Jeff Sutherland, the inventor of the Scrum methodology, has calculated that the number of communication channels increases dramatically with the number of new people you connect with , and our brains can’t cope.

If you want to calculate this impact then the number of communication channels required = the formula n(n-1)/2 where n is the number of people on the team, or under your control. You can see that the larger the team, the greater the number of communication channels required and therefore adding more people slows down our own brain activity.

So we are back to Graicunas and I think the conclusion is that teams  and direct reports should be less than   10 people.

The last word may well be steeped in ancient Chinese history because the number 8 is said to be very lucky……