Why Size Matters

I have spent the last decade of my life helping the small company I joined grow into a mid-sized company.  The team I joined had about 30 people in a department that had about 100 people in a company that had maybe 250 people.  Now the company is well into the thousands, and my department is approaching 600 people.  That growth happened over the span of 11 years.

When a company is small, everybody knows everybody else.  We know each others strengths, are often irritated by their quirks, but it’s not so much that we can’t get along and agree to head the same general direction.  When that doesn’t work out, people leave, making space for new joiners and incremental improvement.

There is something tribal in a company of this size.  Many small companies never get beyond this stage, and that is not necessarily a bad thing.  Frankly, I enjoy working at a company that has that close-knit feel.  Knowing that what you do matters is one of the best motivators.

As a company grows, the people who are “in charge” know less and less about the details of what is going on.  Levels of management are established for good reason — at least that’s what we tell ourselves.  As we grew, I recommended adding a layer of management as a way to ensure that we always “knew” what was going on, when the problem of knowing became too large for any one person.

Adding a layer of management increases the “distance” from the worker-bee to the top executive.  Where once we had:

Worker → Manager → Department Head → CEO

we then had:

Worker → Manager → Director → Department Head → CEO

Then we had a whole new crop of managers to train, so they were given “junior” management positions, a.k.a. Line Manager.  That made some of the chains look like this:

Worker → Line Manager → Manager → Director → Department Head → CEO

Then we had a crop of managers who needed a promotion, so we made space at the director level by adding another level, like this.

Worker → Line Manager → Manager → Director → Senior Director → Department Head → CEO

Then I was promoted to VP, and we ended up with:

Worker → Line Manager → Manager → Director → Senior Director → VP → Department Head → CEO

Seven hops from the one end to the other.  And the closer to the work, the more the structure fanned out.  The CEO managed seven or eight department heads, our department head managed a handful of VPs, I managed a few directors, and so on.

So we all knew what was going on, right?

Throughout this expansion, we kept our worker-to-manager ratio at about 8-to-1 on average.  It is not as if we were turning workers into people who sit around watching the work get done, at least not at first.  We had a lot of hiring to do, and everyone needs a manager, so the number of managers had to expand proportionally.

Did you spot the problem with what I just wrote?  “Everyone needs a manager.”  From one angle, this is perfectly logical.  Legally speaking, someone needs to represent the company for personnel matters, and managers can also help organize the work.  For a while, we emphasized that management was just there for the “essentials,” not to boss people around.  That was our attempt to keep the old feeling of being small and not needing a lot of management.

By having too much management, we could fall back on the crutch of hiring people who needed to be managed, rather than finding more self-driven go-getters like we had when we were small.

Also, the practice of downplaying management left us with a heap of weak managers.  Strong managers were turned out by the workers who didn’t need to be told what to do.  Over the course of years, the whole structure festered and became rotten.  Eventually, we had too many “workers” who were happy to do whatever they wanted and “managers” who didn’t have the temperament or chutzpa to hold them accountable.

Now if you want to know how successful companies organize at scale, here are a few examples in one easy chart.

Yeah, I don’t know what to do at that size either.  Seems like there are a few no-so-fun organizational models to choose from.  Surely there are problems at every scale.  Personally, I would rather go back to something small where no one needs a manager because everyone is helping and everyone knows it.

Dare I say it?  In this case, smaller is better.

 

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