Our research shows that Optimizing Organization Design® leads to better financial performance, better customer satisfaction and better employee satisfaction. It also shows that one of our organization design sub factors, manager – direct report alignment, is by itself directly related to these performance measures. We were surprised that one sub factor would be robust enough to be directly related to these outcome measures.
Manager – direct report alignment is based on the work of Elliott Jaques and his colleagues. They developed a measure of the complexity of work called time span. With it, one can determine how many layers or strata an organization should have, and place every position in the correct layer or stratum. More specifically, one can develop optimal manager – direct report alignment.
Optimal Manager – Direct Report Alignment
There is one optimal situation. This is when the manager is exactly one layer or stratum above a direct report, in terms of both the complexity of work done and the capability to work at that level.
There are two sub optimal situations.
The first is called compression. This is when a manager and direct report are actually operating at the same level. An organization chart doesn’t tell you this… it is only boxes on a piece of paper… it is necessary to measure the complexity of work to determine this. In a compression situation, we would expect that the manager would be micromanaging and not adding sufficient value. We would expect that the direct report could not use her / his full capability.
The second sub optimal situation is called a gap. This is when a manager and direct report are operating more than one level or stratum apart. We would expect that the manager could feel “pulled down into the weeds” and see the direct report as having no “initiative”. We would expect that the direct report would see the manager as not providing appropriate direction.
Fundamental to Other Factors
This manager – direct report alignment is fundamental to the direct report relationship with the manager, and also with employee satisfaction. One can also see how it can be related to customer satisfaction and financial performance. Research shows that there are relationships among all of these factors. Quite frankly, we have been surprised at the robustness of manager – direct report alignment. While we would have expected that organization design, as we define it, would be related to these outcome measures, we would not have expected that any of the sub factors would be robust enough to do so. Manager – direct report alignment has proved us wrong.
Wrong Nearly Half of the Time
Our benchmarking database of over 59,000 manager – direct report relationships shows that manager – direct report alignment is sub optimal nearly 50% of the time. This is a horrendous waste of human resources and a significant opportunity for performance improvement… both improved employee satisfaction and improved financial performance.
Contact us today and request a discussion with our consultants who are experts at aligning organization structure.