Beijing Eaps Consulting Inc., Ivey (2009)

Topics: Chief executive officer, Management, Harvard Business School Pages: 16 (4586 words) Published: June 24, 2013
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APRIL 2012 reprint r1204H

How Many Direct Reports?
Senior leaders, always pressed for time, are nonetheless broadening their span of control. by Gary L. Neilson and Julie Wulf

With compliments of...

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2 Harvard Business Review April 2012

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Gary L. Neilson is a senior vice president in the Chicago office of Booz & Company and a coauthor of “the Secrets to Successful Strategy execution” (HBR June 2008).

FoR aRtiCle RePRintS Call 800-988-0886 oR 617-783-7500, oR viSit HbR.oRG

Julie Wulf is an associate professor at Harvard Business School and has conducted extensive research on the internal governance of senior management in large U.S. firms.

Senior leaders, always pressed for time, are nonetheless broadening their span of control. by Gary L. Neilson and Julie Wulf

I

f senior executives are feeling ever-increasing pressure on their time—and few would suggest that’s not the case—why would they add more to their plates? It seems counterintuitive, but according to our research into C-level roles over the past two decades, the CEO’s average span of control, measured by the number of direct reports, has doubled, rising from about five in the mid-1980s to almost 10 in the mid-2000s. The leap in the chief executive’s purview is all the more remarkable when you consider that companies today are vastly more complex, globally dispersed, and strictly scrutinized than those of previous generations. Let’s look at Sara Mathew, who became the chairman and CEO of Dun & Bradstreet in January 2010. On top of the six people who had reported to her predecessor, she tacked on the 10 who had made up her team when she was COO. In addition, she chose not to replace herself in the COO role, because she didn’t want to burden her staff with additional change, and—more to the point— she wanted to stay on top of what was happening across the organization, so that she could quickly adjust direction if need be. April 2012 Harvard Business Review 3

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Mathew exemplifies two trends we’ve uncovered in our research into C-level roles over the past 20 years. First, new CEOs in particular are taking on a broader array of responsibilities as they seek a comprehensive understanding of the business and as new technologies allow them to reach more people more directly. But over time—once they attain a steady state—they gradually reduce their span of control until the number of reports approaches the old norm. Second, new CEOs are increasingly choosing to go without a deputy. Across industries, the COO position has faded. In 1986 some 55% of Fortune 500 companies had a chief operating officer. By 1999 the number was down to 45%, and it has continued to decline over the past decade. The dual shifts are compatible. The COO has traditionally served as a “span breaker”—someone

ceoS’ SpAN of coNtRoL HAS DoubLeD oveR tHe pASt tWo DecADeS Data from a sample of Fortune 500 companies show a dramatic increase in the number of positions that answer directly to the Ceo. Most of the rise is due to the growing presence of functional specialists at the top table. 1986–1990

GeNeRAL mANAGeRS 1991–1995

fuNctIONAL SPecIALIStS

4.7

NumBeR Of POSItIONS RePORtING dIRectLy tO ceO

5.3 6.5

1996–1999

2004–2008

9.8

SOuRce RagHURaM g. RaJan anD JUlie WUlF,“tHe Flattening FiRM” (The Review oF economics and sTaTisTics, noveMBeR 2006); MaRia gUaDalUPe, Hongyi li, anD JUlie WUlF, “WHo liveS in tHe C-SUite?” (HaRvaRD BUSineSS SCHool WoRking PaPeR, 2011)

who managed multiple aspects of the business and translated them for the CEO. Lose the COO, and the CEO takes on the responsibility herself. Accordingly, functional specialists like the chief information officer and the chief marketing officer are more frequently reporting directly to the top, bringing relevant strategic capabilities to bear on direction setting and execution. At the same...
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