Staying the Course as a CIO. Jonathan Mitchell
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grading system has taken care of that. Woe betide you if you are a grade 17 manager asking for some grade 19 foliage. But ask these people about computers and they will become deeply agitated about their urgent need for an expensive new departmental application that could cost millions. Managers will also fervently believe that their application must be grotesquely customised to meet their every whim. Whether you like it or not, most of the impetus for new IT investments in your company will come disproportionately from the middle management. My own personal record was to discover nearly 700 active IT projects in an organisation of only 40,000 people. With a project budget of a mere £20m, this meant that each project was spending £28,571.42 each year. It's hardly surprising that few were ever finished.
Q. “How can you tell the difference between a Middle Manager and a Senior Manager?”
A. “The Middle Manager always thinks he needs more resources and more people to get things done. The Senior Manager is just the opposite – he thinks he is expending too much resource with too many people.”
Is this a bad thing? Well, it need not be so, but certain obstacles get in the way of having an effective middle management community living in a utopian harmony of peace and love with the IT organisation. Here are some of them.
As I've already suggested, there are often quite large numbers of middle managers in any large corporate organisation. This is because most companies base their operating models on pyramidal organisational structures. The structures are generated through work breakdown models, often based on function or geography. A company might break itself up into several divisions (such as R&D, Product Development, Sales and Marketing, Production & Distribution etc.). Each of these divisions can then be further broken down into smaller units. Sales and Marketing for example, could be divided geographically into regions (such as North America or Europe), and then subsequently decomposed further into country organisations and perhaps finally into sales territories. In this model, significant numbers of middle managers are created as the organisation unfolds layer by layer.
The upshot of all this is that if you are not careful, then you can end up with an alarming number of levels in an organisation. There may also be quite impressive numbers of people who are “managing” things rather than “doing” things. The average number of people who report to each of these supervisors dictates both the number of middle managers and the number of hierarchical layers in the company. Many organisations do not pay attention to this important detail. As a result they can quickly become overwhelmed with barbarian hordes of middle managers swarming around the halls and offices.
Figure 1.3 shows what happens if an organisation unfolds with reporting lines of 1:5, 1:8 and 1:11. In effect, each layer of the organisation will have 5, 8 or 11 people reporting to each manager at each level of the company.
Figure 1.3 The Relationship between Management Span and Organisational Size
If you compare the three models, you will notice that the 1:5 model requires seven levels of management structure to accommodate a mere 19,531 managers and staff. However, the same number of levels would support 299,593 people in the 1:8 ratio. But if you structure your organisation at 1:11, then a staggering 1,948,717 can be accommodated. The number of managers in an organisation is often an unintended side-effect of the reporting spans you choose. For example, even in a medium-sized company of 20,000 people, the spans make a huge difference. In the 1:5 model above, 3,906 managers are required to man such a company, whereas the 1:11 model will only deploy 1,464 supervisors. If it costs $80,000 to employ a manager, then the extra 2,442 managers required in the 1:5 span organisation will add nearly $200m of operating cost to the company. So if you ever wondered why management consultants are always banging on about layers, spans and flatter structures then this is the reason why. One organisation where I worked operated with an average management to staff ratio of 1:5½. Under cover of the 2008 recession, we ran a program which consultants would call “delayering” the company. We tasked each part of the organisation to make structural alterations to their reporting lines so that the management/staff ratio moved towards a target of 1:8. This had a startling impact. We found that we were able to remove nearly 2,500 managerial and clerical posts out of a white collar workforce of 19,800 without causing major disruption to the business. This saved more than £120m of annual operating costs. In comparison, to achieve £120m of profit, the company would have to sell nearly £1.5 billion of equipment and services (which was never going to be easy in the deepest recession in living memory).
“If sufficient number of management layers are superimposed on top of each other, it can be assured that disaster is not left to chance.”
Short organisational spans of five or less reports per manager lead to towering management structures comprised of many layers, populated by very large numbers of managers. Furthermore each manager will also have rather less responsibility and rather more time on their hands compared to their counterparts in flatter structures. Should you belong to such a low-span company, then you can probably look forward to a great deal of middle management attention. There is also likely to be heavy demand for lots of new computer systems. Now might be a good time to undertake a quick analysis of the structure of the company to identify the low-span zones. There's a very good chance that these are the areas where most of the pent-up demand for new projects, systems and services are coming from. Conversely, a line manager with fifteen reports is likely to be far too busy to be thinking about trivial things like IT. He or she will be focussed on the important job of keeping their head above the ever rising waters. However, should a heavily loaded manager ever get very passionate about wanting some electronic assistance then there is likely to be a very good reason for it.
“An overburdened, over-stretched executive is the best executive, because he or she doesn't have the time to meddle, to deal in trivia, to bother people.”
Linkage is a major problem for any IT leader. This is often because many companies still fail to recognise that the most senior IT leader must be a fully paid up member of the top executive team to be effective. He or she is often buried in the management structure of other functions, such as Finance or heaven forbid, maybe even some kind of Shared Services function. This means that the linkage between the rest of the IT organisation and the business will also occur at correspondingly lower levels in the hierarchy. The whole question of the management of IT, unlike other disciplines, seems to have a curious optionality about it. No CEO in their right mind would leave their Finance Director buried several layers down in another function. However, they seem to think it is quite acceptable for this to happen to their IT leader. Some even believe that IT can be led by someone with no experience whatsoever in the discipline. There is also a curious penchant for relatively junior manager with a hobby interest in IT to end up as main points of engagement between business units and the IT function. People seem to end up in these positions irrespective of their seniority, their role or more importantly, their degree of common sense.
Figure 1.4 shows a notional organisation by level. The CEO sits astride the top of the chart, with the real workers at the bottom. The main area of responsibility of each role is identified, together with the types of things that these individuals will be worrying about in normal day-to-day business. The main interactions are represented by the thickness of the arrows.
Figure 1.4 A Well-Connected IT Organisation
In this example, the linkage is established at the top level. In other words, the IT leader is a bona fide member of the executive team. They have a direct reporting relationship with the CEO and the status to match. When the IT leader is seen as a proper member of the management team, it is much easier to generate an agenda where IT is an important enabler for the strategic plans of the company. The thickness of the arrows in the diagram above is very similar, indicating consistent interactions between the IT function