Own the Future: 50 Ways to Win from The Boston Consulting Group

Chapter 23

Shaping Up: The Delayered Look

Ron Nicol

Even after all the job cuts of the past few years, many organizations are still out of shape—literally. They have too many layers, there are too many pay levels within those layers, and, not surprisingly, spans of control are too narrow. Companies are too lean in some places and too fat in others.

By layers, we mean the hierarchy of reporting relationships. Levels refer to pay grades. And spans refer to the number of direct reports. The costs to companies of being out of shape are enormous, particularly in terms of reaction time and decision making.

Why, then, are so many companies still out of shape? One reason is that belt-tightening (across-the-board layoffs and department closings), although fast and uncomplicated, is often a blunt and unfair instrument that does little to fix an organization's basic structure. At the other extreme, process redesign, which seeks to change the detail of organizational interactions, is a lengthy approach that often doesn't question whether something really should exist. “Value-based” cost reduction, which also focuses on process activities rather than the interaction of people, is another alternative, but it can miss the big opportunities and still doesn't improve decision making or responsiveness.

Focusing exclusively on delayering at the management level, on the other hand, speeds up both information flows and decision making. Moreover, with leaner managerial ranks and the focus on work rather ...