Wednesday, April 11, 2012

Diagnosing Your Top Team’s Span of Control

What is the right number of direct reports for any incoming C-level executive? A new diagnostic tool can provide the answer, based on each leader’s situation and strategy.

by Gary L. Neilson

Choosing the right executive leadership team is one of the most important decisions that a C-level executive can make. Many leaders populate their teams with the “usual suspects”: people who have been on the top team a long time, seemingly entitled to a place there by virtue of their positions. Others are added only if there’s room. In our article on top teams (“How Many Direct Reports?” Harvard Business Review, April 2012), Harvard Business School professor Julie Wulf and I advised executives to turn this logic on its head: “Start with the capabilities and roles needed to push your company’s strategy forward.” In other words, your top team’s members — drawn from some of your current direct reports, along with appointees to new positions that you create — should together be accountable for all the capabilities that shape your company’s distinctive edge and enable you to win in the market.

Even with that criterion in mind, it’s tough to get the size and composition of your top team right, especially given all the competing priorities that senior leaders face today. This is particularly true when you first come on board in a new position. The territory is often uncharted, your predecessor’s experience may be irrelevant to your most pressing challenges, and reflective time is sorely lacking. Without guidance, and with few unbiased stakeholders in your immediate circle, you may end up relying on guesswork, gut instinct, or rules of thumb that have little to do with your actual needs. The result? Too many or too few people reporting to you, with other peoples’ competing priorities setting the terms of your discussion.

If you are a senior executive pursuing a coherent strategy, you need a span of control that is “fit for purpose.” Each voice at the table is a signal to the rest of the organization about what you consider important. Each represents a strategic capability needed to drive success for the company, or for the portion of it you lead.

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