What Matters Now: How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation

5.3

ESCAPING THE MANAGEMENT TAX

A top–heavy management structure is not only tyrannical, it's expensive, in ways both obvious and subtle. To start with, managers add overhead, and as an organization grows, this expense rises in both absolute and relative terms. To see why, imagine a small organization with ten employees and one boss. Here the ratio of managers to employees is 1:10. (Duh.) Now imagine an organization with 100,000 first–level employees and that same 1:10 span of control. This globe–spanning giant will have 11,111 managers—that's one boss for every nine employees, or 11% of total headcount. Why? Because now there are managers managing other managers. Assume further that each of these individuals gets paid three times the salary ...