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BW Businessworld

'Please Go To The COO', Said The CEO!

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A large sized pharmaceutical company is making profits since last five years. The third generation promoter of a family owned company that turned into a PLC a decade ago, Ravi Parmar, 42, is also its CEO and been taking all major decisions independently so far. There are ten direct functional reports under him including the HR, finance, marketing, legal, sales, quality control, export liaison, government liaison, packaging and logistics.
 
Ravi had created a great team, it had taken many years of his interpersonal time and patience developing each functional head as a leader but now he was increasingly feeling the need to slow down a bit, both his family and health  required some amount of attention. While he was still able to manage planned set of activities, he felt hassled handling untimely or unplanned ones.
 
He somehow felt deprived of energies when dealing with external constituencies, there was already a lot on platter juggling things for the sake of internal stakeholders. He knew, his HR was counseling in a bid to retain two of his direct reports who had started to feel mid-life career crisis, they had been feeling less contributing and limiting in their growth, they did not have any other issues with Ravi or the company.
 
Ravi was not willing to let go his years of hard work in creating a world class team keeping a very lateral and broad structure devoid of any fancy hierarchies and designations. This was how his father had taught him and this is how he had learnt. ‘Detachment’ was a difficult thing for him he had realized, even several years of practicing yoga and meditation was not helping. This was certainly his very weak point. Ravi was now desperately looking for a shadow leader like him to fill in place of him, whenever and wherever he felt the need most and bring with his some fresh set of ideas of running a big empire in the most modern and effective way and be able to manage and retain his able core team.
 
Atul Rajshekhar is a 37 year old dynamic entrepreneur. He started an online B2B platform of supplying auto-parts and ancillaries to the trader’s community almost a year ago after leaving an IT company where he serviced automobile clients overseas. He received a seed fund of Rs. 36 crores by an investor in Singapore that had enabled and encouraged him to hire a team of young professionals like him, driven by knowledge and passion. He had managed to train a team of six direct reports and assigned respective sales and marketing targets as per the assigned six zones. These managers further had 8-10 junior executives under them and they further were required to train and develop 2-3 trainees or interns under each. The narrow span of control was helping Atul, the CEO to keep things at a reasonable distance, his direct intervention on matters was not sought and he was relieved of his direct reports taking respective regional decisions. He was happy dealing with a handful rather than a cavalry. 
 
He was busy building an empire out of a shack and he just did not have the time for fine details. He had larger things on his mind - the product had to be developed and improved drastically to fair well with the competitors, a bigger office may be required to be used as the head office, a legal liaison team had to be put in place to coordinate between the partnering company in Singapore and India, two other markets in Asia and one in middle east demanded immediate travel and attention. The CFO told him the number of levels in the organization is increasing leading to higher costs largely owing to compensation. His HR head warned him to also focus more on interpersonal communications to allow his new team to be closely monitored and build confidence. Increasingly, he was feeling the need to look out for a capable person acting as a proxy in his absence. If not better, the things must remain status-quo. 
 
The above two illustrations are seemingly related to how span of control varies in organizations as per the nature of business activities or jobs, skills and competencies of managers, interpersonal and leadership capabilities. Traditionally, the average span of control was generally between 6-8 reports under a manger of supervisor. Edgar H Schein, in 1980’s had predicted that average span of control will grow up to 20 – 25 in number i.e. more and more companies may adopt to a flatter or ‘delayered’ organizational structure and do away with hierarchies. Organisations will undergo a change as each job position will have its own empowerment, knowledge base, skill and accountability.
 
Supervision of employees will be lesser with quantifiable performance measurement tools. As predicted, it slowly started happening a few years ago with number of global companies. Mid level of managements started disappearing. Their post offices roles seemed redundant and were not required. In India the process was initially slow; it caught pace due to automation with various applications streamlining reporting system that resulted in lesser distortion of communications.
 
While there is no pre-defined and ideal span of control and highly subjective to customization, it plays a significant role when a leader has to make critical decisions and rely on costs estimates. The CEO and his top management team is the governing body responsible for laying strategies and designing systems, processes and appointing resources. They are also the direct reflection of underlying corporate principles, philosophy and cultural fabric the organization creates for others to follow. 
 
While in the first illustration, it is observed that a CEO with larger teams do not save time for personal use or ploughs enough from his given resources, he is compromising on external constituencies despite the fact that he is trying hard to maintain the ‘team model’ of interactions with his direct reports. While the ‘team model’ is ideal and compliments the flat structure, a distinctive approach meeting planned and cross functional interactive requirements is yet not allowing Ravi either his share of working alone or interacting with outside stakeholders like customers, suppliers, etc. 
 
In the second case, it looks like Atul may like to empower his functional and zonal heads and seems extremely non-interfering; it seems very less focus is given on adherence to policies and frameworks. 
 
While the narrow span will gradually grow bigger or taller as his company grows, his team certainly needs to be frequently communicated to regarding a startup organization’s goals, expectations from each function, costs control and executive or managerial team management. This way his team may remain result oriented and future ready. 
 
While the span of control may only become bigger, a modern organizational structure, challenge for top executives or CEOs will also grow to be able to adopt leadership qualities like being a patient listener, a risk taker, explorative, non-interfering, a problem solver, a companion and mentor. He may not be able to pass on the buck easily to the second- in-command, it may need an in-depth analysis to figure out whether he really needs a COO or he is just turned a basket case. 
 
While we see that ‘Span of control’ no longer is limited to the length and breadth of an organizational structure, it has slowly started to represent how companies are governed, the focus has shifted towards managing constituencies rather than a hierarchical level or a position. It is the influence that the leader may have in providing an enabling collaborative work environment while also being able to manage unplanned or inevitable set of activities. So while it is important to design and plan the span, it is for a leader to also possess certain innate qualities that may help him build and succeed with his team put in place: 
 
Thinking straight: It will save a lot of time if the leader knows what is the team composition to look like - does it necessarily have to be a mix of go getters, mentors or thinkers or he may be good with just implementers. He need to uncompromisingly plan the structure right to be able to get things done, once the team is chosen wisely and is set, he may not have the time to come back on his decisions taken and redesign or reappoint substitutes as it will kill a lot of time. The team must also be smart to stretch the leader, challenge him and continue to develop his professional leadership traits. 
 
Concentrate just enough: If a leader thinks he is capable to handle a broad span of control and has the time to patiently cultivate each member into a leader for tomorrow, he may then do away with layers. But if he lacks skills to manage numbers, patience to weave a single thread of culture and team dynamics across without devaluing the interests, capabilities and talent that each member under him brings, he may opt out and look for a more operational and a narrow span to avoid gaps and mishandling. 
 
Trust, Time and Tail: The three T’s are important for a leader to get things moving in the direction he had envisaged for his team while pursuing vision and mission of the company. Trust is an important asset for a leader; if not naturally it should come with some amount of practice and patience. Trust placed in his core team will help him receive loyalty and internal ambassadors or endorsers. A leader has to understand the time invested in building teams will always contribute to his and his company’s overall growth, he should be able to allow that time before he considers sharing his work and responsibility load, with that accountability of his team will also get divided. 
 
He should be able to train and tail the consequences and be ready to do it all over again if required. The first illustration where Ravi is seen pushed to dealing with both internal and external stakeholders without much delegation. Eventually, over the years of his running the family business with equal passion and persistence, his limited interactions with external stakeholders is becoming his prime concern. While he has never thought of delegation before, it seems he may gradually need to train his mind to learn the strategic art. While trying to balance, he seems to be losing out on his engagements with internal stakeholders as well i.e. his employees. Here, delegation may seem like a logical corrective step ensuring operational level decisions are consulted with a COO without compromising on sales performance of the company or his wide span of tightly constructed team, still not water tight. 
 
In the second illustration, Atul is leading a dynamic startup that has managed to seek handsome funding. He seems in a hurry to manage and deal with some real harsh deadlines. It is evident he needs control over critical factors to maintain the growth pitch and reasonably solve or fire fight issues that may obstacle his fast paced ambition. He is already sitting on a big buzzer where his other main direct functional reports are giving away signs of things turning unhealthy. He probably needs to pause for a while, decide, plan and tread further accordingly. 
 
While we discuss the above qualities in a leader as pre-requisites, it is often observed that the leader may like to give away his part of work and power to a COO or a CFO depending upon the way his schedules and timelines get encumbered. The idea should be to let it happen as naturally as possible rather than merely as a comforting ploy. The latter actually may not happen due to present of boards and other relevant stakeholders. A leader may not be able to maneuver the roles interchangeably or conveniently under the pretext of re-structuring. Hence, Span of control and delegation have to be well thought through to avoid any legal hassles related to appointment, transfers or re-appointments. 
 
Following are some points where delegation to a COO or a CFO should be considered after due diligence: 
 
External priorities:  With delegation, a CEO is being able to allow time to external stakeholders. A COO or a CFO correlates well to a CEO’s time allocation vis-à-vis any other direct functional report as per a part of the skill profile that remains common for the three roles. A COO or a CFO may be able to take on an independent charge allowing relatively more time a CEO may be able to spend on external and spontaneous interactions.
 
Level of involvement or intensity:  CEO’s span of activity i.e. time that he gets to do his work alone or attend to work exigencies is directly associated with the span of control he is managing and the level of involvement or type of interactions he holds with his team i.e. the number of direct reports, level of engagement or depth of discussions, problem-solving brainstorming sessions, etc. 
 
Presence of a delegate (COO or CFO) potentially allows a CEO to do better planning of work and interact effectively with top management team. Theoretically, a CEO while expanding his executive team is also allowing himself some amount of fair time to tend to other equally strategic 
interactions out of the organization while also assigning significant tasks to his immediate delegate/s, seems like a complimentary structure drawing out synergies and enabling scale. 
 
Reporting Relationships: The CEO style is typically defined on the assumption that his interactions with his subordinates are largely one-on-one to arrive at mutual or collaborative work plans. While planning to delegate he must specifically draw reporting lines and define relationships in the organizations’ structure to leave no room for a subordinate to feel head-less or doubtful of double line or dotted line reporting etc. 
 
At the outset, delegation may seem a comfortable choice, but it is only wise if a CEO is too overwhelmed managing rather than improving the strategic contributors of overall growth. A delegated executive team may strengthen the leadership and provide an impetus to the execution of big positive ideas and help realize the potential of people and workplace.
 
(The author, Yasho V Verma, is a management thinker and philosopher)
 
(Names of the persons, industries and companies in the aforesaid cases explaining corporate structures and span of control have been changed to maintain discretion)


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leadership management hr ceos yasho v verma span of control coos