Executive Span of Control | Identifying the Optimal Structure Show
Executive span of control, which is generally defined as the number of direct reports under a leader, should be periodically reviewed to ensure an effective and efficient management structure.Download PDF >In today’s increasingly complex health care environment, executives are responsible for driving performance aligned with a health system’s mission, vision and values. Span of control, which is generally defined as the number of direct reports under a leader, should be periodically reviewed to ensure an effective and efficient management structure. Health systems strive to attain optimal span of control to ensure their front line staff have the appropriate amount of supervision, communication, training and performance management in place, while also seeking to optimize the cost of their operating model. At the senior leadership level, span of control is vital and serves as an important measure of accountability for an executive. Having too many direct reports or lines of business to oversee can dilute strategic focus if executives become mired in day-to-day operations and compromise a manager’s ability to effectively develop and grow talent. Conversely, having too few direct reports may be an indication of an inefficient management structure with potential duplication of responsibility and approval channels. This can affect the decision-making processes, slow down overall execution, and lead to excess costs. Note: Span of control is a complex and nuanced management topic. The purpose of this article is to provide a conceptual introduction, share key data and benchmarks from SullivanCotter’s proprietary Workforce Metrics Benchmark database, highlight key strategies and considerations, and summarize the benefits that health systems can achieve from improving span of control. These benchmarks are aggregated across not-for-profit health care organizations with different operating models and strategic imperatives, and therefore should be used as a general point of reference rather than to create specific performance targets. Finding the optimal mix of management oversight can be challenging.For this article, SullivanCotter analyzed span of control for more than 4,000 health system executives across different job families and reporting levels in order to identify the typical range of direct reports and help health systems assess their executive span of control structures. This analysis is based on data from SullivanCotter’s Workforce Metrics Benchmark database and represents nearly 700,000 individuals from 54 not-for-profit health systems (comprising more than 600 individual/subsidiary hospitals and other operating entities) with an average net revenue of over $4.5 billion. Range of Span of Control by LevelSullivanCotter evaluated span of control across four different executive-level roles consisting of System CEOs and Presidents, Entity CEOs and Presidents, Executive Vice Presidents, Senior Vice Presidents and Vice Presidents. Definitions of each role are included in the Appendix. Exhibit 1 below shows the range for the number of direct reports per executive. The green shading indicates the 25th to 75th percentiles, while the red shading indicates the 10th and 90th percentiles. Range of Span of Control – Number of Direct Reports by Level System CEOs and Presidents generally have 9 to 13 direct reports with a median of 11. As we move further down in the organization, this range tends to decrease for any of the Vice President level positions. Having less than 3 or more than 9 direct reports for this group would suggest it may be appropriate to review the span of control. While the number of direct reports is a fundamental component of an executive’s scope of responsibility, it is not the only indicator. The combined number of direct and indirect reports can help to demonstrate total accountability and can vary widely depending on number of functions overseen, organization size, and functional area. For this purpose, ‘indirect reports‘ include all of the individuals who report through an executive’s direct reports down the organization hierarchy. For instance, when evaluating Vice Presidents in Nursing (which may include CNOs of affiliate entities) at smaller organizations (less than 5,000 FTEs), the data show that each VP oversees a median of 268 total direct and indirect reports. At larger organizations (over 25,000 FTEs), each Vice President in Nursing oversees a median of 376 total direct and indirect reports. Across each job family, the number of total reports increases as organization size increases. This highlights the value of scale of an organization in supporting organizational efficiencies. Also, we note that there are more employees within the nursing and operational functions than we typically see in many of the administrative areas (e.g., Marketing, Legal, Human Resources, Finance). Exhibit 2 below shows the median number of total reports for a Vice President incumbent for select job families by organization size. Vice Presidents – Median Number of Total (Direct and Indirect) Reports by Job Family and Organization Size Range of Span of Control by Job FamilySullivanCotter conducted additional research to analyze span of control by job family and each reporting level within that job family (i.e., Chief Officer of a specific job family at level 1, direct reports at level 2, etc.). This analysis shows how span of control structure can vary across reporting levels for certain job families. Exhibit 3 below highlights the differences between Clinical and Administrative job families. Explanation of the core functions within each job family is included in the Appendix. Median Direct Reports – Job Family Reporting Level Executives overseeing Nursing and Ancillary and Clinical Operations job families have a more consistent span of control with a median of 7 or 8 direct reports regardless of reporting level. Note that with inpatient nursing having a relatively larger number of employees, median direct span of control for level 2 and 3 nursing executives increases to 9. Median span of control in Administrative job families looks different as top executives in Finance, Human Resources and Information Technology functions, for example, have 6 or 7 direct reports and the executives reporting to them have about 5 direct reports. To assess the limits of span of control, SullivanCotter analyzed executives at levels combined across Clinical and Administrative job families. We consider typical span of control to fall between the 25th and 75th percentiles, with narrow or wide span of control falling outside of that range. Health systems can use these benchmarks to identify individuals that fall below the 25th percentile or above the 75th percentile. Based on these data, executives in Administrative job families who have only 1 or 2 direct reports may have an overly narrow span of control. Conversely, executives in Clinical job families who have 15 or 16 direct reports may have a span of control that is too wide. Again, with inpatient nursing having a relatively larger number of employees, the range of data from the 75th percentile to 90th percentile is 12 to 20 direct reports. Exhibit 4 below identifies the number of directs reports that fall within these two categories. Range of Span of Control by Job Family Strategies for Assessing and Redesigning Executive Span of ControlImproving span of control begins with a current state assessment to understand where the health system may deviate from leading practices. These steps include:
In order to right-size executive span of control, there are several key strategies health systems can consider to help facilitate this process:
As health systems select and prioritize these strategies to refine span of control, there are a number of additional considerations to keep in mind:
Positive OutcomesA number of benefits associated with rightsizing span of control have been discussed in this article. The following diagram recaps some of these positive outcomes that health systems have achieved.
ConclusionThe data show that spans of control vary significantly among different operations and functional support areas as well as by executive level. As health systems evaluate their leadership structures, differentiated spans of control should be applied for various cohorts of leaders. Robust benchmark data provide an important reference as health systems determine the optimal spans of control. Span of control is one aspect to consider when evaluating the ideal management oversight model and should not be reviewed in isolation without other performance metrics. Department leaders must still be accountable for achieving their expected outcomes and quality measures. So while health systems may set targets for executive oversight, they must not become fixated on achieving a specific numerical ratio and lose sight of the overarching goal of balancing the need for senior leaders to focus on strategy and growth while also effectively leading their functions to achieve these goals. AppendixExecutive Job Level Definitions
Select Core Functions within Clinical and Administrative Job FamiliesClinicalAncillary and Clinical Operations includes executives in behavioral and mental health, laboratory, pharmacy and rehabilitation, as well as executives that oversee hospital operations such as the COO and VP of Operations. Nursing includes executives in care management, inpatient and outpatient nursing, surgical services, transitional care, clinical education, emergency medical services and women’s health. — AdministrativeFinancial Services includes executives in functions such as financial administration, tax, audit, planning and analysis, managed care financing, revenue cycle, treasury and investments. Human Resources includes executives in functions such as diversity and inclusion, employee and labor relations, organizational development, HR operations, leadership and workforce development, talent acquisition and total rewards. Information Technology (IT) and Health Information includes executives in functions such as IT administration, health information management, IT security, instructional and learning technology, network and infrastructure management, programming and systems development and web services. Note: As the purpose of this article was to evaluate select job families for conceptual illustration, not every job family or function was analyzed. Examples of other job families not included in the analysis are dietary, housekeeping, maintenance, supply chain, service lines and medical group operations (though ambulatory/outpatient nursing executives are included in Nursing). How many people does a span of control structure averagely have in their team?Ideally in an organization, according to modern organizational experts is approximately 15 to 20 subordinates per supervisor or manager. This forms the basis for a manageable span of control. However, some experts with a more traditional focus believe that 5-6 subordinates per supervisor or manager are ideal.
Which of the following factors help determine a manager's span of control quizlet?Which of the following factors help determine a manager's span of control? The level of standardization of the work and the degree of empowerment that employees have.
What is the term used to describe those functions that a firm can do as well or better than others?Core Competencies. Those functions that the organizations can do as well as or better than any other organization in the world.
Is the line of authority that moves from the top of a hierarchy to the bottom?The line of authority that moves from the top of a hierarchy to the lowest level is called the: chain of command.
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