What is the Most Efficient Number of Direct Reports for a Team Lead?

Should We Really Focus on the Exact Number? Or the Span of Control?

Reorganization

We had a reorganization in the third and fourth quarters of 2022.

Companies sometimes reorganize at the operational strategy level to achieve better performance in the upcoming quarter.

When you undergo a reorganization, it takes time to adjust to the new environment. Ultimately, a team's true capability is shown by how quickly they adapt and achieve their target performance. We gauge the success of a reorganization during our end-of-quarter retrospective, and through those retrospectives, we gain insights for future org changes. (If I were to share one pro tip before a reorganization, I highly recommend doing a premortem with the team leads of the newly formed groups.)

New Relationships

With a reorganization, the organizational layers change. As a result, new team leads and members are paired together.

The team lead announces the new team's goals and provides guidance so everyone can achieve them. In particular, to drive performance, the lead must identify each member's strengths and help align them with the team's objectives. A lead also needs to build mutual trust through 1:1s and lead the team with highly individualized strategies. In the end, continuous managing costs are unavoidable.

However, at startups, team leads usually don't just manage; they also do hands-on work. This means they have to juggle being a maker and managing a manager's schedule. Running both a maker's schedule and a manager's schedule simultaneously is already difficult, but there are even times when they take on multiple roles, like running several teams.

As the number of members to manage grows alongside multiple roles, you sometimes end up spending 2–3 days just on 1:1s. Interestingly, you'll sometimes find that the hands-on work time you planned at the start of the sprint has completely vanished. This naturally leads to working late, and if this continues, the team lead will face burnout. (All this, even while performance isn't improving.)

At this point, it is crucial for the team lead to figure out what a stable span of control looks like for them. With enough willpower, a lead might feel like they could manage 100 people, but relying on willpower alone will ultimately lead to a vicious cycle of poor performance, burnout, and lowered member morale.

Span of Control

I once chatted with our CEO about the span of control. At its simplest, it's about how many people one manager should ideally manage. The widely known industry standard is 7, but our conclusion was that while this is a good starting number, it ultimately needs to be adjusted according to the situation.

Before diving deeper, let's look at two organizational examples below.

Both organizations consist of layers including CEO / VP, Director / Team Lead, and IC (Individual Contributor).

However, we assume the span of control is 3 for Team A and 7 for Team B.

For Organization A, out of 40 total employees, 13 are managing, and 27 are executing individual tasks as ICs.

For Team B, out of 400 total employees, 57 are managing, and 343 are executing individual tasks as ICs.

Through these charts, we can conceptually see how a team can be operated more effectively depending on the span of control.

For Team A, about 67% of the total employees are working as ICs, whereas for Team B, about 86% can execute work as ICs.

The table below shows the ratio of ICs within an organization as the span of control increases.

You can see that as the span of control gets larger, the ratio of ICs increases, allowing the company to operate more efficiently.

However, the tricky part is that the team needs to actually deliver performance while expanding its span of control.

If you blindly increase the span of control, managers might face burnout without any performance to show for it.

So, how should we determine the span of control? Very simply, it can vary based on the manager's proficiency and the ICs' work maturity.

For example, someone with 5 years of engineering management experience can handle a larger span of control than someone leading an engineering team for the first time. Also, the more senior engineers there are on the team, the more you can expand the span of control. (Under the premise that the back-and-forth communication is smooth and managing costs will be lower.)

I've heard that in the early 2010s, Google's Search Engineering team had an engineer-to-manager ratio of about 20:1. I also heard that depending on the team, there were 2:1 or 3:1 ratios. When I recently spoke with someone at Google, they mentioned managing 3 members as a team lead.

So why does the span of control vary from team to team and situation to situation?

Our good old friend Peter Drucker mentioned that if you look at this through the concept of the span of managerial responsibility, things can change. What this means is that depending on the level of training and help required, the span of control can expand or shrink.

For example, if an engineering team's manager is junior, but there are a lot of senior engineers, you can drive performance with minimal managing costs as long as the goals are clearly aligned. Because, with the intuition that comes from experience, seniors can quickly analyze potential blockers in a project, step in to train junior engineers if needed, and basically just know how to produce results.

Therefore, managers themselves should reflect on and figure out their optimal span of control on a sprint-by-sprint and quarter-by-quarter basis.

Manager Self-Checklist

To self-diagnose your span of control, I recommend checking the following 3 factors:

• Team Characteristics

• Managing Skills

• Number of Senior Members

Team Characteristics

A team definitely has a goal that it was created for. And there are specific domain areas required to achieve that goal.

For instance, let's say a senior backend engineer becomes the new manager of a search team. That manager might have plenty of backend experience, but because they still need to learn more about the search domain while running the team, their span of control might not be that high.

Alternatively, if a PO with commerce experience from a previous company becomes the lead of a new commerce business team, their deep domain knowledge might allow them to manage more people.

Managing Skills

This simply requires reflecting on the manager's own leadership. Even among regular members, we often see people showing leadership during tasks.

You can tell by looking at whether a manager always keeps team performance top of mind and shows a willingness to look at the big picture—taking on responsibility and making sacrifices to achieve it. (Sometimes we see cases where a manager gets bogged down in trivial details and misses the team's overall performance.)

Number of Senior Members

The higher the ratio of senior members on the team, the larger the span of control can be.

Seniors can usually analyze what it takes to achieve a goal in a much shorter amount of time.

Beyond that, they also show high efficiency in terms of managing costs because they share their needs more honestly and clearly, and can engage in deep discussions regarding the problems they face.

Conclusion

Honestly, I wrote this post while looking back at my past self, when I failed to handle my span of control well. (Simply put, it's a reflection paper. I wrote it to organize past learnings and next action items as part of the reflection process.)

Reorganizations are bound to happen inevitably, and I hope you can find seeds for improvement by looking back at your current org structure. (One particularly interesting thing is discovering combinations of people who create synergy. Also, you might find some teams consistently performing well while keeping a great vibe, while others might deliver performance but have a terrible atmosphere. Sadly, you'll also spot teams that continuously fail to perform, which require quick action.)

If each manager periodically reflects on their span of control by looking at the team, their managing skills, and their senior members—discovering problems and areas for improvement through retrospectives and sharing them with the company—we can definitely increase the chances of more successful reorganizations in the future.