Why managing a team of 50 can be harder than one of 500

When helping recruiters for references for senior managers, I always get the question, “What is the largest number of people [Insert Name Here] managed?”—Implying that “Bigger is Better.” Bigger is not better, it is simply Bigger. Every organization size has its own range of challenges. What is interesting is that the organization size that is most challenging to manage is not the necessarily largest. Managing mid-sized organizations can often be more challenging. The easiest way to show this is to look at the challenges of managing organizations of various sizes.

Managing the Start-up Team of Ten (or Less)

The start-up organization is small enough to put everyone in the same room (I know of one start-up that used their local Starbucks as its office). Everyone can see each other and talk to each other to plan activities, catch mistakes, etc. within minutes. For this reason, it can be the easiest size organization to manage.

However, small organizations have their challenges. The departure of one person (or even the injury) is a double-digit percentage impact to productivity (and can scuttle a whole product launch). Nevertheless, at this size, there is not much management needed. There is plenty or leadership (an entirely different thing) needed. However, there are few management techniques needed. This makes it the easiest organization to manage.

Managing the Small Company of 10-100

Once an organization grows beyond 10, the group is simply too big to manage detailed activity with everyone in the room. Professional management structures are required:

• Beyond 10 people, you need at least one manager (generally one for every 8-15 people depending on function) who can focus on coordination of who does what—and, just as importantly, when. If you don’t do this you will start to see productivity losses—vs. gains—as you grow larger (Mark Suster has a great post on what happens when startups do not make the management shift when they grow past 10).
• Beyond 20 people, you are big enough to always have someone hurt or sick at any given time. However, you are not big enough to have many people you can easily swap in to recover lost work. You have to learn to factor these losses into all planning and scheduling.
• When you grow beyond 40 people, you will need another level of management. This forces your organization to learn how to manage multi-level delegation and communication effectively (a common challenge for new managers).
• When you grow beyond 60 people, you become large enough to statistically have a major “life event” (wedding, family death, new child, etc.) in process during any given pay period. However, you are nowhere near large enough to absorb these without disruption. (Reminder: US-based companies above 50 people must comply with the Family Medical and Leave Act.)

In addition, organizations of these sizes are almost always trying to grow their businesses. As they grow, they see bursts in demand (as they win new customers). However, retaining reserve in organizations of less than 100 people is very difficult. As a result, the organization leader is always wresting to juggle people, projects, hiring, office expansion, and numerous other challenges.

Managing the Mid-sized Company (or Large Company Division) of 100-1,000

As you organization approaches around 100 people, an interesting phenomenon takes place. You begin to benefit from the Law of Large Numbers:

• First, you are statistically likely to have enough people in place with the requisite skills and experience to step in if you lose someone (or need to augment a project that is behind schedule).
• Second, it is much easier to staff for variance the size and timing of work. Quite simply the spare capacity you need to cover projects with 90% staffing is less then 5% at 100 people (and less than 1% at 500) vs. 15% at 10 people.

This is why the staffing of hospital beds is easier for a large hospital than a small one (and why telcos, insurance agencies, credit card providers and others benefit from serving larger populations than small ones).

Of course, large organizations require more layers of management. However, moving from two layers of management to three (or more is much) easier than moving from zero to one (or one to two):

• Moving to from zero layers to one requires you to learn to delegate activities.
• Moving from one layer to two requires you to learn to delegate goals.
• Moving beyond two layers requires you to delegate goals more effectively (i.e., you need to be improve a skill, not learn a new one).

Caveat: It is harder to change direction in large organizations (due to both the sheer number of people and the number of layers inhibiting communication). However, change is motivating people to do something they would not normally do (this is leadership, not management). Management is an every-day activity.

Why Managing the Mid-sized Organization Can Be the Hardest

The mid-sized organization is large enough to have the majority of management challenges but too small to seamlessly handle changes in demand (or staff availability). The following two diagrams (courtesy of Wikipedia) sum this up beautifully:

So What Kind of Managers Do I Refer to Recruiters?

When a recruiter asks me, “What is the largest number of people [Insert Name Here] managed?” I ask, “How big is your organization now, and how will it change over the next three years?” Based on that answer, I will pick a few names that best match their needs to refer. However, the easiest referrals are those who have managed organizations of small, medium and large size—both through growth and contraction.