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Ratio of Senior leaders to other employees in a company

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Thinking about title inflation and top heavy companies. Do you know of a benchmark or a rule of thumb regarding the percentage of employees in a company that should be at the director level and above?

How do you guard against title inflation and/or letting a company become top heavy?

Organizational Design
Leadership
Job leveling
Ellen Raim
24 months ago

3 answers

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Thanks Alan-- what I am really trying to get at is your last paragraph. Here in the US the progression from individual contributor goes I.C-->manager--> senior manager-->director--> senior director-->vice president-->senior vice president--> executive vice president. None of them are legal roles and they have nothing to do with the board of directors. Its just the senior people in the company.

I see the companies I am working with getting really top heavy. and before there can be a move like the one you describe in your last paragraph, I would love to have some data. I vaguely remember reading somewhere that the top echelon titled folks should be no more than 8-10% of the company.....that's the kind of data I am looking for.....your thoughts would be welcome. thanks

Ellen Raim
24 months ago
Those top heavy folks are really not leaders. - Dr. David E. 24 months ago
Hi Ellen. I'm struggling to find any real data on this. I've contacted a couple of people I know because it occurs to me that the providers of HR systems (PeopleSoft etc) must have the picture in terms of the range at least. I'll let you know if I get anything concrete. - Alan 24 months ago
HUGE THANKS Alan-- I have been on line reading for days and I see lots of articles acknowledging the problems that are caused by too many "leaders" and not enough "doers" but no solutions other than eliminate ALL management (Zappos, Valve and a few others) - Ellen 24 months ago
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agreed David-- but I believe its my responsibility to help "fix" it....and I need a way to have the conversation....so, suggestions?

Ellen Raim
24 months ago
Reduce non essential folks and managers - Dr. David E. 24 months ago
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Hi Ellen. I guess it depends how you define the label director. In the UK at least, a company director is a legal position, with legal accountabilities attached. Companies need some kind of board of directors to run effectively, and I would say on average, apart from very small companies, the number of directors is going to be 5-15, whatever their size, so ratios don't help.

There is then a separate question around how something that looks on the outside to be one company might be split up into a number of smaller legal entities, each of which has its own board of directors. One company I know in financial services had around 4000 employees worldwide, and probably something like 100 to 150 of those were directors of one of the legal entities, about 12 of those were on the exec team, but only 6 or so were on the overall board.

Title inflation can be a problem where its been used just to make people feel better about having been at a company a long time - ie. it becomes a label for 'I'm very experienced' as opposed to 'I run this chunk of a company'. I know one organisation that bit the bullet by reducing the overall number of grades by half, and limiting who was allowed titles like director to those with very specific responsibilities. It caused some initial noise but people calmed down remarkably quickly once they saw it was clear and fair.

Alan A
24 months ago
What a question - Gosh NO! - Dr. David E. 24 months ago

Have some input?