Optimal management structures

Complex management structures can be expensive. They may be detrimental to decision making, accountability and communication.

Flatter management structures and increased spans of control can maximise resource use, encourage innovation and support capacity for change.

The Australian Public Service Commission has published a framework for establishing optimal management structures. This is designed to reduce the number of organisational layers within agencies and increase the number of direct reports. It assists agencies to align their management structures with their strategic priorities.

The APS Framework for establishing optimal management structures requires agencies to have the smallest number of organisational layers necessary to perform effectively. The number of layers in an agency is ideally between five and seven.

In the 2016 APS agency survey, agencies were asked to report on the number of organisational layers in place in July 2015 and July 2016. The average number of layers reported for both years was 5.3.

The framework recognises that smaller organisations may need fewer layers. As an organisation gets larger, more complex or more geographically dispersed, the optimal number of layers may be greater to meet business and operational needs.

An analysis of 2016 agency survey results shows that smaller agencies have fewer layers than larger agencies. Extra small and small agencies have an average of fewer than five layers. Medium and large agencies have an average of less than six layers. Extra-large agencies report an average of nine layers.

Average number of organisational layers by agency size, 2016

Learn more about this chart: view data for Figure 1.

In the 2016 agency survey, over a quarter of agencies reported taking action to reduce the number of organisational layers. The APS sits at the lower end of the recommended range and therefore many agencies would not be taking any action to further reduce layers.

Is action being taken in your agency to reduce the number of organisational layers?

Learn more about this chart: view data for Figure 2.

The most frequently reported actions to achieve an optimal management structure include reviewing work level standards and organisational restructuring to increase the number of direct reports to supervisors.

A range of classification levels can exist in the same layer. Layers should reflect decision-making and accountability in line-management reporting arrangements. Decisions should be made at the lowest practical level.

In the 2016 agency survey, over 50 percent of agencies reported taking action in 2015-16 to improve decision-making delegation. Fifteen percent of agencies reported that no action was necessary.

Is action being taken in your agency to reduce the number of organisational layers?

Learn more about this chart: view data for Figure 3.

When asked what actions they took to improve decision-making delegation, many agencies identified restructuring, reviewing delegations and providing decision-making training as key examples.

Twenty-nine percent of agencies report that they are taking action across the whole agency to increase the average number of direct reports to supervisors. A further 15 percent reported that action is being taken in part of the agency.

Is action being taken in your agency to reduce the number of organisational layers?

Learn more about this chart: view data for Figure 4.

Examples of these actions include re-evaluating job roles and reviewing the size and composition of teams.

More information on the APS framework for optimal management structures is available from HCReview@apsc.gov.au.