Chamath Palihapitiya: Management Span is Expanding, Changes Attributed to Restructuring and Layoffs

Chamath Palihapitiya stated that the average number of direct reports per manager in U.S. companies has increased from 11 to 12 in one year, marking the fastest growth in Gallup's ten-year tracking.

He attributed this change to restructuring and layoffs: after companies cut middle management positions, they assigned retained employees to fewer managers, thinning organizational layers while expanding the control span of individual managers.

Gallup's related research shows that employee engagement is typically higher when managers have about 8 to 9 direct reports; as the number increases, it becomes difficult for managers to provide ongoing feedback, understand work details, and offer personalized development coaching.

A management span exceeding 15 people does not necessarily fail, but it places higher demands on the type of work. Standardized, low-collaboration-dependent positions can be managed by managers overseeing 15 to 20 people; high-complexity, remote collaboration, or knowledge work requiring intensive training relies more on smaller teams.

Palihapitiya proposed a new metric not based on titles or the number of subordinates on an organizational chart, but on how much employee time is spent on customer decision-making, complex judgments, and competitive thinking, versus how much is consumed by administrative coordination and repetitive operations.

In market mechanisms, AI and automation can replace some reporting, scheduling, information retrieval, data entry, and process follow-ups, allowing companies to reduce management and operational headcount; if the freed-up time is invested in customers, products, and complex decisions, a wider management span can enhance profit margins. However, if management is reduced without decreasing coordination complexity, the quality of feedback, engagement, and execution speed will be simultaneously pressured.

Source: Public Information