When growth outpaces structure: the hidden cost of too many direct reports

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A team of 5 becomes 8. Then 12. Then 15. Same manager. Same structure. Different breaking point.

I’ve watched this pattern unfold across countless New Zealand businesses. A successful company grows, headcount increases, but the organisational structure remains frozen in time. Next thing you know, managers who once led a tight-knit team of five now find themselves responsible for 10, 15 or even 20 direct reports—without any corresponding change in their role, their support, or their capacity.

This isn’t malicious. It’s not even intentional. It’s simply what happens when growth becomes the priority and structure becomes an afterthought.

The global context: “the great flattening”

While many kiwi organisations have arrived at wider spans of control through organic growth and (dare I say it) benign neglect, global employers are making this shift deliberately. Large tech companies have eliminated layers of middle management to expand team sizes and accelerate decision-making. Amazon has publicly discussed reducing management roles to lower costs and streamline oversight. Analyses of recent layoff waves suggest that middle managers make up a disproportionately high share of role reductions—a trend some call the “Great Flattening.”

But whether this shift is intentional or accidental, in my mind it raises so many questions: how many people can one manager lead before they become ineffective? Are we unwittingly setting up our middle managers for failure? Are we doing a disservice to all the people reporting into these overstretched managers?

What the research tells us

New research from Gallup, involving over 92,000 teams across 104 organisations in 26 industries and 46 countries, provides crucial insights into ‘span of control’ – the number of people reporting directly to a manager.

The findings reveal that there is no universal optimal team size. Instead, success depends on four critical factors:

1. How engaged is the team?

For small to medium teams (4-19 employees), higher engagement consistently predicts better productivity, lower turnover, and improved wellbeing. However, for large teams of 20 or more, the relationship becomes more complex. In some industries like services, transportation, and healthcare, high engagement still drives productivity. In others, the connection is inconsistent, suggesting that very large teams require additional structural and managerial considerations beyond engagement alone.

The takeaway: Team size is only as effective as the engagement behind it. Highly engaged teams can thrive with more members, but poorly managed teams struggle regardless of size. Find out more about how we can support culture and engagement.

2. How much time do managers spend on individual contributor work?

In the Gallup study, 97% of managers reported having some individual contributor responsibilities—tasks that fall outside their core leadership duties. The median manager spends 40% of their time on this work. I have no doubt that this is consistent with NZ managers and I’d bet that NZ managers spend more than 40% of their time on individual contributor work. It’s inherent in our smaller organisations.

Here’s where it gets critical: managers who spend less than 40% of their time on individual contributor work tend to maintain higher engagement regardless of team size. But managers who exceed that threshold – often called “player-coaches” – show lower engagement, and this deteriorates further as their team grows.

The takeaway: When organisations widen spans of control without reducing managers’ individual workloads, they’re not just redrawing the org chart—they’re setting managers up to fail. The player-coach model can work beautifully with small teams, but becomes unsustainable as direct reports multiply.

3. Do managers have the right talent for the role?

Talented managers rise to challenges where less talented managers struggle. When faced with very large teams (25+ direct reports) and heavy individual workloads (over 40%), managers with high managerial talent maintain higher engagement. Those with medium or low talent show declining engagement as team size and workload increase.

Work location also matters. For on-site managers, increasing team size has minimal impact on engagement—particularly for talented managers. However, remote and hybrid managers face steeper challenges as their teams grow.

The takeaway: Manager talent trumps span of control. Organisations that use scientific methods as part of their leadership capability building programme (such as psychometric assessments and 360-degree reviews) to identify the right talent can successfully support larger teams. But even highly talented remote managers have limits on how many people they can effectively lead.

4. Do managers give employees meaningful, regular feedback?

One habit matters more than almost anything else: providing meaningful feedback to each employee at least once per week. This practice nearly triples the percentage of engaged employees.

Yet it remains uncommon. Only 16% of employees say their last conversation with their manager was extremely meaningful. Meaningful feedback includes recognition, collaboration on goals, discussion of priorities, and a focus on strengths. These conversations don’t need to be long—15 to 30 minutes, done consistently, is enough.

The research shows that employees who receive meaningful weekly feedback are highly engaged (about seven in 10) regardless of team size. Without that feedback, only one in four are engaged.

The takeaway: In today’s workplace, where employees feel increasingly disconnected, managers’ open communication matters more than the number of direct reports. Weekly, meaningful feedback supports engagement regardless of team size—but becomes nearly impossible when spans of control grow without corresponding support. Several of our management and leader training courses include building skills in giving feedback.

What I'm seeing in New Zealand

The patterns I observe in New Zealand businesses rarely involve deliberate decisions to flatten structures. Instead, I see:

  • Reactive growth: Companies add headcount to meet demand without reassessing their management structure
  • Structural inertia: Org charts that haven’t been reviewed in years, even as teams have doubled or tripled
  • Overwhelmed managers: Leaders who excel at their technical work but are drowning in the people side of their role
  • Declining engagement: Teams that were once cohesive becoming fragmented as their manager’s time gets stretched thinner

The most concerning pattern? Managers themselves often don’t realise they’re over-extended until they’re already burned out. They assume they should be able to handle it, that it’s a personal failing rather than a structural problem.

The cost of getting it wrong

When span of control grows beyond what a manager can effectively handle, organisations see:

  • Manager burnout: Leaders working longer hours, struggling to keep up, and eventually disengaging or leaving
  • Poor performance conversations: Issues that should be addressed early instead fester because managers don’t have time
  • Increased turnover: Employees leave when they don’t feel seen, heard, or developed
  • Inconsistent leadership: Some team members get attention while others drift
  • Delayed decisions: Everything takes longer when managers are overloaded

These aren’t abstract costs. They show up in your P&L, your culture, and your ability to execute strategy.

At Epic People, we're here to help

we work with New Zealand organisations to build sustainable management structures that support both growth and engagement. Our approach combines:

Strategic HR consulting

We help you assess your current span of control across the organisation and identify where managers are over-extended. Our HR advisory and strategy advice could include:

  • Organisational design review: Mapping current reporting structures and identifying stress points
  • Workload analysis: Understanding where managers are spending their time and what can be reallocated
  • Structure recommendations: Designing management layers that support effective leadership at scale
  • Implementation support: Helping you communicate and execute structural changes with minimal disruption

Manager talent assessment

Using validated psychometric tools and 360-degree feedback, we help you identify which managers have the natural talent to lead larger teams—and which need more support or different role designs.

  • Psychometric assessments: Scientific evaluation of managerial talent and capability
  • 360-degree feedback: Understanding how managers are perceived by their teams, peers, and leaders
  • Talent development planning: Creating targeted development plans based on individual strengths and gaps

Learn about psychometric testing | Learn about 360-degree feedback

Leadership development and training

We equip your managers with the skills they need to lead effectively, regardless of team size. Our programmes focus on:

Our training is practical, not theoretical. We work with real workplace situations and equip managers with tools they can use immediately.

Explore team leader training | View all leadership courses

Creating a feedback culture

We help organisations embed the practice of weekly, meaningful feedback through:

  • Performance development programme design: Creating simple, sustainable systems for regular check-ins
  • Manager coaching: One-on-one support for managers learning to have better conversations
  • Communication skills training: Building the capability to give feedback that lands well
  • Accountability systems: Ensuring feedback practices stick beyond the initial implementation

On-demand support for leaders

Leadership challenges don’t wait for training sessions. We provide practical, on-demand support for managers navigating real situations:

  • Preparing for difficult conversations
  • Addressing early signs of underperformance
  • Managing conflict within expanding teams
  • Restructuring and role redesign
  • Delegation and workload management
  • Coaching through performance management processes

With over 30 years’ experience in senior HR and leadership roles, we act as a trusted sounding board—helping leaders think things through and take action with confidence.

Contact us about HR support

5 questions for NZ business leaders

Before expanding another manager’s team or eliminating another management layer, consider these questions:

  1. Do you understand the distribution of team sizes across your organisation? Are some managers carrying significantly more than others? Are those differences intentional or accidental?
  2. Do you know which managers have the talent to lead larger teams? Are you using scientific assessments, or still promoting primarily based on tenure and past technical performance?
  3. Are you measuring engagement at the team level? Do you know which teams are thriving and which are struggling? Can you see patterns related to team size?
  4. Have you optimised the player-coach balance? Are your best managers spending more than 40% of their time on individual contributor work, limiting their capacity to lead?
  5. Have you made weekly, meaningful feedback an expected practice? Do managers have the skills, time, and accountability to hold short, frequent, high-quality conversations with every direct report?

If you can answer yes to all five questions, wider spans of control can work in your organisation. If you’re uncertain about any of them, you may be setting your managers – and your business – up for struggle.

Moving forward

Growth is good. Efficiency matters. But neither should come at the expense of your managers’ capacity to lead well or your employees’ experience of being led.

The right span of control isn’t a universal number—it depends on your managers’ talent, their workload, your team’s engagement, and the quality of feedback happening day to day. What works in one part of your business may not work in another. What works with one manager may not work with their peer.

The key is to be intentional. Review your structures regularly. Assess your managers honestly. Invest in their development. Create the conditions for weekly, meaningful feedback. And when you expand team sizes, do it with eyes open to what support managers will need to succeed.

At Epic People, we help New Zealand organisations get this right—combining strategic HR thinking, proven assessment tools, practical leadership development, and ongoing support for managers facing real challenges.

If you’re questioning whether your current management structure is sustainable, let’s talk. We’ll help you assess where you are, identify what needs to change, and build a plan that works for your business, your managers, and your people.

Ready to have the conversation? Get in touch.

Link to the Gallup article: Span of Control: What’s the Optimal Team Size for Managers?