The Power of a Single Management Layer

Not long ago I was listening to Jensen Huang, Founder and CEO of Nvidia, talk on this interview you see below.

He has about 50 direct reports. And he explained his philosophy that the CEO should have the most direct reports because the people that report to the CEO should require the least management.

You can hear them talk about this if you click on the link below.

I’ve arrived at a similar point of view the past few years but for different reasons.

And today i’m going to explain why I think this is very powerful and will be the way that most managers manage in the future.

I developed systems to be able manage lots of direct reports

So on average across different things that I’m doing I’ve probably had 20-30 people report to me over the past few years. And note that most of them are part-time contractors, so it is a bit different to full-time employees.

But I’m very confident if I did the same exact thing with full-time employee it would work exactly the same.

And note that I had 100+ people in my org for awhile back when I was CEO of Groupon Ukraine many years ago… so it is not that I have no experience with what running a larger org of employees is like.

I also had a period a couple years ago when I had 40-50 folks (mix of employees & contractors) that I was managing directly across the various things I was doing (clients, my side hustle, etc).

The things that enabled this was that I was using the same exact system to manage all of them. I used Clickup and it was structured in a similar way across all the stuff I was doing.

Anything anyone did was a task. All work was an update to a task.

So with this foundation in place I could manage by simply following all of the cards I was interested in and getting the updates to my Clickup Inbox, which I would respond frequently to.

It worked just fine and I didn’t even find it stressful.

The way I think about it is… “I can continue adding people until I become the bottleneck.”

Meaning the moment I am no longer able to stay on top of my Clickup inbox and keep people unblocked, that is when I need to scale back.

The key in my view comes down to how I define ‘management’

What is management? Does just responding to a bunch of notifications in Clickup qualify as good ‘management’?

Or am I just doing a very shitty job as a manager and therefore that is the only enabler to how I am able to consistently do this?

And my definition of management is something like this:

• I need to set a clear strategy that translates into us being able to align on your priorities.
• Staying abreast of your progress so that I can give feedback and help steer when necessary.
• Unblocking when it is needed.
• Ensuring that the entire team stays disciplined to the processes, which by default ensures that there is coordination between folks.

That is all! That is ‘management’ in my definition.

What you did not hear is:

• I am NOT going to form a deep relationship with you. Because I am not.
• I am NOT going to set some type of long-term plan for you. Because I am not. Rather you are going to do that yourself and align it with me if necessary.
• I am NOT going to do regular feedback sessions on what you should improve on. Because instead I am going to be giving you constant micro-feedback on your tasks.

And guess what? Having done this for a few years now…. you are probably going to find that I was one of the best managers you ever worked with.

For the simple reason that you were empowered, you were supported, and the team around you functioned very healthily. Without almost any politics or egos.

How does this work in practice?

Let’s show you an example of how this works to allow you to better visualize it. Say you are a new employee, Joe, who works in my team and is a product manager.

Your initial task is going to be build some new app.

So i’m going to structure some folders in Clickup for your app and also set up our standardized task flow. Then i’m going to plug in your team of developers and write up your first couple of tasks to get started on.

You are going to start on these tasks and update as a comment each time you make progress or get stuck. I will respond typically within an hour to unblock you.

You’ll also then start creating some of your own tasks and commenting if I agree that they are a priority. Some of them i will agree, some of them I will perhaps ask you to wait.

You’ll work with your dev team to develop the tasks that i agreed via comment were ready for dev and I would continue to follow this progress giving comments here and there.

Within 2-3 weeks you would be accustomed to the process and expanding the scope of what you do. You will also have a solid working relationship with your team and know who you need to go to for what.

You’d also know that you don’t need to invest effort in developing relationships with anyone in this team.

Rather you just need to tag in the person that you need, and they will help you within about an hour because that is the process.

Meanwhile I will have spent a total of perhaps 2-3 hours over these several weeks to onboard you in this asynchronous way via comments.

And you will have been onboarded such that you are now better positioned to succeed than 99% of all onboarding systems out there that I have been a part of or have seen.

An org of <1000 employees should have only a single management layer

The last point I would like to make is that when you use these systems then even as you scale beyond 50 people, you should still only require a single management layer till you have over 1000 employees.

And only about 0.2% of all companies have >1000 employees, so essentially this advice is for the 99.8% of companies that have less than 1000 people.

YOU SHOULD ONLY HAVE A SINGLE MANAGEMENT LAYER

Yes you heard me right. A CEO should only ever have one more layer below his direct reports.

Meaning for example a CEO has 40 direct reports and then each of those direct reports has on average 25 people.

40 direct reports x 25 reports to each direct = 1000 total employees

So essentially what I am saying is that each direct report needs to be able to use the systems I discussed above as well as the CEO. And if they do then with some practice, managing 25 directs should be relatively easy.

In fact they should easily be able to scale up to 40 if they needed to.

But you do not want a 2nd layer of management. Why?

Because it introduces all types of inefficiencies. Typically as a CEO you have no real clue what is going on two levels below you.

It is like playing the childhood game of telephone. You are hearing from your report, who got some information from his report as to what the team underneath them is doing.

And along each step of the way the information will get distorted with various biases being introduced by the person transmitting the information.

It also lays fertile ground for politics to start to breed. And politics is the absolute enemy of speed and motivation.

Wrapping up

These ideas probably sound like heresy to you right now. And you’re probably thinking to yourself.. “Who the hell is this guy and what gives him the credibility to make such gigantic claims?”

And so most of the folks reading this out there will ignore this. And continue to do whatever it is that you do.

But I already see a small snowball starting in the distance. Of folks that are starting to use these ideas and seeing the power of them.

They are seeing that I did not pull this shit out of my ass randomly… but rather arrived at them by systematically applying first principles thinking and then iterating on them.

And it is these folks that you should be worried about more than me. Because one day one of them might be your competitor.

And you’ll see for yourself…. just how powerful this stuff can be when applied correctly.

P.S. Don't forget to check out our 4th episode of "Million Dollar Ideas"