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Abstract:

cover
CEP Discussion Paper
Span of Control and Span of Activity
Oriana Bandiera, Andrea Prat, Raffaella Sadun and Julie Wulf
April 2012
Paper No' CEPDP1139:
Full Paper (pdf)

JEL Classification: C21; C25; L22; L23


Tags: management; firms; ceo; productivity; firm activities

For both practitioners and researchers, span of control plays an important role in defining and understanding the role of the CEO. In this paper, we combine organizational chart information for a sample of 65 companies with detailed data on how their CEOs allocate their work time, which we define as their span of activity. Span of activity provides a direct measure of the CEO’s management style, including the attention devoted to specific subordinates and functions, the time devoted to individual work and outside constituencies, a preference for multilateral or bilateral interaction, the degree of planning, etc. We find that CEOs with a larger number of reports spend more time with subordinates, more time on large meetings, less time on unplanned activities. The presence of a delegate, such as the COO, allows the CEO to reduce the time spent with insiders and to focus on bilateral and unplanned activities. These results suggest that time-use information is helpful in interpreting how span of control determines management style.