(From Andy Grove’s High Output Management)
The concept of ‘direct report’ doesn’t strictly mean people - it can be understood as a unit of work equivalent to the effort required for managing one direct report. For example, if all activities for a single project (meetings, reports, documentation, etc.) require roughly half a day weekly, these can be counted as one direct report.
The rule of thumb: a manager should spend half a day per week on each direct report to achieve maximum output. Six to eight direct reports per manager is optimal.
To avoid micromanaging whilst maintaining sufficient workload, managers can either flatten the organisational structure or take on additional responsibilities to reach optimal capacity.
Six to eight units of work allows managers to spend up to 40% of their time on discretionary projects—their “raw materials.” This slack is paramount for knowledge managers who must continue learning to maintain their competitive advantage.