Revisiting span of control

As someone who has worked in both small and large companies, span of control issues have always fascinated me. I wrote about this in 2009, quoting some people who were in favor of larger spans of control - also known as flat organizations.

Jake Kuramoto has also looked at the topic, and has linked to an article by Jason Fried of 37signals. His span of control, though not specifically stated, can't be all that excessive - 37signals only has 27 employees. (I know a manager in a much larger company who routinely has had between 15 and 20 direct reports.)

But Fried points out one of the issues with a flat company - there are fewer opportunities for traditional methods of motivation.

Something strange happened at work a couple of months ago: We parted ways with an employee....The issue was ambition—not a lack of it, but more of it than we could use.

She had been in our customer service department for about three years and had always done quality work. Her smarts, initiative, and productivity had never been in question. Now, she wanted that performance to be rewarded with managerial responsibilities and a new job title. It wasn't about the money....

At 37signals...[w]e're not big fans of what I consider "vertical" ambition—that is, the usual career-path trajectory, in which a newbie moves up the ladder from associate to manager to vice president over a number of years of service.

But if you don't have managers walking around, then how do you run things? Fried expects things to run themselves, after a fashion. Here's how customer service works:

There's still a team leader, but that role rotates among the team every week. Each week, a new leader sketches out the agenda, writes up the notes about problems and performance, and steps up to handle any troubled customer interactions.

One thing that Fried is able to avoid is the Peter Principle. If you haven't heard of this principle, it was expressed by Laurence J. Peter in the 1960s. Peter stated, in part:

In a hierarchy every employee tends to rise to his level of incompetence ... in time every post tends to be occupied by an employee who is incompetent to carry out its duties ... Work is accomplished by those employees who have not yet reached their level of incompetence.

If you don't have a hierarchy, then is your organization's incompetence reduced?