In a company of 25 people or more, the formal organizational structure already begins to prevail, and there is a double level of subordination. The CEO can still manually manage 4-5 departments, to which managers are assigned.

As the number of employees grows (starting from 50 people), the company undergoes serious structural changes. This means that the CEO stops managing managers manually. Instead, the company recruits department directors, who have full responsibility. The directors are now in charge of the managers and operate effectively as separate divisions.

The CEO does not participate in direct management, but gives strategic KPIs (key performance indicators) to department directors and checks them (picture 1: intermediate structure).



  • CEO — Chief Executive Officer
  • D — Department director
  • М — Manager
  • E — Employee
  • KPI — Key Performance Indicator



Department directors are responsible for everything with their reputations. They receive KPIs (key performance indicators) and their goal is to achieve those indicators. They also directly manage the managers. Managers, on the other hand, act within their duty regulations (picture 2: complete changes).


It becomes difficult for the CEO to maintain good personal relationships with all department directors. If the head of the company does not build a good personal relationship with all department directors or does not use a management system, then the company forms a separate independent management cluster. This cluster is isolated into a separate company against the will of the chief executive officer. This is a regular mistake in business. If in a company with 50 people it is not really noticeable, in a company with about 100 people it is already clearly visible.

What is the best thing to automate?

The right solution is to automate information flows. There is a very strong information flow in the “design bureau”. This means that there is a large flow of information about ideas, new developments, approaches, and features, and it is incompressible. In manufacturing companies, on the other hand, all information flow is small (mostly statistics and information about failures). The amount of information that reaches management in “design bureaus” is much higher than in manufacturing companies. Therefore, the processing requirements are also much higher. In order to eliminate the formation of individual work groups due to the inability of the management to process such an extensive flow of information, the information flow must be automated.

Read the next article “What is the difference between management of a manufacturing company and a “design bureau” company?"