Maria Guadalupe, Hongyi Li, and Julie Wulf have published an interesting paper that examines the changing size and composition of senior management teams. The scholars compiled a dataset of US firms from 1986 to 2006. They found that the size of the top management team doubled during this twenty year period (from 5 members to 10 members). What drove the increase in size? The researchers found that CEOs tended to add more functional executives to their senior teams (rather than more general managers with P&L responsibility for specific business units). For instance, many senior teams now have a Chief Technology Officer, EVP of Human Resources, EVP of Supply Chain, etc. Finally, the study shows that, "General manager pay decreases as functional managers join the executive team suggesting a shift in activities from general to functional managers-a phenomenon we term 'functional centralization.'"
Are these trends all positive? It's not clear to me. In particular, I worry about the growing size of these teams. Groups have a hard time being productive and efficient when they grow to double digits in terms of members. The opportunity arises for more fragmentation within the teams. Scholars have described a phenomenon called "fault lines" - where subgroups form along certain demographic lines, and friction emerges among the subgroups. Communication patterns and information sharing may also suffer as team size increases, even if the group remains fairly cohesive.