As organisations grow larger they necessarily acquire bureaucracies of expert functionaries. But as bureaucracies grow larger, the managers within them become more interested in their own departments than the organisation as a whole.
If a large organisation has a succinct objective or simple procedures from sources to consumer products or services, then the chief executive of the organisation is likely to be more knowledgeable about all the expertise that is required and doesn’t have too much of a problem in managing its managers and keeping their empire-growing proclivities well trimmed.
If, however, the objective is diverse or has a multitude of procedures then the chief executive has a harder — if not impossible — problem in maintaining morale and efficiency.
The ‘natural’ size of organisation — that is, one in which the genes responsible for socialization have been refined and shaped for millions of years — is somewhere between 80 and 120 members of all ages according to anthropologists. This is equivalent to little more than a dozen or so mature adults in the modern world of work. Above this, political dissention ensues. In the case of hunter-gatherers the groups split in two.
Anything above the ‘natural’ size of organisation can only be maintained by sanctions — either physical or financial. Although empires are constantly being created by ambitious individuals with much more testosterone than usual there is also a more powerful undertow leading back to smaller organisations which snaps us back into practicality every now and again.
Ever since the agrarian revolution at around 10,000 years ago, the sizes of organisations have oscillated between the very large and the very small. It has only been in the last 50 years or so, with the development of evolutionary biology, that we have begun to understand the reason. Perhaps when the subject bccomes part of the educational curriculum that we will pay more attention to the engineering of organisations of optimum size and function in order to avoid many of the problems of today.