“What is the optimal team size?”

This is a recurrent question in a lot of organizations. And there are two main approaches to answer it. An approach (like SCRUM’s one), sets a (so called) “natural” limit to x collocated team members. This limit is often presented as an a priori limit, even if some heretics allow themselves to set the limit higher if the team’s dynamic increases. Organizational design is not considered as a choice variable: collocation is preferred, there is a “natural maximal team size”, the only possible organizational change is a team split, etc.

Another approach consists in creating a mathematical model, in order to simulate variable impacts and find the optimum setup. This approach is quite new (first publication between 2002, 2004), but is very interesting. Simulation is nowadays widely used in a lot of industry branches, so why not apply simulation to organizational field?

A very interesting example of this model approach is described in the paper “Optimal team size and monitoring in organizations“, from Pierre Jinghong Liang, Madhav V. Rajan, and Korok Ray, from repectively Carnegie Mellon, Standford and Chicago universities. As the title suggests, organizational design is seen as a non static variable (an optimum can be found), and a link is established between team size and monitoring. But this is not all: incentive contracts offered to workers and managers are of course also taken into account. Team size, monitoring and incentive contracts are the 3 “instruments” used in this approach. Although  interactions between the model’s agents (workers and managers) may be complex, the modelization and associated simulations leads to some rather simple learnings:

• the robustness of workers contracts
• it is almost never worthwhile to employ multiple managers to supervise a given set of workers
• complementarities between team size and monitoring, and between worker talent and managerial monitoring ability

These are already interesting results, although used model is static in time. It may be expended to take into account variations over time. The link established between team size and monitoring is also interesting, as monitoring now plays already a key role in modern organizations.