:  Optimal Hierarchies in Firms: a Theoretical Model
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:  2008
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:  Proceedings of the 17th World Congress of the IFAC
:  Goubko M., Mishin S. Optimal Hierarchies in Firms: a Theoretical Model // Proceedings of the 17th World Congress of the IFAC, Seoul, Korea, July 6-11, 2008. P. 2962-2967.
:  A normative economic model of management hierarchy design in firms is proposed. We seek for the management hierarchy that minimizes the running costs. Along with direct maintenance expenses these costs include wastes from the loss of control. The results include analytic expressions for the optimal hierarchy attributes: span of control, headcount, efforts distribution, wages differential, etc, as functions of exogenous parameters. They are used to analyze the impact of environment parameters on a firms size, financial results, employees wages and shape of hierarchy. The detailed analysis of this impact can help draw up policy recommendations on rational bureaucracy formation in firms.
The research is supported by the grant 07-07-0078-a of Russian Foundation for Basic Research.
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:  optimal hierarchies, organizational structure, ,
:  Goubko M. V., Mishin S. P.

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