Firms are cutting the number of levels between their organisation's topand bottom, writes Simon London

It may be too early to put them on the endangered species list but chief operating officers (COOs) are a breed that, like frogs and songbirds, you just do not see as often as you once did.

For every handful of companies that appoints a COO to take the strain off an over-worked chief executive (CEO) - recent examples include Sprint, the telecoms group, and Wrigley, the chewing-gum maker - a larger handful abolishes the position.

Companies that have decided to do away with the post include Capital One, Reuters and Sun Microsystems.

Julie Wulf, an assistant professor at the Wharton School of Business at the University of Pennsylvania, said: "Statistically... companies are less likely to have chief operating officers than they were a decade ago".

Her conclusion is based on a study of 300 large companies over 14 years, based on data supplied by Hewitt Associates, the pay and benefits consulting firm.

She and Professor Raghuram Rajan, of Chicago University business school, say the most likely explanation is that chief operating officers are falling victim to "delayering", by which companies reduce the number of steps between the top and bottom of the organisational ziggurat.

The theory that the CEO, the ultimate boss, seems to be shouldering more responsibility for direct oversight of the business is strengthened by their finding that the average big-company chief executive had seven people reporting to him or her at the end of the 1990s, against four in 1986.

This was not because companies were getting bigger; the average number of employees per company fell slightly over that time.

Jeffrey Immelt, chairman and chief executive of General Electric, exemplifies the trend. When Denis Nayden quit as GE Capital chairman last year, he was not replaced. Instead, the heads of its four business units report directly to Mr Immelt.

Mr Immelt said then: "The reason for doing this is simple - I want more direct contact with the financial services teams." Thus a management layer was removed and the CEO gained a net three additional reports.

Where GE goes, other US companies are sure to follow. But is it healthy that today's chief executives are increasing what management theorists call their "span of control"?

Opinions are mixed. While management lore is that the best chief executives are steeped in operational detail, countless CEOs owe their downfall, at least in part, to a tendency to "micro- manage".

Steve Milunovich, technology analyst at Merrill Lynch, believes Sun Microsystems is in danger of falling into this trap. Last week he urged the troubled computer company to recreate the COO's position to counter the influence of Scott McNealy, chairman, chief executive and founder.

Prof Wulf believes that many companies have found a compromise in which the CEO is closer to the action, yet divisional managers have more decision-making authority.

She says these managers are more likely to be appointed "officer" of the corporation in companies that have eliminated the position of COO. This suggests they inherit at least some of their former boss's authority.

Technology could be helping to create this new status quo.

"Enterprise resource planning" systems of the kind many US firms implemented in the 1990s make it easier for CEOs to get data about the performance of individual business units.

But such systems also let divisional managers get the information needed to make informed decisions without having to rely on the corporate bureaucracy.

That said, delayering and CEO aggrandisement are not the only factors behind the increased "span of control" today's CEOs enjoy. Another part of the explanation is the proliferation of "C-suite" executive positions.

For example, a decade ago it was rare to find the chief information officer reporting directly to the CEO. Today, after years in which IT spending has accounted for nearly half of all capital spending by US corporations, the CIO is a more powerful figure.

Similarly, US companies are more likely to have chief marketing officers, chief human resource officers, chief competitive officers and chief learning officers.

In some cases these are new positions. In others they are old jobs with new titles and additional status.

In other words, if delayering is destroying the natural habitat of COOs, the evolution of new C-level positions has increased competition for scarce resources.

The most precious resource of all remains the ear of the CEO, the species perched right at the top of the organisational food chain. - (Financial Times Service)