•alary. The salary thus decreases geometrically as we go from
top to bottom.
In terras of algebra;
n: span of control
bs manager’s salary in proportion to that of his direct
subordinates
L; level of the hierarchy (counting the base as unity)
/- L-
N(L)t number of managers at level L
C(L); Salary at level L
Nos number of managers at the base level
As Salary at the base
£* A)
A- H ~ Jh.
The salaries under the assumptions given conform to Pareto’s
distribution. Simon bases his model on empirical facts (Roberts'
regression of top manager's salary on the site of firm, regression
coefficient 0,37, which would correspond to the value of
and Davis' Pareto distribution of managers’ salaries in General
Motors, Pareto coefficient 3).
The above demonstration is purely deterministic, but if
we regard the span of control as the reciprocal of a probability