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Since the dawn of the Industrial Revolution in Europe in the 1800s, managers have wrestled with the idea of the employee-to-manager ratio, otherwise known as span of control. Having the "right" employee-to-manager ratio, or the number of employees for whom a manager is responsible, can mean heightened efficiency and effectiveness for a company. The determination of the optimal ratio, though, is elusive and varies by the type of work, the kind of workforce and management focus.
History to 1960
For the first 60 years of the 20th century, most organizations were modeled on the military and were characterized by a pyramidal management structure. The optimal employee-to-manager ratio number at that time was six. With the revolution in telecommunications starting in the early 1960s, management styles began to change, and flatter, less hierarchical organizations became the norm. Technology allowed the span of control to be much higher, with the size of the ideal span at 15 to 25.
Today more organizations are virtual organizations where people work as self-contained units, singly or in small teams. Access to electronic information allows teams to be autonomous working within preset boundaries. In these organizations, the span of control can be quite large because management seeks to have all employees and teams having equal access to information to get the job done. In the automotive industry, for example, the span of control for product development teams may be 50 or more as U.S., European, and Asian teams work collaboratively to design vehicles.
Factors Influencing Employee-to-Manager Ratios
Today, managers generally recognize that there is really no one magic number for the right span of control. The number can differ among different departments within the same company. If employees have been in their jobs a long time, if the work is easily understood, if there is an active training and coaching department, if there is little variation in the type of work and if the organization is on the leading edge of technology, a larger span of control is probably indicated.
Span of Control and Cost Savings
In recessionary economies, many companies will pare payroll expenses by letting go middle managers, that group within the company most responsible for seeing work is completed on time and on budget. While this idea may be enticing, it can easily backfire. The company then might experience problems with quality or on-time delivery. It also can lower worker morale and effective decision-making.
Lisa Nielsen is a marketing consultant for small businesses and start-ups. As part of her consultancy, she writes advertising copy, newsletters, speeches, website content and marketing collateral for small and medium-sized businesses. She has been writing for more than 20 years. She is also a business strategist, trainer and executive coach. Nielsen holds a Master of Business Administration from the University of Miami.