“The best management is sometimes less management.” – Ralph C. Smedley
Managing a growing company can be a complex task. As a company expands, the need for effective management becomes paramount. One crucial aspect to consider is the span of control, a ratio stating that a manager should ideally oversee no more than seven employees directly. While this number may vary depending on factors like employee competence and management systems, it generally holds true across various business areas. An excessively high span of control can leave managers with little time for vital tasks like strategic planning and communication, both internally and externally.
Supervisors vs. Managers: It’s important to differentiate between supervisors and managers. While supervisors may oversee one or two employees, they often lack the comprehensive management responsibilities that managers carry. These responsibilities may include planning, hiring, and coordinating with other departments. In some cases, individuals with limited skills in these areas may be prematurely labeled as managers, even though they are essentially manager trainees.
The Influence of Manager Levels: The structure of management within a company plays a significant role in determining how many managers are required for smooth operation. In a company with one level of managers overseeing five departments, the ideal span of control would allow for around thirty-five employees directly managed by managers. Including seven managers under a CEO could raise the maximum theoretical employee count to forty-nine. However, introducing a second level of managers, often executives who manage managers, could further increase the potential employee count. The maximum number of employees, theoretically, could be three hundred and forty-three, plus the seven managers and a CEO, totaling three hundred and fifty-one employees. This is a theoretical maximum, and in practice, it is often lower due to not all managers having the maximum number of direct reports.
The Key to Effective Management: Effective management is pivotal for any business aiming to become a market leader. However, achieving this is easier said than done. Many companies believe they are managing well, but few adhere to the optimal processes that unlock the full potential of management. For improved management that enhances value creation, there are comprehensive courses available. These courses, proven over decades, can increase a company’s value creation by a remarkable 56%. They not only teach the core principles of management but also delve into the five styles of management and guide when each should be employed. Additionally, these courses provide insights into using metrics and dashboards to manage a business through data, a crucial skill for businesses aiming to scale beyond $5 million to $10 million in sales.
Balancing the number of managers with the company’s growth is an art in itself. Understanding the span of control is essential to ensure that managers can effectively oversee their teams without becoming overwhelmed. Furthermore, distinguishing between supervisors and managers is vital to acknowledge the different roles and responsibilities each group carries. In the journey towards successful management, the right structure and an investment in ongoing education can help a company thrive and unlock its full growth potential.
Bob Norton is a long-time Serial Entrepreneur, CEO and investor who founded six companies with four exits that returned over $1 billion to investors for a 25X ROI. Two others are still in development. He has trained, consulted and advised thousands of Entrepreneurs, CEOs and boards since 2002. Mr. Norton works with companies to 2X to 10X growth rates and valuation using AirTight Management™, the world’s most comprehensive Leadership Operating System. He also helps companies raise capital to fund growth. He is also the Founder of The CEO Boot Camp™ and Entrepreneurship University™ for early-stage companies that have not reached product-market fit and $1M ARR.
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