Editor's note to readers
Welcome to the fourth edition of Human Capital Matters for 2015—the digest for leaders and practitioners with an interest in human capital and organisational capability. This edition focuses on Span of Control.
Human Capital Matters seeks to provide APS leaders and practitioners with easy access to the issues of contemporary importance in public and private sector human capital and organisational capability. It has been designed to provide interested readers with a monthly guide to the national and international ideas that are shaping human capital thinking and practice. The inclusion of articles is aimed at stimulating creative and innovative thinking and does not in any way imply that the Australian Public Service Commission endorses service providers or policies.
Span of control refers to how relations are structured between leaders and subordinates in an organisation. A wide span of control exists when a manager oversees many subordinates; a narrow span of control exists when a manager oversees few subordinates.
The first article reports a study by Kenneth J. Meier and John Bohte that draws on the classic works by Luther Gulick (1937) and Joan Woodward (1980) on spans of control. Meier and Bohte generate some hypotheses about how organisations determine their spans of control and how those spans might affect organisational outputs.
The second article, a brief article by the Society for Human Resource Management highlights key factors to review when determining the appropriate span of control within an organisation.
The third article is an extract from the Victorian Public Sector Commission's Organisational Design Resource. It refers to a 2011 Boston Consulting Group report on optimal spans of control.
The fourth article is an extract from the 2013 National Commission of Audit analysis of spans of control in relation to Australian Government departments and agencies.
The fifth article contains a link to a memo by the then United States Miami-Dade Office of Strategic Business Management in response to a 2010 Office of Commission Auditor Span of Control Analysis.
Thank you to those who took the time to provide feedback on earlier editions of Human Capital Matters. Comments, suggestions or questions regarding this publication are always welcome and should be addressed to: humancapitalmatters [at] apsc.gov.au. Readers can also subscribe to the mailing list through this email address.
Kenneth J. Meier and John Bohte Span of Control and Public Organisations: Implementing Luther Gulick's Research Design, Public Administration Review, January/February 2003, Vol 63. No.1
This a study by Kenneth J. Meier and John Bohte that draws on the classic work by Luther Gulick (1937) and Joan Woodward (1980) on spans of control. The researchers generate some hypotheses about how organisations determine their spans of control and how those spans might affect organisational outputs.
In Gulick's (1937) classic essay "Notes on the Theory of Organisation", he argued that span of control structures relationships between leaders and subordinates in organisations. Commenting on the state of knowledge about span of control, Gulick lamented the lack of systematic research on what he viewed as three key determinants of span of control: diversification of function, the element of time, and the element of space.
This study adopts Gulick's approach to examine the effects of diversity of function, time, and space in structuring relationships among employees in a sample of 678 Texas public school districts.
A literature review showed that there was very little research that addressed how organisations determined their spans of control or what difference it makes.
By looking at the classic work by Luther Gulick (1937) and Joan Woodward (1980), the researchers generate some hypotheses about how organisations determine their spans of control and how those spans might affect organisational outputs.
The researchers find that spans of control in organisations reflect how organisations manage environmental challenges and also affect organisational performance. The researchers also discuss the implications of their findings for the management of public organisations.
An organisation that combines diverse functions (Gulick contrasts an Army general and a director of public works) will need to reduce the size of its spans of control simply because the supervisor must interact with more different types of individuals. If subordinates are all performing the same task with the same set of inputs, jobs can be made routine. This similarity of jobs should permit a single individual to supervise more subordinates.
The element of time in Gulick's view focused essentially on stability. In stable organisations, managers do not have to train and oversee new workers. Individual workers need less supervision simply because they are more familiar with their jobs. Stability might not only include stability of workers but also stability of the organisation's other inputs. A stable environment that provides similar inputs to an organisation over a long period of time should permit greater routinisation and thus larger spans of control.
The element of space for Gulick involved the number of buildings that housed the organisation; the more buildings the less face-to-face contact and, in Gulick's mind, the more closely individuals would need supervision.
The researchers argue that studying the effects of these variables is important because span of control relationships can ultimately shape organisational performance.
Joan Woodward's (1980) classic study of British industrial firms revealed that span of control varied a great deal across different organisational settings. In looking for commonalities among exemplary firms in each category, Woodward found that structure, including span of control, was an important determinant of organisational performance. Within each organisational category, successful firms used similar spans of control to structure relationships.
Larger spans of control allow an organisation to operate with fewer administrative employees. Narrow spans of control imply close supervision. Wider spans of control require more autonomy on the part of the subordinate.
Organisations often have broad spans of control at one point in the organisation and relatively narrow spans of control at other points.
The goal of the researchers was to find what determines the span of control for a set of organisations that all use the same modes of production to achieve the same goal (i.e., educating students). Schools are the most common type of public organisation; more public employees work for school districts than any other type of bureaucracy. At the same time, schools are highly professionalised organisations and vest a great deal of discretion in their front line workers (teachers); they tend to be flat organisations composed of individuals with a common educational background. The researchers state that the findings are more likely to apply to public organisations with these characteristics.
The first line supervision in school systems is where administrators supervise teachers; the administrative-teacher span of control is measured directly as the ratio of teachers to administrators in a district. Research shows that the mean administrator-teacher span is 13.8 and has substantial variation (standard deviation = 3.3, range = 3.0 to 30.5). This variation reflects large differences in how schools structure reporting relationships.
Central office administrators supervise school-level administrators, a midlevel management span of control. This span can be measured as the ratio of the number of school level administrators to the number of central office administrators. The researchers find that the broad span of control for teachers contrasts with a relatively narrow mid-manager span of control averaging 2.4 with a range of .2 to 11.3.3 The measure shows a great deal of variation relative to the smaller mean with a standard deviation of 1.3. As can be seen from these averages, school systems are generally flat organisations with wide spans of control at lower levels and narrow spans at the levels where administrators supervise other administrators.
The researchers found that while task demand diversity is a key factor that structures spans of control for first level supervisors, role diversity, rather than task demand diversity is of central importance in structuring mid-management spans of control. Instability, measured in terms of teacher turnover, is an important explanatory variable at the first line supervision level, but not at the mid-management level.
What these findings suggest is that diversity, stability, and space must be defined within the context of organisational hierarchies. Hierarchical organisational designs dictate that employees across different levels are responsible for managing different problems. Diversification of function means that actors throughout an organisation define their key tasks based on the specific responsibilities they are charged with addressing. Thus, one set of factors that influence span of control relationships in a lower level of an organisation may be totally irrelevant to how spans of control are structured at a higher level of that organisation.
The study found that larger spans of control at the first line supervision and mid-management levels were associated with better performance. The researchers are confident that their findings also apply to other public organisations with similar characteristics, that is, highly professionalised organisations with discretion vested in street level bureaucrats.
At the time of writing Kenneth J. Meier was the Charles Puryear Professor of Liberal Arts in the Department of Political Science and the Sara Lindsey Chair in Government in the Bush School at Texas A&M University. John Bohte was an assistant professor of political science at Oakland University in Rochester, Michigan.
Society for Human Resource Management (2013) Span of Control: What factors should determine how many direct reports a manager has?
The article notes that although no perfect ratio likely exists, span of control is critical in understanding organisational design and the behaviors within an organisation, such as the approach used to interact with employees and the effectiveness of communication between each level within an organisation. Therefore, many factors will need to be evaluated before determining the best ratio within an organisation.
Some key factors to review when determining the appropriate span of control within an organisation include the following:
- Organisational size. Large organisations tend have a narrow span of control, whereas smaller organisations often have a wider span of control. This difference is usually due to the costs involved with more managers and the financial resources available to an organisation. Communication may be slower with narrow spans if it must pass through several levels of management.
- Workforce skill level. The complexity or simplicity of the tasks performed by the employees will affect the number of desirable direct reports. Generally, routine tasks involving repetition will require less supervisory control of a manager, allowing a wider span of control, whereas complex tasks or dynamic workplace conditions may be best suited for a narrower span of control, where managers can provide more individualised attention.
- Organisational culture. Organisations need to determine the desired culture when designing their span of control. Flexible workplaces usually have a wider span of control because employees are given more autonomy and flexibility in the production of their work.
- Manager's responsibilities. Review whether the organisational expectations allow the managers to be effective with the number of direct reports they have, especially related to individual responsibilities, departmental planning and training. For instance, executives often have fewer direct reports than other managers in the organisation.
Founded in 1948, the Society for Human Resource Management (SHRM) is a HR membership organisation devoted to human resource management.
Sector Commission (2015), The right span of control
This document is an extract from the Victorian
Public Sector Commission's Organisational Design Resource.
It notes that in 2012, the average number of direct reports to the Victorian Public Service departmental secretaries and CEOs of major Victorian Public Service agencies was 7.5, with the number ranging from 4 to 12.
According to a 2011 Boston Consulting Group Report, in most public-sector organisations, optimal design generally reduces the number of layers across the organisation. It is claimed that more than eight layers of management – and managers with fewer than seven spans of control – tend to make public and private sector organisations sluggish and overly complex and bureaucratic.
The contemporary view is that the span of control depends on:
- employee characteristics such as their capacity for self-direction and motivation
- characteristics of the work being done, such as the amount of standardised or routine tasks may necessitate
- physical proximity of subordinates and the effectiveness of communications technology to allow effective communication when there is a physical separation between a manager and the people whose work they direct
- the budget available, which influences the number of managers that can be engaged in the organisation
- characteristics of the environment in which the work is undertaken
- the organisation's or division's position in the life cycle.
Span of control is only one aspect of the manager's role. Other aspects include the span of accountability, span of influence, span of support. In the context of organisation design these aspects should also be considered.
National Commission of Audit, Australian Government (2013) Spans of control within Commonwealth government agencies
The National Commission of Audit (NCOA) was announced by the Treasurer, the Hon Joe Hockey MP, and the Minister for Finance, Senator the Hon Mathias Cormann, on 22 October 2013.
The Australian Government has released the Phase One and Phase Two Reports of the National Commission of Audit – Towards Responsible Government.
This provides a link to the NCOA's findings about span of control.
The NCOA asserted that Spans of control that are too narrow can result in insufficiently engaged staff, leading to dissatisfaction and reduced morale as well as ineffective communication between different layers of organisations, unclear accountabilities and higher staff costs.
It found that the average span of control for EL2s (excluding managers who do not have staff reporting directly to them) ranges from around one staff member to over 10 staff members in some service delivery and specialist agencies. For EL1s, the average spans of control tended to be narrower. Some organisations indicated that accurate information about spans of control was not possible due to human resource system limitations that did not capture this level of data.
The NCOA used relied on work done by the Boston Consulting Group (BCG). The BCG has developed best practice span of control target ranges for different public sector functions. These ranges are based on organisational de‑layering analysis and projects conducted with various public sector organisations around the world, including a number of Australian government departments and agencies at both the Commonwealth and State levels.
Best practice spans of control target ranges are set out below for different public sector functions:
- 5-8 staff for policy and research functions
- 8-10 staff for service delivery functions
- 7-9 staff for regulation and compliance functions
- 6-12 staff for specialist functions.
In comparing known data about spans of control in agencies with these best practice targets, the NCOA observed the following differences:
- Policy and research agencies – 10 of 14 agencies have an average span of control for EL2s that is below the best practice benchmark range. Eleven of 14 agencies have an average span of control for EL1s that is below best practice.
- Service delivery and operational agencies – 21 of 23 agencies have average spans of control for EL2s and EL1s that are below the best practice benchmark range.
- Regulation and compliance – all 15 agencies have average spans of control for EL2s and EL1s that are below the best practice benchmark range.
- Other specialist agencies – of the 38 specialist agencies, 32 have an average span of control for EL2s that is below the best practice range and 36 have an average span of control for EL1s below best practice.
The National Commission of Audit (NCOA) was established by the Australian Government as an independent body to review and report on the performance, functions and roles of the Commonwealth government.
Miami-Dade County (2010) Response to Office of Commission Auditor Span of Control Analysis
This memo is a response by the Office of Strategic Business Management (OSBM) to span of control analysis undertaken by the Office of Commission Auditor (OCA).
The OSBM notes that different departments had defined 'supervisor' differently. For example one included staff who had hire/fire responsibilities. Another included staff member who may only supervise staff on a seasonal basis. The OSBM found that the most common definition of a supervisor was one who signed another employee's performance appraisal.
The OSBM found that the span of control is most commonly calculated using the following formula:
Average span of control (SOC) = (Total employees – 1)/Total supervisors.
OBSM reviewed a number of studies related to spans of control. The recommended span of control ranged from 6–12 or more. The average span of control in most state and local agencies actually ranged from 5–13 with most agencies close to 6 or 7.
OSBM's literature review found that the optimal span of control for an organisation is dependent on its unique environment. A full list of factors are provided in Attachment 2. However some include:
- extent of non-supervisory activities
- degree of risk or public scrutiny entailed in work
- geographic dispersion of staff
- extent of contracting out
- multiple work shifts
- legal/regulatory issues
- high level of professional expertise required
- ability of classification and pay structure to accommodate non-managerial career paths and reward performance of non-supervisory employees.
The OSBM notes that many of these factors influence spans of control in County departments and argues that they should be taken into account in any analysis of spans of control.
The then Office of Strategic Business Management(OSBM) brought together the strategic planning, management, and budget functions for the United States Miami-Dade County. The Office of the Commission Auditor reports to the Board of County Commissioners and performs both research analyses as well as fiscal audits.