How many managers are needed if you want a company to grow smoothly?
There is a ratio called span of control that says the most people directly reporting to a single manager should be seven. This can vary some based on the people, management systems and other factors, but it generally applies in most areas of a company. More direct reports means the manager will have little time for other work and activities like planning, strategy, communications with outside vendors, etc. Of course, not every manager has seven employees. Some may have only one or two. I usually differentiate this novice as a “supervisor” not a manager. They oversee an employee or two but may not have the harder management responsibilities like planning, hiring and interfacing with other departments. They are really a manger trainee but often giving the title of manager even though they lack the skills needed.
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Give the span of control of a maximum of seven employees per manager a company with one level of managers, that may have five departments would likely top out at about thirty-five employees. Or forty-nine with seven managers under a CEO. Adding a second level of managers, or executives that manage managers, increases the theoretical maximum employee headcount to about forty-nine managers with seven employees. That calculates to a maximum of three hundred and forty-three employees plus seven manages and a CEO to total three-hundred and fifty one employees. Again, this is a theoretical maximum and since many managers will not have all seven it can be half that amount. Some larger companies limit a facility’s size to this number and compartmentalize functions to reach a $1B size or more.
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Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.
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