People Analytics Uncover the Optimal Span of Control

The HR functions of more and more companies have started a journey to establish and use people analytics – as a response to make HR more data-driven and to combine HR activities and decisions closer to the top and bottom line.

People analytics is many different things and can do many different things. I will just address one of the many areas where HR analyses can move the company from one level to the next.

Span of Control

Imagine a company that wants to reduce the number of managers because they want a more flat and hence, agile company structure. At the same time, they want to cut costs by saving on wages to a list of managers.

In other words, the company wants to change the span of control, i.e. how many employees the managers supervise.

It can surely be a reasonable decision to work with the span of control. But does the intervention also have negative consequences that the company should be aware of?

Here, HR facts can provide insights so that top management can make a more intelligent decision on a much better foundation.

Research the Consequences Upfront

The most obvious consequence you do not need analysis to see is that the remaining managers will have more employees to supervise.

But it is less obvious how it will affect the employees’ well-being and productivity and hence, the top line and bottom line of the company.

At Ennova, we have done several analyses of the span of control across more than 12,000 teams worldwide. A couple of the overall conclusions are:

• The more employees a manager supervises, the lower the assessment - particularly immediate manager and top management
• The larger team size, the lower engagement and lower willingness to recommend the workplace to others (eNPS)
  
  

Span of Control

Uncover the More Complex Links

However, when we study the numbers a little closer it is much more differentiated.

Some specific types of managers can handle a large span of control. For example, in several companies, we have seen that managers in units close to the customers can easily supervise more than 15 employees, yet still receive a good score from the employees, and still have a high level of engagement in the team.

On the contrary, some groups of employees, e.g. talents, thrive better in teams with a lower span of control. The explanation for this is that this type of employee requires more one-on-one feedback and a closer focus to support the development. This sets a natural limit for the number of employees the manager can handle.

A third example that makes everything even more complex is that companies have different capabilities to handle the span of control.

Some companies are capable of having larger teams. The managers there are simply better equipped to handle the challenges that inevitably will occur with more employees on the team.

There is a Strong Business case for Span of Control Analyses

Hence, analyzing the specific conditions in your company will produce an invaluable insight into the consequences of employee engagement. And engagement is a critical factor for both the top line and bottom line.

From several global analyses, we know that engagement is closely related to the risk of voluntary resignations. The lower the engagement in a team, the bigger the risk that your employees resign.

This will naturally affect the company’s top line and bottom line - particularly if key employees and talents resign. Recruitment and onboarding of new employees require a lot of resources. At the same time, there is often a void and deliveries are running at a lower level until the new employee has been fully integrated.

Therefore, the span of control analyses is also justified from a people analytics perspective, where the premise is the combination with business outcome.

Every Organization Needs Its Analysis

Hence, the conclusion is that there is not one optimum span of control. The context is critical for the number of employees a manager can reasonably handle.

For example, whether the manager is an extrovert or introvert has an impact. As mentioned, teams with a lot of talents require a lower span of control. Whether the team consists of employees with high seniority and employees who are more or less “self-managing” also has significance.

Hence, all companies would benefit from conducting span-of-control analyses. The context in which managers operate is unique and specific. Hence, it is necessary to examine how you can optimize the span of control across your particular organization.