Introduction

This measure indicates the percentage of the organisation’s workforce employed in official and managerial positions.

Interpretation

For this measure, managerial positions refer to positions with managerial functions, regardless of whether those positions involve direct supervisory responsibility. A result of 14% means that 14% of all employees occupy managerial positions.

A high proportion of managers in the workforce may indicate that the organisation:

• has a relatively tall structure with many hierarchical levels; and/or
• regardless of number of hierarchical levels, has a low ‘span of control’ (i.e. number of employees for each manager).

Organisations with a high proportion of managers may experience: higher salary costs, communication blockages, a loss of responsiveness in decision making, and/or a sense of disempowerment among non-managerial employees.

A low proportion of managers, on the other hand, tends to indicate a flat organisation structure with fewer hierarchical levels, and a relatively high ‘span of control’. Organisations with a low proportion of managers can risk stretching managers too thinly, potentially diluting personnel management, project management and senior-level planning. In addition, maintaining a low number of managerial positions long term may result in a smaller pool of internal talent from which to draw for succession planning purposes.

Target Settings

‘Staffing Rate – Managerial’ is affected by a number of factors such as organisation design (including number of work sites as well as hierarchy levels), industry, job function mix and career path strategies. Given the diversity of these factors in combination, this measure is best used as a contextual benchmark. However, within a benchmark group of comparable organisations, an organisation aiming to minimise salary costs or hierarchical levels may target moving results toward the 25th percentile. Organisations aiming to provide a plethora of managerial positions for career pathing or employee retention purposes may instead target moving results toward the 75th percentile of a relevant benchmark group.

Results

Over the period 2001-2007, the median ‘Staffing Rate – Managerial’ has climbed slowly but steadily to 14.0%, meaning that organisations typically have a higher percentage of their workforce employed in managerial positions than 5 years ago. This may be surprising given the fact that most organisations reduced headcount during this period. One can infer from these two facts that those headcount reductions disproportionately affected non-managers. This outcome may or may not have been a deliberate goal in the down-sizing of those organisations. Given the current ecomonic climate the may be future reductions visible in benchmarking of this metric.

The trend results for Staffing Rate – Managerial’ at the 25^th and 75^th percentiles have been slightly more volatile. The difference between the 75^th and 25^th percentiles may not look large in absolute terms – in 2006, results were 17.6% and 11.2% respectively. However, even small variations can have notable impacts on span of control. For example, in an organisation of 10,000 employees, a 17.6% ‘Staffing Rate – Managerial’ provides a ‘span of control’ of 1 manager for every 4.68 employees; in the same-sized organisation, an 11.2% ‘Staffing Rate – Managerial’ provides a ‘span of control’ of 1 manager for every 7.93 employees.

‘Staffing Rate – Managerial’ is an example of a measure where significant variation exists across industries. Results for Staffing Rate – Managerial tend to be lower in labor-intensive industries such as manufacturing, while results tend to be higher in professional industries such as financial services and insurance carriers.

Significant variation can also exist within an organisation. For example, in one Financial Activities organisation the Staffing Rate – Managerial may be 5.3% in the Call Centre, but 17.5% in the Marketing and Development section. Obviously, organisations need to consider their internal targets for this measure when selecting managers for optimum role ‘fit’. Also, the organisation’s management development programs need to cater for the range of managerial styles and techniques required by different managerial roles.

Analysis

As ‘Staffing Rate – Managerial’ is likely to vary across functions employers may wish to analyse this measure among functions or organisational units. It may also be helpful to analyse this measure by tenure, gender, ethnic background and other personal characteristics to better understand the diversity and career path implications of hierarchy in the organisation.

It is also important to analyse this measure in conjunction with measures of managerial quality, e.g. performance ratings, employee surveys, exit reasons. The adage about: ‘people leave their manager – not their job’ has been proven time and again in exit research; so organisations should be vigilant in ensuring they have the optimum quality as well as number of managers.

Limitations

‘Staffing Rate – Managerial’ does not differentiate between managers and non-managers at various hierarchical levels or titles, so it provides only a two-dimensional view of hierarchical structure. This measure does not directly indicate the number of hierarchical levels in the organisation or the nature of career paths leading to managerial positions. Also, the measure cannot indicate the quality, experience or stability of managerial staff.

Variations

• Staffing Rate – Executive
• Staffing Rate – Managerial – Contact Center
• Staffing Rate – Managerial – Corporate
• Staffing Rate – Managerial – Female
• Staffing Rate – Managerial – Field
• Staffing Rate – Managerial – High Performers
• Staffing Rate – Managerial – High Potential
• Staffing Rate – Managerial – LDP Participants
• Staffing Rate – Managerial – Minority
• Staffing Rate – Managerial – Revenue Generating
• Staffing Rate – VP and Above

Related Measures

• Average Span of Control
• Average Workforce Tenure – Managers (variation)
• Cross-Functional Mobility – Managers
• Employee Satisfaction with Leadership
• LDP Prevalence Rate
• Manager Instability Rate
• Manager Quality Index
• Positions Without Ready Candidates Rate
• Promotion Rate
• Promotion Speed Ratio
• Return on Human Investment Ratio
• Successor Pool Coverage
• Upward Review Rate
• Voluntary Termination Rate – Managers (variation)

Data Sourcing

Organisations may identify managers using any of several data sources, including a managerial/non-managerial column in an HRIS table, an EEO job category label of Officials and Managers or a supervisory organisational hierarchy.

Tags: benchmarks, HR Metrics, measures, Metrics, Span of control, Staffing Facter - Managerial, Staffing Factor

This entry was posted on Tuesday, November 25th, 2008 at 7:52 am and is filed under HCM, HR Metrics, Human Capital, Workforce Analytics, Workforce Reporting. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.