How many people can one person manage?
Harvard Business Review estimates the ideal range for an experienced manager is between five and nine with a sweet spot of seven.
The ratio of managers to direct reporters matters because it explains why some companies grow and others plateau. Every business is different, but you can loosely think of a company’s evolution as a series of stages with an invisible gate holding most owners from progressing to the next stage.
Stage 1: Doers (up to 9 employees)
In stage 1, you direct a handful of doers. You need people who can follow your standard operating procedures and execute. Your best employees will often be generalists who can do a lot of things reasonably well. They thrive on variety and like the feeling of getting things done.
Many owners get stuck in stage 1 because they fear delegation. Many owners do not trust employees enough to do the work without their direct oversight. However, those owners courageous enough to hire some managers will graduate to stage 2.
Stage 2: Managers (10–40 employees)
In a Stage 2 company, the owner hires a small number of managers (usually less than five), who are paid to ensure their direct reports execute. The emphasis is on managing against the plan the owner gives them. Good managers understand the process they are being asked to manage. They are detail-oriented and stick to the plan.
While managers may contribute to the plan, they are not usually responsible for creating it. Managers typically need their leader(s) to supply their plan, which is why many companies stall out at stage 2.
Stage 3: Leaders (40 + employees)
For our purposes here, let’s define a leader as a person who can lead a team through more than one layer of management.
While most leaders can manage, the opposite is not necessarily true. Leadership requires managers to learn a new set of skills. Leaders need to be able to communicate clearly, delegate effectively, and create strategy.
If you are stuck at stage 2, you have two options: either you need to hire leaders, which risks alienating your managers, or train managers to become leaders. Both strategies are hard and time consuming, which is why many companies get stuck at stage 2.
If you are stuck, it is worth asking if you have the right people in place to take your business to the next stage. In the beginning, you will need managers you can trust. And to graduate to stage 3, you will need people who can manage and lead. Some managers may need training, while other areas of your business may need an entirely new leader to make the transition successful.
Contact Whitehorn today to find out how we can help you grow your business.
