SPAN OF CONTROL

SPAN OF CONTROL

In a business of more than one person, unless the business has equal partners, then there are

managers and subordinates

Subordinates are workers controlled by the manager

HIERARCHY- structure of the management of the business

TOP OF COMPANY- managing director until the BELOW OF THE COMPANY- shop floor worker

SPAN OF CONTROL

SPAN OF CONTROL

HIERARCHY is usually best understood by using an organization chart

NARROW SPAN OF CONTROL

SPAN OF CONTROL

SPAN OF CONTROL is the number of people who report to one manager in a hierarchy

The less people under the control of one manager- the narrower (smaller) the span of control

NARROW SPAN OF CONTROL

SPAN OF CONTROL

ADVANTAGES of narrow span of control:

1) Allows a manager to communicate quickly with the employees under them and control them more

easily

2) Feedback of ideas from the workers will be more effective

3) Requires a higher level of management skill to control a greater number of employees, so there is

less management skill required

WIDE SPAN OF CONTROL

SPAN OF CONTROL

The more people under the control of one manager- the bigger (wider) the span of control

WIDE SPAN OF CONTROL

SPAN OF CONTROL

ADVANTAGES of wide span of control:

1) There are less layers of management to pass a message through, so the message reaches more

employees faster

2) It costs less money to run a wider span of control because a business does not need to employ as

many managers

SPAN OF CONTROL

SPAN OF CONTROL

The width of the span of control depends on:

1) THE TYPE OF PRODUCT BEING MADE- products which are easy to make or deliver will need less

supervision and so can have a wider span of control

2) SKILLS OF MANAGERS AND WORKERS- a more skilful workforce can operate with a wider span of control because they will need less supervision. A

more skilful manager can control a greater number of staff

SPAN OF CONTROL

SPAN OF CONTROL

CHAIN OF COMMAND- the line on which orders and decisions are passed down from top to bottom of

the hierarchy

A production manager may be higher up the hierarchy, but will not be able to tell a marketing

person what to do

SPAN OF CONTROL

SPAN OF CONTROL

ADVANTAGE OF HIERARCHIES:

1) Helps create a clear communication line between the top and bottom of the business- this improves

co-ordination and motivation since employees know what is expected of them and when

2) Hierarchies create departments and departments form teams

SPAN OF CONTROL

SPAN OF CONTROL

DISADVANTAGE OF HIERARCHIES:

1) Departments work for themselves and not the greater good of the business

2) Departments do not see the whole picture in making decisions

3) Hierarchies can be inflexible and difficult to adjust

THE PURPOSE OF CONTROL

SPAN OF CONTROL

Control provides an organization with ways to:

1) Adapting to environmental change2) Limiting the accumulation of error

3) Coping with organizational complexity4) Minimizing costs

ADVANTAGES OF CONTROLLING

SPAN OF CONTROL

Improves Goodwill Minimise wastages

Helps to fix responsibilityGuides operations

Motivates employees Minimises deviations Facilitates delegation

Facilitates co-ordination Increases efficiency

MAIN STPES IN CONTROL PROCESS

SPAN OF CONTROL

Establishment of standards

Measurement of performance

Comparison of actual and standard performance

Taking remedial actions

TYPE OF CONTROL

SPAN OF CONTROL

1) PRE- CONTROL/ FEED-FORWARD CONTROL: Control that takes place before work is performed

2) CONCURRENT CONTROL:Control that takes place as work is being performed

3) FEEDBACK CONTROL:Control that concentrates on the post organizational

performance

BREAK-EVEN ANALYSIS

SPAN OF CONTROL

Technique widely used by production management and management accountants

Based on categorising production costs between those which are:

‘VARIABLE’ (costs that change when the production output changes)

‘FIXED’ (costs not directly related to the volume of production)

BREAK-EVEN ANALYSIS

SPAN OF CONTROL

Units sold

Sales

FIXED COSTS

SPAN OF CONTROL

Business costs that are not directly related to the level of production/output

Even if the business has a zero output or high output, fixed costs will remain broadly the same

Examples: Rent, Depreciation, R&D, Admin costs

VARIABLE COSTS

SPAN OF CONTROL

Those costs which vary directly with the level of output

Represent payment output-related inputs such as raw materials, commission

DIRECT VARIABLE COSTS- directly attributable to the production of a particular product/service and allocated to a particular cost centre (Example: raw

materials, wages)

INDIRECT VARIABLE COSTS- cannot be attributable to production but they do vary with output (Example;

depreciation, maintenance)

SEMI-VARIABLE COSTS

SPAN OF CONTROL

EXAMPLE: when a business has relatively low levels of sales, it may not require costs associated with

functions such as human resource management or a fully resourced finance department

However, as the scale of the business grows, then more resources are required

If production rises suddenly then some short-term increase in warehousing and/or transport may be

required

In these circumstances, we say that part of the cost is variable and part fixed