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
SPAN OF CONTROL
NARROW 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
SPAN OF CONTROL
NARROW 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
SPAN OF CONTROL
WIDE SPAN OF CONTROL
The more people under the control of one managerthe bigger (wider) the span of control
SPAN OF CONTROL
WIDE 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
SPAN OF CONTROL
THE PURPOSE OF CONTROL
 Control provides an organization with ways to:
1) Adapting to environmental change
2) Limiting the accumulation of error
3) Coping with organizational complexity
4) Minimizing costs
SPAN OF CONTROL
ADVANTAGES OF CONTROLLING
 Improves Goodwill
 Minimise wastages
 Helps to fix responsibility
Guides operations
Motivates employees
 Minimises deviations
 Facilitates delegation
 Facilitates co-ordination
 Increases efficiency
SPAN OF CONTROL
MAIN STPES IN CONTROL PROCESS
Establishment of standards
Measurement of performance
Comparison of actual and standard performance
Taking remedial actions
SPAN OF CONTROL
TYPE 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
SPAN OF CONTROL
BREAK-EVEN ANALYSIS
 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)
SPAN OF CONTROL
BREAK-EVEN ANALYSIS
Sales
Units sold
SPAN OF CONTROL
FIXED COSTS
 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
SPAN OF CONTROL
VARIABLE COSTS
 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)
SPAN OF CONTROL
SEMI-VARIABLE COSTS
 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