Description
Managers as a percentage of total headcount at the end of the reporting period.
Formula
End of period headcount. Manager I End of period headcount * 100
Interpretation
Staffing Rate – Managerial indicates the percentage of the organisation’s workforce employed in managerial positions. Managerial positions, for this measure, typically refer to positions with managerial titles, regardless of whether those positions involve supervisory responsibility. A result of 14 per cent means that 14 per cent 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.
As compared to flatter organisations, some employers with tall hierarchies experience higher salary costs, more difficult top-down communication and a loss of responsiveness in decision making due to bureaucratic procedures.
A low proportion of managers, on the other hand, tend to indicate a flat organisation structure with fewer hierarchical levels. Organisations with flat structures 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 when needed.
Results for Staffing Rate – Managerial tend to be lower in labour-intensive industries such as manufacturing, while results tend to be higher in professional industries such as financial services, information technology and professional services.
Data Sourcing
Organisations may identify managers using any of several data sources, including a managerial/non managerial column in an HRIS table, job title or a supervisory organisational hierarchy.
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.
Limitations
Staffing Rate – Managerial does not differentiate on span of control or number of reports 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.
Targets
Targets for the proportion of managers in an organisation are likely to depend on organisation design, industry, job function mix and career path strategies.
Within a benchmark group of organisations in similar industries or with similar job functions, 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 path or employee retention purposes may instead target moving results toward the 75th percentile of a relevant benchmark group.