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  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  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  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  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  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 change 2)Limiting the accumulation of error 3)Coping with organizational complexity 4)Minimizing costs

ADVANTAGES OF CONTROLLING SPAN OF CONTROL  Improves Goodwill  Minimise wastages  Helps to fix responsibility  Guides 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