The management structure building service contractors choose directly affects their abilities to satisfy customers, retain employees and earn profits. And while it is common to add or delete positions for various reasons each year, too many position adjustments could shift a company’s entire command structure. That’s why BSCs should review their organizational structures regularly to ensure service consistency and efficiency.

When reviewing management structures, keep in mind four main factors: command hierarchy; company size; each level’s span of control; and the decision-making processes within the organization.

Depth matters
Management hierarchy refers to the number of levels of management and supervision. A flat structure is one with few levels; a tall structure has many levels.

An example of a BSC’s flat management hierarchy is when there are a night supervisor on the first level, a vice president of operations on the second level, and the president on the third level.

A tall management hierarchy, on the other hand, could have as many as six or more levels with a site supervisor, a district manager, an assistant operations manager for night operations, an operations manager, a vice president of operations and then the president.

Some companies may have even more levels, but they all can be divided into three basic tiers.

Although titles for top-level positions may vary from one BSC to another, common designations are president for the chief directing officer and vice president for each of the other officers who oversee divisions or departments.

Other common titles for top-level managers are chief executive officer, chief operations officer, chief financial officer, and chief marketing officer. Some firms simply call them general manager, operations manager, finance manager and so on. Others call their decision makers principals to give equal status to their management positions and to avoid the appearance of hierarchy.

First-level managers are those who directly oversee workers, often called supervisors. They occupy the lowest level of management and are responsible for the finished product or service. Supervisors are accountable for the quantity and quality of service, thus making them an indispensable link in the corporate hierarchy.

Larger firms also have many mid-level managers. But for the sake of economy and efficiency, many BSCs have worked to eliminate these positions to “flatten” their organizations. Some companies even make this elimination a key part of acquisition plans to quickly realize savings.

Regardless of the number of management levels, every contractor has a hierarchy or chain of command. With few exceptions, power, authority and influence increase as a person rises to a higher level. An exception is when employees at lower levels have special knowledge, skills, or external connections not shared by those at higher levels and are critical to the organization’s success.

Position can affect productivity
Where a worker is placed in a hierarchy makes a big difference to the individual and to the entire company. Every management level that is added or removed dramatically affects how the organization functions, how workers see themselves as a part of it and how the company spends its financial resources.

One of the greatest incentives a business can give its employees is to let them know that when they come to work for the firm they may achieve any position in the company by applying themselves and qualifying when positions are available; first-level management positions are logical promotions for qualified, interested workers. What BSC wouldn’t want to someday turn over the management reins to loyal, qualified, and talented employees who will carry on the business successfully?

Since management levels cost money, the more levels you have the more you spend. Therefore, it’s vital to find out how many you really need.

In a flat organization with few management levels, communication generally is faster and less distorted. Since decisions can be made faster, customer needs are met more quickly, and employees at lower levels feel more in touch with top management. On the negative side, there are fewer opportunities for promotion in flat organizations.

There are several positive aspects of tall organizations. One advantage is that the workload can be reduced for each manager, resulting in tighter supervision and higher productivity. Another advantage to employees is that there are more opportunities for promotion.

On the negative side, with more links in the communication chain, distortion is more likely in tall organizations. Decision-making takes longer, and organizational change reaches a virtual standstill.

Usually at some point in their history, large janitorial companies with tall structures have had practically no communication between the top and bottom levels. Ideas take weeks to reach the opposite end of the hierarchy, if they arrive at all. Lower level managers begin feeling left out of the decision making process and the entire corporate structure weakens until the problems are corrected.

Charting growth
Size is one of the most important variables affecting a BSC. When it starts out as a one-person enterprise—as most cleaning companies do—the owner performs all the tasks that he or she is capable of doing and sub-contracts out the rest. As the company grows, the owner hires employees with special skills, and divisions of labor start to appear. A sales representative and a supervisor for custodial services usually are among the early hires.

As the company continues to grow, departments are formed and managers added. With additional growth, mid-level managers come on board and the sales and marketing department splits into territories.

By the time the company becomes an industry giant with six or more management levels, it spends more time and resources on maintaining itself than on serving its customers. Top-heavy companies are very slow to change and have a hard time competing successfully with smaller, leaner firms.

But they can recapture the speed and flexibility of smaller companies. Some large BSCs outsource all functions that are not a part of their core business, such as secretarial services, payroll, human resources management, safety, training, and even sales and marketing, along with their mid-level managers.

To quickly and effectively respond to customers’ needs, many companies restructure into autonomous teams. Team members learn every task so they can cover for one another when absent, and specialists in the company are available to help the teams with difficult or unusual problems.

Who’s in command
Span of control, refers to the number of people who report to one manager or supervisor. A narrow span of control exists when there are very few people. A broad span of control exists when there are many people.

For decades, a span of five to seven workers per supervisor was considered ideal. Today the emphasis is on flattening the organization with a broader span of control, resulting in more workers per supervisor. It’s not unusual in today’s economy for a cleaning company to have one supervisor for every 10 to 15 or more workers.

A narrow span of control is appropriate where the work is complex and unpredictable, where the work needs to be closely coordinated, or where workers are unskilled and inexperienced. Examples of a narrow span of control are:

  • When a new cleaning company has few experienced employees and supervisors.
  • When specialty companies, such as water and fire damage restoration crews work in confined areas requiring special procedures, chemicals and equipment, but fewer workers.

The negative aspect of narrowed control is the higher cost of management due to more people earning higher salaries.

On the positive side, fewer workers needing supervision allows each manager more time and energy for managerial duties. Although communication is slower with additional levels of hierarchy, workers receive more individual attention.

A broad span of control is most appropriate when the work is straightforward, when there are standard rules and procedures to guide workers and when employees are capable and experienced. A broad span of control results in lower management costs and encourages workers to develop skill and initiative, making their own decisions.

On the negative side, with more workers to supervise, managers spread their efforts thinner, thereby requiring the company to find alternatives to handle coordination, communication, and other managerial work.

Consolidating responsibility
How centralized management is also plays a role in the success of cleaning operations. Centralization puts decisions in the hands of a few top people, while decentralization empowers many people to make decisions. While many BSCs have decentralized management functions at lower levels in the firm and as close as possible to their customers, other companies have centralized management functions. It’s quite common for companies to move from one extreme to the other during the course of their history, depending on what best suits their needs at different times.

There are three major reasons to centralize management functions. The first reason is control. Central control is especially important when the entire company must meet hard-to-understand regulatory requirements or when decisions at the local level affect the entire company.

The second reason to centralize management is cost. When purchasing is streamlined from one department, the company can obtain better quantity discounts and have less paperwork.

New technology is another reason. New phone systems, the Internet and other innovations have lowered operation costs and can funnel customers directly to the right decision makers.

Alternatively, there are some good reasons to decentralize management functions. Local decision making allows the company to respond quickly to customers and to local conditions if no higher approval is necessary.
The second reason is employee growth. Allowing people in lower-level positions to make decisions stimulates creativity and independence while helping develop a pool of internal candidates for higher level positions.

And while new technology can be a case for centralizing decision making, it also can be one for decentralizing it. Today’s information systems enable delegation of authority to lower levels while still keeping top management well informed through instant messaging, teleconferencing and other computer-generating reporting methods.

Carry through
A good rule to follow is to make sure decisions are made by people who are as close as possible to the source of information and to the field of action. This will help you make quicker and better-informed decisions.

Another rule to follow is that senior decision makers need to be involved when decisions are long-term and more difficult to reverse, when they affect the organization as a whole or other parts of the organization, and when they are more costly.

Before adding another management level to your business or before paring down your business, it would be wise to first review these management structure options, the framework of a successful business, and then take appropriate action.

Forrest L. Farmer is CEO of Clean-Pro Industries, Inc., a publishing and consulting firm in Portland, Oregon. You may contact him at his Web site.




POSTED ON: 11/1/2001