The ratio of bosses to employees is an efficiency measure. If one sporting goods store has two managers and 12 employees who work on the floor, and another sporting goods store employs three managers and has nine employees, the first sporting goods store has less administrative overhead. A manager usually makes more money than a nonsupervisory employee, so reducing the number of managers is one way for a company to achieve substantial cost savings.
The ratio of bosses to employees provides more useful information when the comparison is between similar organizations. If a burger restaurant at the mall has two managers and 20 other employees, this might be because the burger restaurant needs fewer managers than the sporting goods store because managers at the sporting goods store have additional administrative responsibilities.
A manager can perform tasks that increase a company's revenue directly, in addition to supervising employees. A partner at an accounting firm trains less experienced accountants and gives them tasks to perform, and she also meets with clients and brings in business for the firm. A company should consider the ratio of the hours that the manager spends on administrative tasks to the hours she uses to generate income for the company.
The boss-vs.-employee ratio also includes the number of hours that each employee works. According to the Department of Commerce, a part-time employee does not add as much to the ratio as a full-time employee. If a sporting goods store hires six workers per manager, but each worker is at the store for 20 hours each week and the manager is present for 40 hours, the boss versus employee ratio is 3 to 1, not 6 to 1.
A company that has a high boss-to-employee ratio is placing more responsibility on each individual worker. If the company employs fewer managers, each manager has to perform more tasks, so he has less time to help an individual employee solve a problem. A lower boss-to-employee ratio suggests that the company is more formal and hierarchical, and a worker could need to make frequent requests for permission to carry out her job tasks.
No single ratio is most efficient for bosses to employees, according to the city of Seattle. Each organization needs to consider the skill levels of individual managers and workers when it sets a staffing ratio, because one boss might be able to successfully manage more workers than her colleague, and a worker who has more experience might not need as much guidance from his boss.