How many managers does it take to run an IT organization? How should the roles and responsibilities of those managers be defined, and their performance evaluated? If the organization finds that its managers are performing poorly, that it has too many managers, or that its administrative structure is inappropriate, how does it go about addressing the situation?A combination of fact-based quantitative metrics together with a qualitative analysis of management processes can yield important insights into these complex questions. More specifically, objective measures of manager-to-staff ratios, productivity, and quality are essential. A truly meaningful understanding of management effectiveness, however, requires a contextual analysis of organizational culture, decision-making processes, and employee and customer attitudes and opinions.Steps in the ProcessThe first step in the process is to develop a structured view of what is included, in the broadest sense, in management and administration within an IT organization. The chart below illustrates the functions to be analyzed. insert image tk >The functional perspective is enhanced through a four-level view of size, productivity, quality, and processes, as described below. Level 1 (Size)Company scope information(number of IT and company employees, total IT budget)Number of FTEs (Full Time Equivalents) in each processLevel 2 (Productivity)Key volumes\/activities processedLevel 3 (Quality)Key quality measures of processed volumes\/activitiesLevel 4 (Decision Processes)Organizational structure, decision drivers, control mechanisms, escalation proceduresUsing this measurement framework, it's possible to examine the number of people involved in different roles. For example, 17 percent of employees might be involved in management and administration of IT. Problem is, there's no way of knowing based on that information whether the percentage is too high, too low, or appropriate. The next step is therefore to drill down and examine productivity - what people are actually accomplishing in terms of volumes and activities completed. Similarly, quality can be gauged in terms of measure such as errors per 1000 orders processed.While these measures are useful, they provide little insight into managerial performance in a broader sense, since they don't examine whether corporate processes are followed, whether staff are motivated to maximize their potential, and whether the organization's staff and customers are satisfied - all key indicators of a manager's effectiveness.Put differently, if an IT organization has a 1:7 manager-to-employee ratio and rates highly on productivity, quality, process adherence, and customer and employee satisfaction, then that ratio is likely appropriate. For an organization with a 1:16 manager-to-employee ratio with low productivity, poor quality, and universally dissatisfied customers, meanwhile, adding managers would seem to be a dubious performance improvement strategy. A Qualitative PerspectiveA qualitative analysis of management functions and decision-making processes is essential to gauging organizational effectiveness. This qualitative view must explore in detail how decisions are made - who makes them, what the drivers and control mechanisms of decisions are, how decisions are escalated, and the problems and challenges that develop when these drivers and mechanisms go awry.Employee and customer surveys and interviews can be valuable tools for analyzing organizational management. In a recent assessment of a large, global IT organization, Compass reviewed existing customer and employee satisfaction surveys, and interviewed 100 IT and administrative managers, sales representatives, account managers, and line managers in areas such as finance and human resources. While qualitative in nature, the interviews - which took place in ten global offices - were structured and focused on decision processes.The interview process should be designed to identify the processes in place, explore how well they are working, and understand where and how bottlenecks in decision-making arise. Employees can provide unique insights into problems and difficulties - such as, for example, the obstacles presented by endless meetings of various steering committees that never seem to resolve a problem. A Complementary ApproachFact-based, quantifiable measures complemented by qualitative insights enable a thorough analysis of what parts of the organization are being managed well, in terms of IT efficiency, administration, and adherence to established processes. Opportunities to improve various aspects of managerial and administrative performance can also be identified.This comprehensive approach to organizational analysis goes beyond the simplistic approach of identifying excess overhead and reducing headcount by x percent. Rather, it becomes possible to focus on true improvement - whether that involves adding or reducing management or staff, or changing work processes, or changing decision-making processes.For example, a proper analysis could identify that too much overhead exists in an organization - but with widely differing underlying causes. In one instance, an organization could have too many people in support processes, due to inefficiencies in process design and inefficiencies in execution. In another case, poor customer relations could lead to a perceived overhead, in the sense that customers question the value they receive from IT.In the first instance, the solution may be a relatively straightforward reduction in the number of people involved in certain processes. In the second, however, new and different skills may be needed to improve the perception of customers regarding the value of IT services. Insights From Analysis of IT AdministrationWhile the methodology described in this white paper examines administration and management of IT organizations, it is broadly applicable to generic functions in a wide range of business areas - human resources, finance, procurement, and general administration. Insight into - and improvement of - administrative efficiency is becoming an imperative of today's business environment, particularly for organizations that are moving from a role of an internal service provider to one of competing for business on the open market.A quantitative analysis of organizational efficiency, coupled with qualitative discussions that reveal the effectiveness of decision processes, can dramatically improve administrative and managerial performance.Hans Johansson, a senior consultant in Compass' Stockholm, Sweden, offices, specializes in issues of cost, productivity, quality, customer satisfaction, and sourcing.