Evaluating Expansion Strategies for a Growing Firm
A consulting firm has 100 consultants, managed by 10 team leads (a 1:10 ratio). The founder currently manages all 10 team leads directly. The firm plans to double its size to 200 consultants. The founder is considering two strategies:
Strategy 1: Hire 100 new consultants and 10 new team leads, maintaining the 1:10 ratio. The founder would then need to hire a new layer of 2 senior managers to oversee the 20 team leads.
Strategy 2: Hire 100 new consultants but only 5 new team leads. This would increase the span of control for each team lead, saving on management salaries.
Critically evaluate both strategies. Which strategy would you recommend to the founder for sustainable, long-term growth? Justify your recommendation by explaining the potential impact of each strategy on total costs and overall productivity.
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