A Personnel Cost Model for Organisational Structure Design

Abstract

In this paper, a business organisation’s personnel related cost function was developed in terms of number of managers (NM), span of control (SC) per manager, number of supervisors (NS) and number of management levels (ML) as variables while number of lowest cadre of staff; rate of pay and allowances, working hours and human interaction dynamics factors were the parameters. Based on this, business organisational design problem was formulated and solved as nonlinear constrained optimization problem with the minimization of total personnel related operating costs, as the objective as the objective function. A solution methodology was produced and an example problem solved.

Keywords: Organisational design, Organisational structure, Optimal organisation, Personnel cost model