A magic number of 11 is accepted in industry. This number, also called span is a balance between the overhead of having too many managers and the loss of focus on higher span. Well, here is my logic.
The rule 5(+-)2 says that it is difficult to remember more than 7 things. If one wants to retain focus on each team member, one has to honor this number. As a manager not only tasks, productivity but career paths of team members need to be managed. There are few more magic numbers that are industry accepted - 70% of your team will be rated standard, 20% high-flyers and 10% below average. If you want to focus on 7 team members, could ignore 1 that is below average and 2 will be self-driven, you can afford to have 10 people in the team.
But here is a bigger reason that you should give more thought to team size. Generally it is expected that you motivate your team members. That means giving each team member 15-30min per week. And this should be highest productivity time, not the end of day boring sessions. The energy you impart to your team in these sessions will go long way in maintaining a high productive team. On all five days of work you should begin the day by talking to a team member. To manage 10 people would mean two calendar weeks.
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Here is one rule of thumb (http://blogs.ittoolbox.com/eai/implementation/archives/rule-of-thumb-maximum-team-size-3865)
Your team size should be square root of total project effort in person months. So if ur project is 64 person months, have a team size of 8.
From: http://en.wikipedia.org/wiki/Team
At least one study of problem-solving in groups showed an optimal size of groups at four members[1]. Other works estimate the optimal size between 5-12 members.[citation needed] Less than 5 members results in decreased perspectives and diminished creativity. Membership in excess of 12 results in increased conflict and greater potential of sub-groups forming.
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