The staff structure you create for your business can mean the difference between growth and stagnation. The unfortunate reality is that all too often a company’s organizational structure is never considered. Especially as small businesses start to grow, the staff structure evolves organically and often haphazardly; rather than being thoughtfully developed.
When a new business is born, there are usually just a few people involved, and they do everything. Susan might be best at finance, so she handles the books. Angie might have big ideas, so she is creating products or services. And Olivia may be very charismatic, so she takes the lead on sales. This is a great start!
As the company grows, they bring in team members to help with sales and production and service. When they are still small the company can get by without creating much formal structure. This is often preferred as they want to remain responsive and nimble and casual. As long as everyone is productive and working well together, this free-flowing construct can work for companies up to about 7 to 10 people.
Challenges arise when the company starts to grow bigger and the structure doesn’t get addressed. The bigger a company gets, the harder it is for the leader(s) to keep their finger on the pulse of what is going on. Team members have less accountability if there is no clear chain of command. Expectations may be misunderstood. Decision making becomes inconsistent and confusing. This is the point where companies that have solid growth potential, start to stagnate.
Components of a Strong Structure
You may be wondering what it means to create a strong structure. Here are the key components that can help you organize your team for greater growth:
Delegation & Mindful Expansion
This is a simple concept. Everyone has seen an org chart and understands how they work. The tricky part lies in finding the right one for your business. Generally speaking, the work of a business can be divided into three categories:
When thinking about your organizational structure, think about groups of accountability. In a smaller business, one person may be responsible for everything related to finance. As the business grows they will likely need help managing things like payroll, accounting, budgeting, and more. It usually makes sense to add staff or contract services under the person who is responsible for finance. That forms a department.
Depending on the type of business, you may have multiple departments in each category. For example, if you deliver several different product lines, each one may be a different operational department. If you sell to both the general public, as well as to corporations, those may be two different departments under the sales category. A department may grow too big for one person to manage and rather than adding layers, it might be best to divide it into different departments.
In addition to having departments leading finance, sales, and operations, there needs to be one or two leaders above this level. This is usually the business owner or owners. They are responsible for setting the vision and culture, creating new ideas, key decision making, leading staff, and driving strategy (as well as a million other things). In his book “Traction”, Gino Wickman titles these roles as Visionary and Integrator. The Visionary sets the course for the company. The Integrator drives the work. Depending on the size of your business, one person may serve as both roles.
There is not a “right” org chart that will work for every company. You need to determine what your different departments look like. You need to figure out what gets lumped together and what needs to stand alone. The number of layers is dependent on the needs of your company and how you want it to function. The focus, purpose and vision of your business will determine how this looks and what’s “right” for you.
Establishing your organizational chart is the foundational step needed for clear accountabilities. In addition to listing positions and names on your org chart, this step involves listing the things that each position is accountable for. Keep it fairly high level, not including every task that the position manages, just the items that the person in that seat is expected to take responsibility for and drive.
Each position should have 3 to 7 elements listed. Anyone who supervises staff should have LMA (Lead, Manage, hold Accountable) on their list of accountabilities. Other items to include could be managing of processes (like payroll), ownership of outcomes (such as sales numbers), and production expectations. Again, the work of the business will drive what goes onto these lists. Everything that the business needs in order to function, needs to be on someone’s accountability list.
Delegation & Mindful Expansion
You will notice that each of these structural components builds on the previous one. Establishing clear accountabilities helps determine where delegation is needed. When listing out the accountabilities for each position, watch for lists with more than 7 elements. This will often create a barricade as the person in that position has too much on their plate. This could be by choice (control issues, amirite?) or because the company isn’t to the point where they can add positions yet.
Choosing to hold onto everything is very common in small, growing businesses. The person or people who created the business often feel like they are the only ones who can do it right. Unfortunately, this practice is not sustainable. The person choosing to be responsible for everything is going to eventually burn out, while at the same time keeping the business from growing and thriving. When this is the case, a crucial conversation needs to be had, explaining the problems created by the behavior.
As a business is growing it is important to make staff additions conservatively and thoughtfully. The finances need to be able to sustain the addition and it needs to be made based on the most pressing demands. The org chart and accountabilities can clearly show where the pain points are. When your chart shows that a position has 8 or more accountabilities, you have the opportunity to think through your options. Is there someone to delegate some elements to? Does the company have the financial ability to add a position or split the position? If the resources are not immediately available, plan out what your next move will be based on where the work is concentrated.
This method for planning your staff growth helps ensure that the squeaky wheel isn’t getting all of the resources. It allows for decision making based on what will allow the entire team to be most productive. It also helps determine if there are internal roadblocks limiting your capacity.
Finally. The last element in a strong organizational structure is supervision. And not just regular “I report to him, you report to me” supervision, but thoughtful and intentional supervision. This can be a tough one for small businesses. Especially when the business was founded by friends or family, and now all of a sudden we need to hold people accountable. Establishing clear supervision can be tricky and feel uncomfortable at first, but it is 100% worth the pain and effort.
I find that many people truly hate supervising people. They get frustrated by having to tell people things more than once. They expect people to have the same level of understanding or work ethic as they have. They dislike the confrontation of redirecting staff when they are off track. And all of that can be difficult and uncomfortable if you haven’t taken the steps of creating an organizational chart, clear accountabilities and delegating/mindfully expanding.
By establishing this clear structure, your supervisors have a much easier job. The organizational chart creates a clear chain of command. Every person in the business knows who they need to go to for support and direction. The expectations are clearly outlined in their accountabilities. Staffing decisions about how to delegate and expand are made easier because they are informed. Now all of this is not meant to imply that supervisors don’t need training and practice on how to effectively LMA, rather that this structure sets them up well for success.
Similarly to the number of accountabilities per position, it’s important to be intentional about the number of direct reports to a position. The general rule of thumb is that a supervisor leads up to seven staff or staff positions. That means that in a department with different people managing different functions, a leader should have no more than seven direct reports. However, in a department with several people doing the same thing, a supervisor can manage more people. For example, if a department has 15 cashiers, one supervisor can manage them effectively because they are all doing the same job. Ensuring a team leader has a manageable workload is paramount to setting them up for LMA success.
Need help establishing the right organizational structure for your business? Email me at email@example.com to schedule a free 30-minute consultation to see how we get you moving on the path to growth!