As you grow your small business from scratch, a business system that is often forgotten is the development of your organisational chart.
Your organisational chart is a picture of how people in your business is organised, what “departments” they belong to, the responsibilities for the different parts of your business, who they report to, and so on. You’ll know what one looks like when you see it, an upside-down “tree” with the boss at the top and each “branch” representing a different part of the business and who works in each.
I totally understand why it is forgotten, because at the very start when you started the business, it looked like you didn’t need it.
After all, perhaps you were the only employee?
But as you grew, you created new roles and as you grew further, some of these roles got confused. People started off by “helping” and doing a bit of everything, but in time this may have got confused. Things didn’t get done because people thought someone else was doing it; it wasn’t their direct responsibility.
If you grow your business without a formal organisational chart, it’s more than likely that you have come to a point where there are gaps in the work, or where each new employee finds it hard to understand how they fit in, or there is some daily confusion about what needs to be done and who is doing it.
Have you got to that position?
I have written elsewhere about how to design and populate your organisational chart as you grow your business, and this week I wanted to discuss the 7 ways you can use your organisational chart to make your business super-efficient!
#1 Avoids Cross-Over And Confusion
Your organisational chart should clearly organise your business into different parts that make up your business. These may be the Production people, the Marketing people, the Finance people, and so on.
This will clearly tell people who are responsible for what functions and avoids the inefficiency of cross-over where two sets of workers are doing the same thing.
At the same time, small tasks don’t fall in between the cracks because there is a clearly identified group of people who should take responsibility for those types of tasks.
A good organisational chart also shows what happens when responsibilities intersect.
For example, how do people in the sales team pass on customer feedback to the production team so that the product can be improved? Who do they do that through?
Your organisational chart should also show the management and supervision structure of each function. Who is “in charge”, who do people go to when they need instruction or to check on their work, and who do those people in charge go to in their turn? This clarity avoids the situation where people learn how to do things from the wrong people, or where new workers who need training don’t know who to go to and sit there continually doing the wrong thing.
As your business grows larger, it also helps in making communication more efficient. Each manager can receive new strategy and policy and pass it on to their teams without your having to hold large meetings. Each team can discuss issues and improvements and the manager can collect those ideas and pass them on to you without your having to attend every team meeting.
#2 Individuals Know What They Should Do And Why
As you design your organisational chart, you can write detailed position description statements for every position shown in the business.
This means that individually, each employee knows exactly what they are responsible for within their teams. Their position description statements should also give them their individual objectives and Key Performance Indicators (KPI’s) and show them how these relate to the objectives and responsibilities of their team. This allows them to understand that no matter how small a part they think they play, everyone has a role to play in pulling in the same direction.
Knowing this, they can play their parts effectively and help the business become more efficient because they don’t need to stop whatever they are doing to ask for micro-managed instructions.
#3 New People Fit Right In
An up to date and published organisational chart allows new people to fit in effortlessly.
Rather than taking the time to introduce them to how the business works and who to see if they need help, they can see at a glance how they fit into the business, what they are supposed to do, who they rely on to do their job, and who to report to or get training from.
This can cut the need for training in systems and procedures by a substantial amount of time.
#4 The Business Strategy Is Clear
If you design your organisational chart as if you were describing the business when it has attained your vision, then you are describing the structure as it should be.
This makes your business strategy clear to your employees – about how you are planning to grow, what type of work will get focus, what part of the business will take more responsibility.
They can see clearly who wears several hats at the moment, and understand that as more people are hired, how those positions will change in personnel, but not in function.
Designing the finished picture at the start also means that your business strategy is driving the business. There is a saying that either strategy dictates strategy or structure creates a structure. You want to make sure that your vision and strategy is already dictated by your organisational structure, rather than growing your structure as and when new people arrive and having them drive what strategy you adopt at that time.
#5 Create Motivation And Drive
An organisational structure that shows what the “finished product” will be like shows your employees what their career paths could be.
There is nothing worse than working in a business where your perception of the only way of getting on in the company is to await someone else to die or move on!
The promotion channels can be discussed at staff reviews, so people are clear how they can progress. It will help you and them identify your talent for the future, as well as what resources like training you need to implement to help them.
This will create an internal motivation mechanism because people will feel like they have a future in the organisation – and that creates drive and efficiency.
#6 Gaps In Resources Will Be Identified
An organisational chart, designed with your vision and strategy in mind, will expose those parts of your business with deficiencies.
You will see where you have the wrong people, and where you don’t have enough people. You will even see if you have gaps in business functions and responsibilities or where you may need to split teams into more logical groups.
You should be able to identify the skills you need into the future, affecting how you recruit, or how you implement training programs.
#7 People Will Need Less Supervision
And that means you don’t have to spend so much time making sure people are doing the right things and spend more time making sure your business is growing in the right way.
Once your organisational chart helps you improve the above 6 efficiencies, you will find that people are more equipped to think for themselves. They will know how to avoid confusion about who does what, they will respond to knowing what they are individually responsible for, new people will need less time to fit in and will immediately have the right people looking after them, everyone will understand what the business strategy is and help to work toward it, they will be motivated and work for their own advancement and improvement, and they will receive the right training and attain the right skill levels to work out solutions for themselves.
All of this will free you from micro-managing people and allow you the time to work on the big-picture tasks.
So, the lesson is clear!
If you have grown your business by plugging people in wherever they fitted when they joined if you created teams depending on who you had available, you need to take a breath and design your organisational chart with deliberation and purpose, or instead of creating efficiency, you will create stifling and time-robbing inefficiency in your business.
I have written a guide on how to create your purposeful organisational chart, and you can download a free copy here.
If you haven’t checked it out already, my website teikoh.com is also full of other tips and tools on how to grow your business. Why don’t I see you over there?