Last fortnight, we dealt with how to grow your business by making sure that your employees grow with you – by providing them with a clear Position Description that detailed their goals, objectives and responsibilities, and performance measures, and by ensuring that you implement a consistent feedback system to review their performance.
This fortnight, we are going to look at how to employ people with intent. That is, knowing exactly who you need to employ, what their roles are and how these people will populate your complete business structure.
This means designing what your business will look like, from the beginning, and in doing this, knowing what your organisational structure will look like when your business structure is complete.
To do this, we are going to look at designing your Organisation Chart.
But first, to recap, this is the second in our series of starting and building your successful small business.
We started with a seven article series on Starting A Small Business – the first of that series is linked here.
The Starting A Small Business Series dealt with knowing your “Why”, what you need to think about when you start up, steps to take, checking for feasibility, preparing your first business plan, hiring your first employees, and creating consistent workflow systems.
In this second series of articles, we are looking at what to do after you have started and established your business, in this series called Growing Your Business. We have already looked at how to choose the right measures to measure your growth, looking ahead with a strategic plan, following up with an annual business plan, growing with a focused marketing plan, and growing your employees.
Now, let’s deal with your Organisation Chart.
What is an organisation chart?
Put simply, it is a “tree” diagram of the positions in your business – who they are, what they do and are responsible for, who they report to, and who they supervise.
Notice I said “diagram of positions” not a diagram of people. And when I say “who they are” I did not mean the names of the current incumbent, I mean their position descriptions. This is important as I explain later – an organisation chart is about organising the roles and responsibilities in your business in the most efficient way – not about who does what right now because they are the most experienced or capable.
If you want to operate a business now, or at anytime in the future, where you are not called upon to micro-manage every decision, to supervise every person and help them make every decision, where people in your business know exactly what to do and who to go to if they need help, then you need two things:-
- A very clear vision of what everyone should be striving for; and
- An organised team where everyone knows their roles and responsibilities and know what procedures they need to follow in their tasks.
An organisation chart is the start of an organised team.
You can download a free worksheet below that explains the organisation chart in more detail and provides a series of steps you can follow to design yours.
Now here are a few rules about how you put together your organisation chart.
Rule 1, start now. I don’t care if you have 10 staff or it’s just you. Start putting together your diagram of every functional position you need to be working in your business when you have “got there” and have achieved your vision. Start with identifying the different business “functions” or activities your business will require, for example, sales and marketing, administration, production, delivery and distribution, and so on.
Identify the “management” position heading up each of these functions. From a deep analysis of your vision, work out how many people work in each function and what they are doing.
This is so that you design – from the very outset – how you are going to grow, rather than add branches as you go and on the run. Don’t create a functional branch just because you think it’s got too busy – if it wasn’t in the initial design it’s probably not required.
Recognise that – if you are small – some people might wear a number of different hats, which lead to Rule 2.
Rule 2 is to never combine functional positions because someone currently wears two hats. Just because your current “best” employee is the salesperson as well as involved in delivering the product to customers doesn’t mean that is the most efficient thing to do. What happens when your “best” person resigns and the next candidate is not “as good” and can’t do both? Separating positions logically allows you to grow, and to identify who you should hire next, to fill in one of the doubled-up positions.
This leads to Rule 3.
Rule 3 is never to organise individuals i.e. names and personalities. Just because Nancy who joined you as a bookkeeper has turned out to also be a really good Executive Assistant for the managers doesn’t mean that is one position. It is, as per Rule 2, two functional positions.
The danger of breaking Rule 3 is that once you organise by personality – in order to replace Nancy you have to find someone who is exactly like her. What are the chances of that?
The benefits of having an organisation chart designed properly by function, with position descriptions attached to each position, are:
- You give clarity about the purpose of a role;
- Each position is clear about its role and responsibilities;
- Each position understands how they fit into the whole and how they work with and alongside other positions;
- There is no confusion when people change – they just slot into the empty position and pick up the unchanged purpose, role, responsibilities and attached processes or tasks and their predetermined procedures;
- It creates room to grow efficiently and in an organised way – you know exactly what positions have to be filled in advance;
- It creates room for your team to grow – they have a career path set out in front of them.
Now, don’t forget to download the free worksheet that provides more information about organisation charts, and takes you through a series of steps in a worksheet to help you design your organisation chart.
Having a well thought out and future proof organisation chart is part of designing your self-running business. If people knew exactly what they should be doing – it creates clarity of roles for them to make decisions for themselves without breaking the business.
Once you have your Organisation Chart, here are 7 ways you can use it to make your business truly 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 a 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 them to focus on, what part of the business they will take more responsibility for.
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 about 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 that have 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 in 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.
If you want to know more about Creating The Self-Running Business, an online training program taking you through the steps to systemise your business, go over to my website and click on the Products page for more information.
Next fortnight, we are continuing the Grow Your Business series by looking at how to set it up to scale. You won’t want to miss it, so I suggest you register here to ensure that a copy is emailed directly to your inbox so that you can read it at your leisure.
See you soon!