Time For a New or Evolved Organizational Structure? Five Success Factors To Consider

People, processes, and systems – that’s what is needed to execute your business plan. I always like to start with people, the most important. Whether you are at the $10 Million stage or the $1 Billion stage, a well thought out organizational structure is crucial.  And, whether you are developing your senior team or a functional area, such as merchandising, the following five factors will help insure your success:

  1. Do the “boxes” first – that’s what I always say (and do). Meaning, start with the jobs “not” the people you currently have in place. All too often we have seen organizational structures developed around “John’s skills”, as an example. This type of planning leads to inefficient organizations, not to mention the crisis when John gets promoted or leaves. This does “not” mean that you don’t need your current team. But, by beginning with the “boxes”, jobs, you will ultimately set your team up for success.
  2. Before you can develop effective “boxes”, jobs, you’ll need:
    •  A solid list of key metrics to affect.
    •  Tasks or functions that need to be done.
    •  Business processes needed to complete tasks and affect metrics.
    • Cross-functional interactions needed to complete tasks and affect metrics.
  3. Once you have the “boxes” initially developed based on metrics, tasks, business processes, and cross-functional interaction the fun begins.
    •  You don’t want an organization that has too many levels.  It takes too long to get things done and it can limit “ownership” by the employees. Positions can be staggered so that there are not too many levels but there is room to grow in positions and responsibilities.  This means there may be a director position in one area but a manager in another. No need for every area to have both. "Hand offs" in work flow, or business processes, should be as limited as possible.
    • On the flip side, you don’t want an organization that is too “flat”, meaning too few “levels” and too many direct reports. A rough guideline is about six to eight direct reports for each manager.  Less than this can create too many layers and doesn’t add much value. Generally, it’s hard for managers to effectively manage many more than this.
    • Make sure there is room to grow in the organizational structure – for your organization and for each employee. It’s a good idea to lay out your current organization, proposed new organization, and a future organization - one or two years from now. This helps manage your organization to the next level.
  4. Now that you have the “boxes” it is crucial to complete job descriptions for each “box”. These need to include: metrics, tasks, business processes, key interfaces (or cross-functional interactions) along with the qualities and qualifications of the ideal candidate.
  5. Now you are ready. With a realistic assessment of each of your current team members, you can place them in the most appropriate “box” . During this exercise, you will also see where you may need to hire new talent and/or transition a team member to another area.

Having utilized the five success factors, you have set up each employee and your organization for success. Each team member is in a job with clear roles and accountabilities – a job they are suited for. And, you have developed room for the organization to grow along with promotional opportunities for your team members - a wonderful incentive. Next steps include a clear communication plan, transition plan and a 90 day follow up.

Good luck. I’d love to hear about your organizational needs. I can be reached at Janice@JLSearsConsulting.com or 206-369-3726