“The way people are organized in a business enterprise can have a critical impact on overall operating effectiveness, efficiency, and in turn, bottom line profitability.” Eric Flamholtz
“Why do I need an organizational chart?” I was asked by a Company President. “We only have 10 people!”
“That’s true” I replied. “As way of an explanation, let me ask you a few questions. How serious are you about getting back in control of your business?”
“I’m serious about change. Is that the answer you were looking for? We can’t keep going the way we are going. I’m overwhelmed keeping up with everything” was the reply.
“I get it” I said. “However, have you thought about how to consistently meet the needs of your customer better than anybody else? And, have you thought about what the business would look like if it was really hitting on all cylinders?
“No.” the Company President answered. “I’m putting out fires all day long. And doing the work that needs to get done. There just isn’t time to do anything else.”
“Of course. I get that too.” I continued, “Are standards and responsibilities clearly defined for each role? Not just each person? And, are the accountabilities clear as well? Generally speaking to best serve your customers you need to be sure everyone doing what they are supposed to be doing. That applies to both internal and external customers.”
“Well, kind of, sort of” was the answer. “I have it mostly in my head. Except not to the extent you just described.”
I wanted to scream: “This is the reason you feel like you are losing control and overwhelmed!”
AN ENTREPRENEURIAL TOOL
An organizational chart is a critical entrepreneurial tool. It is the result of thinking about what positions are required in your organization. In addition to all the work which needs to be done. NOT what the organization needs to look like now. Rather what it needs to look like to operate profitably in the future. As Covey would say, starting with “the end in mind.”
From the organizational chart flows:
- The results to be achieved by each position,
- The standards by which each position is held accountable, and
- Which position is accountable to which other role.
Symptoms of lack of standards and accountabilities are:
- Being overwhelmed,
- Duplication of work,
- Things falling through the cracks, and
- Customer dissatisfaction
Here are the positions an organization of even the smallest size should have on their ORG chart:
President/COO- Responsible for determining and the overall achievement of both short and long term organizational goals.
VP Sales and Marketing- Responsible for attracting prospects. And turning prospects into customers. Equally important is determining what customers really want. Then providing messaging using words that your ideal client would use. Reports to the COO.
VP Operations – Responsible for delivering what is promised. Also continually providing the best service to customers. Reports to COO.
VP Finance- Responsible for budgeting. In addition, managing the P & L, and balance sheet. Reports to COO.
Sales Manager/Customer Service Manager/Professional Seller- Report to VP Sales and Marketing.
Production Manager/Service Manager/Facilities Manager- Report to VP Operations.
Accounts Receivable/Accounts Payable- Report to VP Finance
Most of the work which needs to be done in an organization is described above. Yours might vary a little. You should develop a summary of the results expected by each position and the accountabilities once you have identified the positions that are necessary.
A point often overlooked is that you and your people may be responsible for more than one of the roles. It depends on how many people are in your organization. Here is an example of what your org chart may look like:
You are missing out on a huge opportunity to grow if you haven’t taken the time and effort to create an organizational chart for your company. It’s important to realize that standards can be measured once they have been defined for each position. And what gets measured can get improved. Continually improving is what leads to your organization being remarkable. As a result your organization will have a competitive advantage! Simple. However, not simplistic. Create your organizational chart today.
Growing organizations face common challenges. Does yours face any of these? Download “Measuring Growing Pains” here.