Every smart business owner knows their degree of business success rests with the quality and skills of their employees. But unfortunately, in both my strategic planning facilitation with growing, highly successful companies, and my brokerage work with owners moving on to other endeavors, I find ineffectual and even dysfunctional organizational charts. To be perfectly frank, I find lots of good people boxed into outdated jobs.
To stage your company for even greater profit this year, it is vital to scrutinize and optimize three critical success components: your organizational structure, your performance expectations by job function and your reward system. This article is the first in a three-part series. Today, I will deal exclusively with organizational structure.
I also want to give you fair warning right now — this article is not one you should simply glance over. If your current time is limited, I encourage you to go ahead and skim through, but be prepared to come back to this article later to actually do the steps. To get maximum benefit, it’s going to take more than a skim-through read. If the article resonates with you, commit to making the time to complete the five action steps. When you do, you’ll be blessed with a bigger bottom line and happier employees. So, let’s get started.
Organizational Structure
Unless you are a first-generation marketer, it’s likely you inherited your current organizational structure. At most multi-generation jobbers, somehow over the years people’s titles and positions became sacred cows. To take that view in today’s changing marketplace may be lethal. Why? Because the marketplace has changed dramatically, and you can’t go to market the same way your grandfather did and still survive! To achieve maximum productivity and profitability, your organizational structure needs to reflect today’s marketplace, not yesterday’s. So, here are the five steps you need to take to propel your company to the next level of achievement:
Step # 1) Detailed Long Term Vision. You first step is to write down the detailed vision you have for your company looking five to ten years into the future. Include:
a. Customer base. What types of customers, industries, etc. will be the prime profit-producers for you in this five to ten year time frame?
b. Products and services. Again, think maximum profits, but also think about your company’s true differentiating strengths. What are you currently best at? Dealer supply? Home deliveries? Car washes? Rural convenience stores? Bulk oil? Expand your products and services thinking into “possibles” not just what you do now.
c. Delivery methods. Next, how will you get your products and services to your various customers? For instance, with retail customers coming to you, how will you get them there and what will the delivery look like?
d. Administrative support. Now that you’ve determined customers, products, services and delivery methods, what support would be needed to provide the highest quality customer experience? Again, think outside your current positions into logical functional areas. Don’t move to step number two below until you are completely satisfied with your vision!
Step # 2) Key Positions Based on Detailed Vision. To complete this second step, you’ll need a pad of 3”x3” sticky notes. Stop now and go get them. Now, with your sticky notes pad in hand, and with no thought or concern about who you have in your organization right now, create each key position you believe would be necessary to fulfill your vision at the highest possible quality level. You’ll use one sticky note per function. Don’t worry about eloquent titles right now. Simply identify all the key functions that must be fulfilled.
Step # 3) Functional Organizational Chart. Now it’s time to place your stickies into logical order on a sheet of paper with the goal of something that resembles an organizational chart. Again, force yourself to think outside of your current structure, instead thinking about what makes sense for your vision. Focus on functions not people. What function should report to what function? As your org chart begins to take shape, remember that five to seven direct reports is the recommended maximum for any one person, executive or lower managerial, to handle effectively.
Step # 4) Match Existing Personnel to Functions. For this step, you’ll need another pad of even smaller sticky notes (the 1” x 2” are ideal and it’s best to use a different color than you did for your functions). This time, as you study each function, think about your existing staff — their skills, talents and natural abilities. As certain people come to mind that could best perform the function, write their name on your smaller sticky notes and affix it to the function. (I’m having you use sticky notes so you can change your mind and move personnel easily until you are satisfied.)
Since your functional org chart is for your 5 to 10 year vision, you may not have the resources (people or money) for a separate person in each function. Therefore, right now, you may have one person covering two or even three or more functions today. You’ll have clarity, though, that as your company grows, those functions need to be separate functions and will eventually be split out as you grow and have the ability to hire more qualified personnel.
Step # 5) Redirect, hire and if you need to, fire. If you’ve done the preceding four steps diligently, it’s entirely probable you just realized exactly how much work you have cut out for yourself! You may see clear keepers, keepers you have in the wrong organizational spot or function right now, and some employees that in your heart of hearts you know don’t fit in the plan anywhere.
Please realize you absolutely must make all necessary changes. Companies I’ve worked with that have completed these steps tell me they are amazed that the people they’ve had to let go were as relieved as they were. Simply design a fair severance package if you don’t have one already, then apply it consistently. Rest easy that your courage will bless your entire organization including the people you let go. You are allowing them to go find a position with a better skill fit where they can feel more accomplishment and achievement.
Overcoming Obstacles to Reorganization. One of the concerns I hear from CEOs overhauling their org structure is fear they won’t be able to find the people they need. To widen your pool of potential resources, I would encourage you to consider bright candidates from outside the petro industry. If for some functions you absolutely feel you will need someone with petro background, a good recruiting firm like Energy Recruiters (www.er-inc.com) can be a huge help.
A second concern I hear voiced is fear of losing people you don’t want to lose. Again, let me reassure you. If you are thoughtful about how you approach buy-in, my experience is 100% retention of the “keepers.” Begin by sharing your long-term vision with the keepers on your current executive team and soliciting their input. Inform them of the first two steps of the process – how you determined the 5 to 10 year vision and then the functions you created based on that vision. Get their input. They may improve upon your initial pass at the org chart.
Next, meet one on one with each member of your team to see where they see themselves fitting. If they see themselves in the slots you chose for them, you are off and running. If they see themselves differently, this gives you an excellent springboard for discussion. They may have previously non-disclosed desires and talents you need to explore, or they may lack the confidence and skills to tackle the position you want them to handle. By acknowledging this now, and coming up with a plan, you’ll have successful implementation.
In summary, sound organizational structure is absolutely critical to high functioning, high profit businesses. In my next two segments in this three-part series, I’ll provide you with a game plan for your next two steps, Performance Expectations by Job Functions, and High-Empowerment Reward Systems.