Organizational Structure: Think like a big company to be more effective

 

When small companies start, they are small. One maybe two people are running all the operations. They fulfill the roles like marketing, sales, production, finance, the CEO and Janitor. Then the organization starts to grow and somebody is pulled into the organization. Sometimes this is done through a formal recruiting process, sometimes the friend of a friend. That first hire has one thing in common, it is also a multi-tasker and just takes over a few of the tasks of the owner of the company. It is a multi-tasker that is not afraid to roll up the sleeves.

Larger organization grow often times in the same pattern. The person that wants to get rid of a task or responsibility just gives it to the person that came in last. When you look at many small businesses you meet very dedicated employees who wear multiple hats. Unfortunately many tasks that they fulfill might not something that they do because they are good at it, but simply do it because that is what the history dictated.

We all know that we have to align the employee strengths with the tasks that the company needs to fulfill. But How do you get from this tangled mess to an organization that is focussed on utilizing the strength of people and growing an efficient well oil machine?

1. Determine the tasks of the organization.

Start to write all the tasks down in one big list. We are looking for tasks like sales, delivering the services, answering the phone, bookkeeping etc. Depending on the size of your organization you can go very detailed or stay more at the big picture level. You can divide for example “delivering the service” in multiple tasks.

2. Categorize tasks

In this phase you can sort your tasks. Most small businesses can look at three four buckets.

  • Preparation
    • Everything that is being done to be able to produce a product or deliver a service, from sales to procurement
  • Manufacturing/ Producing
    • This is where you make the money, all tasks to deliver the services or to produce a product.
  • After care
    • When you do after your deliver the service or produce a product, this is handled in this bucket. Most smaller companies combine this with the Preparation bucket.
  • Support
    • In this bucket are all the tasks that an organization needs to do to run the company. Many of those tasks can be outsourced, as they either require very in depth knowledge (think CPA, legal counsel or consultants), or can do it more efficient because of the volume the company generates (think payroll, recruiting or sanitation)
    • People working in this area can most of the time easily be replaced as they don’t fulfill a core task of the business.
    • Knowledge of the task is more important than the knowledge of the organization.

3. Estimate time needed

In the third phase, you look at how much time is needed to complete each task. List the tasks that are between 30 and 40 hours. Those are full-time positions.

4. Bundle tasks

When you are now looking at your small tasks, it is time to do the hard thinking. Determine which task is so important that it needs to be done absolutely right, and which tasks can be done less than perfect. The tasks that absolutely need to be done are primary tasks. You need to decide if the task can be outsourced (most likely yes if they are in the support bucket) then outsource the tasks. If you cannot outsource the task then this is the main skill you are looking for in a person. To make the position full time you add tasks that are secondary tasks. Make sure that they are related; preventing that somebody will absolutely fail at those secondary tasks. For example, if running payroll is a secondary task and you also have a primary task for a bookkeeper, give the payroll to the bookkeeper and not to the salesperson. The salesperson is most likely not very detailed oriented, while your bookkeeper is.

When you have sorted all your tasks in a structured way. Check your organization. How many full-time slots do you have, how many people do you have and how much money can you spend on hiring people? If one of those three is not aligned, you need to go back to the drawing board. When it is aligned, you will see that creating this organization runs smoother and more efficient.

Designing an organization takes time and practise. The outcome will amaze you!