Let’s talk business structure!

Every business, large and small, has an organizational chart, whether the chart is documented or not. One of the differences between a high-performing organization and a low-performing organization is how effective they use their organizational structure.

Does Your Organizational Structure Hurt Your Business?

In a high-performing business, the organizational chart is much more than a reporting structure. An effective organizational chart is one that serves two purposes:

  1. Clearly defined communication flow
  2. Clearly defined of accountability (via measurement)

Does Your Organizational Structure Hurt Your Business?Let’s take a look at a basic chart:

In the top box are the shareholders of the organization. Their primary interest in the business is return-on-investment. Going down the chart, the next box is the CEO/President. For most small businesses, the business owner is both the CEO and the President. They serve to build a great team using the 6-Keys To A Winning Team (which is a topic for a future blog!) and drive return-on-investment. The boxes under the CEO/President represent the four-key functional areas of the business: marketing, sales, operations, and finance. 

So let’s take a high-level look at these four functional areas.

  • Marketing – generates leads through targeted promotions
  • Sales – cultivate and maintain relationships with customers
  • Operations – ensure customer satisfaction by delivering high-quality goods/services on-time (or early!) and on or under budget
  • Finance – a catch-all for the backbone structures of the business, including A/R, A/P, HR, IT, etc.

While this seems pretty straight-forward, it is much more involved in practice.  There are two main challenges that organizations have when building an organizational chart:

  1. Confusion in who “owns” what role
  2. Assigning tasks rather than delegating responsibilities and ownership

These practices muddle not only the communication pathways but the structure of accountability. We see this often in smaller companies when the marketing and sales fall into one box with one person responsible for both functions. The staff member in this role will often find themselves with competing priorities, and it can be difficult to determine where to look when there is a problem with, for example, a lack of sales. Is it ineffective marketing or a flawed sales process? Or maybe even a little bit of both?

Another common example is when multiple team members are given ownership of one box.  In short, if more than one person owns it, then nobody owns it. Having too many cooks in the kitchen leads to a never-ending blame game and a lack of follow-through.

If your business is not achieving the results you want, perhaps it’s time we take a look at your organizational structure.