When I ask small business owners if they have an organizational chart for their business, they react one of two ways: The polite ones stare at me speechless, with their lips slightly pinched waiting for me to blurt out, “Just kidding!” so they can unleash the laughter they’ve been holding back and get on with more serious discussions; whereas the blunt ones launch into a mini-rampage about what a “waste of time” creating an organizational chart is, and how it’s only for a big business with no culture, character or soul.
To both of these groups of skeptics, it’s simply a colourful diagram that never gets referred to again.
Either way, the idea of an organizational chart for small businesses doesn’t garner much credibility when I first mention it to owners. But it sure gets a lot of attention in the end. That’s because most owners and managers don’t consider these charts as important when their businesses are very small. But I view them as tools for the long-term; detailing the who, what, where, when and why of a future team that is needed to grow the business.
We in small business tend to think we have a handle on what our company requires on a day-to-day basis. But we don’t. We usually just react to the incoming demands of the business – the fires that need to be put out at that very moment.
When I ask clients to draft an organizational chart on paper, they almost always do it backwards. They put their names on the top, with their titles and, when I push them, they include brief job descriptions and a list of responsibilities. If it’s a one-person shop, the job description is usually ‘everything.’
In larger businesses, the clients draw a line and to the left to their most senior employee, write their names and titles and so on. This routine goes on until all the names of the existing employees have been accounted for. But do you see what’s wrong with this picture?
The problem is that most owners define their business by the people in the existing positions and not by what the business actually needs. The business doesn’t need “Tom – President” and “Mary – General Manager.” And it doesn’t need to know what Tom or Mary do in a day. This way of thinking about an organization is backwards. Instead, your small businesses organizational chart should assign the names of individuals at the end of the process.
First create the title and job description on a separate piece of paper or index card so you have lots of room to include the necessary tasks. Worry about assigning those tasks later. The key is to stick to the role as it should be positioned, not how you think it’s currently being fulfilled by an existing employee.
For example, “President – Responsible for: strategic direction; hiring of senior managers; financial oversight; key customer and supplier relationships; operational oversight including sales and marketing.” Then you can list your tasks. But keep them limited to the work above as expected by a President of a company, not what extra work you happen to do as the President of your company. Next do the same for VP Marketing, VP Finance, VP Sales, all the way down to shipper, receiving, inventory control, building maintenance and cleaner.
Only when you are done the above should you start adding names to these positions. The smaller the business, the more often you will find your name on these jobs.
When a small business owner with the title of President is cleaning the toilet, she is not actually doing the work of a President, she is doing the work of a cleaner. As the business grows, that piece of the organizational chart will have someone else’s name attached as you hire and delegate. Meanwhile, you now have an organizational chart that shows how vast and varied the responsibilities of your business are. And somehow, in your eight, 10, 12, 14, 16-hour work day, a little bit of time needs to be applied to all those needs in your business.
In the future, however, you have a clear road map of the positions that need to be filled as the business grows and what the business requires from those people – as opposed to what the people in those roles do for the business. When you hire, you will be filling the business need, not fitting someone into the business.
No matter how small your business, an organizational chart will provide a sober picture of what the business needs from its staff and opportunities for delegation and growth in the future.
Chris Griffiths is the Toronto-based director of fine tune consulting, a boutique management consulting practice. Over the past 20 years, he has started or acquired and exited seven businesses.
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