Top seven reasons smart business owners have an organizational chart

As a small business coach, I have most certainly heard every conceivable argument against having an organizational chart, from “we are a team here” to “organizational charts are all about power and control” and everything in between.  What about why you should have one? As a small business, it is a good idea to have a future organizational chart as well as current one. Yes, even if you only have a few employees. Here is why:

 

1.      Creating an organizational chart usually leads to better role descriptions and ease of accountability. An organizational chart diminishes ambiguity around who is accountable for what.

2.      You will have a hiring strategy versus waiting till you have to have someone.

3.      When people know what they are accountable for and to whom, they are empowered to be responsible for their part. 

4.      When people can see what future roles will be available they can see a future in the business and will less likely feel like they are in a dead end job.

5.      Employees will have a gap between their current skill set and the one needed to fill future roles.

6.      Clear job roles and lines of accountability increase the chance of appropriate communication to someone who can make a difference with issues.

7.      You can strategically design an organization that allows you some freedom and even better, your employees can see your vision.

 

 

Sound good? So, where do you start? Begin with the end in mind or at least a few years down the road.

 

Close your eyes and imagine that its _____ (fill in the year). You and your team have built a great business. This business allows you to take time away and provides you with a fabulous income.  You are no longer the bottleneck of the business; day-to-day activities are done without you. You only hold a few key roles accountable.

 

 Now, ask yourself what revenue are you on track for?  

 

What roles will be full time in 20_ _ (three years from now)?

What roles will you have let go of by then?

What roles will have to be split up?

Who are your key reports?

What roles would be better off outsourced?

How will you measure the success of each role?

What is each role accountable for?

 

Using a blank sheet of paper (or go to Microsoft Word) and the title cheat sheet at end of these instructions, start with your projected revenue in 3 years. Based on that level of production, utilizing what you know about operating costs and salaries currently, what roles are needed and wanted? Draw them on the paper or add boxes in the word document. You are obviously guessing a bit and that is okay. This can be tweaked as you think things through and grow your business. 

 

Avoid the following:

·        Names of people (just put the role down).

·        Having more than three key reports.

·        Having one person in charge of everyone.

·        Overstating the job title, the job title should be appropriate to the job level and scope of work.

·        Adding more people than the business can afford.  

 

Now that you have a three-year chart …back into two years and then create the 2- year chart and the one year chart.

 

This is not a one-time exercise, it should be revisited at a minimum annually to tweak and revise as you grow your business.

 

See sample org charts and job titles provided. For more on organizational strategy visit our podcast to listen to our strategic planning course.

 

Alicia Marie Fruin

Business Owner, Coach, Trainer 

 

www.profitconsultingco.podbean.com

 

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