Primary Implication
Your business will only make the money it should if those in your employ clearly know who they are accountable to for their job-specific accountabilities. Use your business structure to establish the roles your people exchange their time, talent, and efforts to fulfill in exchange for the wages you pay them.
Knowing “what my role” is is the first part of having your Org Structure enable your business to make more money. The second part is clarifying who they report to each employee and how they and their manager will know they are earning their pay.
Overview
The only way a company and those in its employ make more MONEY is when the PEOPLE involved hold themselves and each other “ACCOUNTABLE” for results as individuals, a team, and a company. It is how you establish who is accountable for what in your business is framed by your Org Structure.
Traditional Org Structures for small businesses are functionally structured around Sales, Operations, and Finance. Few businesses are large enough to have divisional, matrix, geographic, or decentralized team-based organizational structures supporting their business model.
The critical consideration in confirming who reports to who starts with a chain of command skill specialization. Your goal is to have the most accountable person for an area of the business manage that portion of the business, with those working in that skill specialization reporting to them. You want a person who is accountable for results to own the results of your most important business areas. Accountable people are more likely to push for action changes to get the desired result rather than give up on a planned result when the going gets tough.
The next consideration in reporting relationships reflected in your Org Structure is the span of control that exists for those managing the actions and output of others, either being paid a wage by you, on commission, or a significant expense for your business. Anytime a manager has too much to do and oversee, you have a manager set up for failure. You want your span of control to be just that controllable.
The goal of your Org Structure is to hold people accountable for what’s in their control. You know you have correctly defined the roles in your Org Structure when planned results can be made black and white. Either it was achieved, or it wasn’t. Anything outside of a person’s control robs them of the opportunity to be fully accountable for the results of their actions.
Poorly defined roles and reporting relationships make it too easy for nonaccountable people to deflect from what they didn’t do with excuses tied to things outside of their control. When you have accountable people in the right role with clear accountabilities, they rarely talk about what they didn’t realize. They would rather talk about what they will do differently to realize the planned results by tweaking their actions until they get the desired result.
A few thoughts on the design and development of your Org Structure:
- Business is easier when it’s Black and White. What makes business complicated is shades of gray.
- People crave clarity and definitiveness.
- Problems diminish when you remove fuzziness and uncertainty.
- Use questions to confirm black or white and either or understanding. Vague answers are not agreement. Yes or no is clear.
- Responsibilities and accountabilities that can be proceduralized can be delegated. It can be delegated if it can be turned into a metric, form, plan, or process.
- Key to profit growth is resolving the #1 constraint, followed by the next one and the next one within a given area of your Org Structure.
- Should, could, would, and if are all business profanities spoken by those not wanting to be held accountable for results by the person they report to.
The people tied to your business are the reason why you earn superior profits with cash reserves in the bank or struggle financially. Fail to position your employees with the management support to do their best work, you will have serious disconnects that lower sales and increase costs. When this is the case the business will make less money 100% of the time.
Avoid this mess by being aware of who your best customers and employees are, what they expect from you, and what you should expect from them to make more money; then, structure your organization to consistently deliver what the people most important to your sales and profits expect when doing business with and for you.
