Why the org chart is always the first step toward greater capacity
The very first step in architecting the capacity you need to scale may surprise you. You need to take a long hard look at your org chart. If you do not address the core problems and incongruences that exist in your organizational structure, you might as well pour money into a black hole.
Spending more on marketing won’t solve your scale problems.
Hiring additional sales reps won’t solve your scale problems.
Holding team offsite and planning sessions won’t solve your scale problems.
Doing trust falls and team-building exercises won’t solve your scale problems.
These strategies (except for the trust falls) can work, but ONLY AFTER you’ve addressed the confusion and ambiguity in your ranks. For more on why this is, you can check out my previous article, Is Your Org Chart a Joke? It may be costing you dearly. For this article’s purpose, trust me when I say, you need to start with your org chart.
How to ‘start with your org chart’
The next logical question is, “what does it mean to ‘start with your org chart’?” When I consult with top leadership teams, here are the five exercises we use the unlock all of the latent potential within their people.
- Fix the org chart itself
- Shift from heads to hats
- Map out the flow of critical information
- Firmly establish your key decision-making group(s)
- Define your senior leadership team
1. Fix the org chart itself
The first step here is to track down your existing org chart. If you have one, you probably haven’t looked at it for years. That needs to change today. Once we’ve blown off the digital dust, most clients I work with will immediately notice their written chart looks nothing like the real world. To make the most of your team’s time together, I recommend having one or two people work together ahead of time to get the org chart at least roughly aligned with how you actually operate.
These org charts typically look like a pile of spaghetti. There are lines everywhere connecting everyone. Many key leaders are filling pieces of positions all over the place. Titles were initially handed out to compensate for the lack of compensation. Reporting lines and accountability are all over the map.
Taking the time to write this all out is so powerful because it lets you see, often for the first time, just how big a mess you have on your hands.
In the organization’s I’ve helped, it is here that they will all sit back somewhat in awe, and after a long pause, without fail, someone in the room asks, “How have we ever gotten anything done?” This is an incredibly critical point because it brings the team and you as a leader to a crossroad.
You can listen to that voice screaming inside you that this is a waste of time, and you have real work to do. If you do, you’ll go back to what you’ve done, and you’ll continue to get the results you already have. You may go back a change this or that or 100 things, but you won’t move forward.
You can push forward and set about the hard work of redrawing each of those lines, having the difficult conversations, and creating the structure that will finally be capable of achieving the growth you’ve always wanted.
To clean up your org chart, you need to identify what isn’t working right now and correct it. I’ve also found that it is incredibly helpful to ask what our org chart needs to look like in 5 years. Mapping out your future org chart lets you know what positions you will need to hire for or even create to get your business to the next level.
2. Shift from heads to hats
During the early organic growth stage, we appoint people to run positions. We pick people we trust and like. We typically choose managers based on their individual performance or their longevity in the organization. Then we custom mold the position to that person’s unique strengths.
As I am getting to know the internal structure of a client, I’ll ask the founder or CEO, “What does a sales manager do?” The typical response is a name, not a set of tasks and responsibilities.
The sales manager is Jane, and how do we define what a sales manager does? It’s whatever Jane does. Roles are built around people. While people are most certainly your most valuable asset and always will be, the problem is one person doesn’t scale.
To break the $10M barrier, we’ve got to define the role itself.
When people don’t have a job spec, whether it’s written down or not, if they don’t have a really clear, laser-like understanding of there roles and responsibilities, when they get into a room full of people, the quality of the decisions made by that group goes down.
This can be an incredibly difficult transition for a leader. While working through the leadership roles that the business needs, it shines a light on those leaders who don’t fit the new definition.
This leaves you with an incredibly difficult choice, do you keep things as they are to protect the relationship, or do you choose to move forward. Either option is perfectly ok if you are willing to accept the consequences. If you keep someone in a role that is too big or not a good fit, you are going to limit the ability of the entire business.
3. Map out the flow of critical information
One or two people typically make decisions in the organic growth stage of a business. Because so few people are needed to make a decision, little work is done to build the muscle of scalable information sharing. Heroic leaders thrive in this time. We pride ourselves on our agility and decisiveness.
However, as the business’s complexity and the team’s size grow, the baton starts dropping, critical information slips through the cracks, and someone makes decisions with little to no input from all those key stakeholders who will be affected by the decision.
For example, a sales team will offer an additional service as an incentive to land deals and hit this month’s sales targets. However, the marketing team had already run a different promotion, and the order fulfillment team had no idea about either of them. Customers end up getting incomplete orders, and a mountain of time and expense builds as everyone scrambles to make it right. Everyone (including the customer) is a little frustrated, but the next month hits, and we do it all over again.
To resolve this issue, we need to move to team-based decision-making. Now, this is not consensus or mindless bureaucracy. Instead, it is efficient and effective decision-making. You’ll find this switch a little awkward at first, but once you get the hang of it, you’ll be able to make decisions quickly, execute on those decisions quickly, and do it at scale.
But first, we need to identify what information and reports are required for the team to make these high-quality decisions. Then, we need to make sure that information is ready, valid, and accessible for the team when they sit down to make the decision.
4. Firmly establish your key decision-making group(s)
The next thing that you need to look at is the decision-making groups in the business. This isn’t as simple as it may seem. Where are decisions made? In the meeting, or in the meeting after the meeting? Does the Leadership team decide, or is it really the CEO and COO that decide together?
Decision making early on means getting data, usually anecdotes or individual experiences, and making a decision about it ourselves. It’s great. This approach gives us an enormous sense of autonomy and a lot of freedom.
Typically when I start working with a client, their decision-making process looks like this Information -> Execution -> Decision (IED). This ready, fire, aim approach is dangerous, and it is severely limiting your ability to scale. Now that the team is bigger and the problems are more complicated, we need a new way of making decisions.
What makes this so complicated when you first look at it is that decisions are being made all over the place in one-off ad hoc meetings, when the CEO stops by your office, or when your sales manager is punching out emails while waiting to board her next flight. The one place you are almost guaranteed not to find decisions being made is in decision-making meetings, but more on that in a moment.
So how do we start to wrap our minds around our decision-making groups?
Get your calendar out, look at the meetings you’re involved in:
- Physical meetings
- Virtual meetings
- Phone calls that are happening regularly
- Meetings that happen on the fly and meetings you schedule
- Email exchanges, slack channels, etc
Identify where the most important decisions are currently being made and where they should be made.
5. Define your senior leadership team
Now that we’ve looked at the org chart, switched from heads to hats, mapped out the information flow, and identified our key decision-making groups, you’ll probably recognize your senior leadership team isn’t quite as well defined as you had initially thought. It’s more like an amorphous group of people who are sort of the senior team, but that might depend on and vary from topic to topic.
What data can get escalated to that senior team? Just about anything. When anything can get escalated, then anything does. The senior team ends up getting bogged down in the tactical firefighting and weed pulling at the expense of focusing on the important issues that will move the entire business forward.
Defining your senior leadership team is about structuring who and what gets into the executive team and who and what does not. It’s like creating a role description for the team as a whole.Defining your senior leadership team is about structuring who and what gets into the executive team and who and what does not. It's like creating a role description for the team as a whole. Click To Tweet
We’re talking about building a clear understanding of why the team exists and what they need to do to succeed. With this understanding, you can draw a line between the issues that should be handled by the senior leadership team and those issues that can be delegated elsewhere in the business.
All those job specs we worked on allow us to create the clarity necessary to make this division or responsibility work and give us the confidence that those decision made by other’s in the organization are going to be in line with the direction of the organization and help to move it forward
And what does that do? It reduces what’s coming to the executive team and focuses on the strategic issues the business is facing.
The org chart is the hardest thing to fix in any organization. Doing it right takes time, hard work, attention to detail, and usually a few challenging conversations.
This difficulty, however, pales in comparison to the many lasting benefits of a clear organizational structure. Morale improves, clarity improves, decisions get better, execution gets faster, and for the first time in a long time, you as the leader will start to get the sense that when you push on the gas pedal, the whole business will move forward.