Typically, when you start out as an entrepreneur, you are a company of one. However, when you draw up the organizational chart to describe your business, it is no different than the organizational chart for a much larger business such as General Motors, General Electric or Microsoft.
You have a CEO, a COO, a CFO, the Vice President of Marketing, Vice President of Administration, Vice President of Operations, Vice President of Information Technologies, and so on. Often, in the start-up phase of building your business, your initials are in all of those boxes.
Now, you may do all of those jobs. Or, if you’re like most entrepreneurs, you’re going to neglect some of the functions required to build a successful business because you do not enjoy those tasks or value them. The problem is that over time, these are usually the areas that come back to bite you.
Structure is the system of roles, role relationships and policies that define accountabilities and authorities within the organization. Within a one-person business you occupy all of those roles and role relationships. As you grow the business, you need to recruit the right talent and assign roles.
Part of the process is to establish the accountabilities and authorities of each person on the team.
The Four Aspects of a Role
- Where is the role relative to other roles in the organization chart? Who will the employee manage? Who will the employee’s manager be? Who will the manager’s manager be?
- What is the level of work in the role? Is this a Stratum I role? Is it a Stratum IV role? Over time you will develop a sense of the stratum of a role. The Stratum of a role is determined by the complexity of the work and the time frame to complete the longest task. At first, try to identify the length of the longest task in the role. This may not always be obvious, and you may need to judge whether this is front-line clerical work (Stratum I), or the complexity of a manager of front-line work (Stratum II) and so on.
- What are the areas of accountability (functions) of the role? These are the types of tasks that the manager might assign the employee.
- What relationships does this role have with other roles in the organization?
Defining Your Role
If you are the owner of the business, there are only two issues to consider about your own role. First is stratum, and that is very challenging to determine yourself as it is difficult to assess one’s own level of cognitive capacity. The starting point is to ask yourself how far into the future you have a vision of your organization – a vision that you can actually start working towards today.
If you are 50 years old and see yourself selling the business when you retire at 65, that does not constitute a 15-year vision unless you can say what your plan is for selling the business and what you are doing today to make that sale happen. Try not to let your ego get in the way of an honest assessment of the longest task in your role which will most likely be the furthest-out vision for your company that you can effectively work towards.
The other issue to clarify is which functions of the organization you will delegate and which you will carry yourself. You might decide to have a Marketing Director to whom you can say, “Here is where I want us in our market in 18 months. Make it so.” You might instead decide to carry not only the vision for marketing but also the strategy so that you determine how to get to that 18-month vision and at most delegate specific tasks to help get you there, for example, “Get us a table at the conference in April and prepare the handouts for it.”
Recruit the Right Talent for Roles
Once you have defined a role you need to determine the capabilities an employee needs to be able to succeed in the role. The stratum of the role tells you the level of cognitive capability required by an employee.
From the areas of accountability you can determine what skills the employee will require. You will explain to any candidate for the role what type of work the role will require and what a typical day would look like.
They need to be able to determine if they will value the role sufficiently to commit to the work in it. Obviously, you will wish to avoid anyone with personal dysfunctions that will prevent them from working effectively in the role.
Most entrepreneurs start out recruiting good people and then figuring out how to use them. But to build a sustainable business, you need to hire someone who is able to fulfil the requirements of a role.
If the person you hire lacks the cognitive capacity required for the role, doesn’t have the needed skills, cannot develop them as soon as they are needed or will not commit their capability to the work in the role, then the tasks that should be assigned to that role will not get done.
As those tasks come from your strategy, your strategy will not be implemented. Given that your strategy is your way of reaching your vision, you will not reach your vision. It is that simple.
In a small, start-up organization, coordination between roles can come through good will. People help each other out, and employees without “team spirit” find themselves without employment. But as the organization grows and as your vision, strategy and structure become clearer, you need to clearly articulate how your people work with each other.
This happens in two ways:
- First, you need to tell those whom you manage directly how you want them to work with each other. Everyone in your senior team must be clear about the vision you are driving towards, your strategy for getting there and their part in implementing the strategy.
- Second, you need to explain how the work should be coordinated. Do you want your marketing manager to check with your sales manager before putting a program together? Do you want all products to be checked by the marketing manager to ensure they have the look you want? The over-riding context for how your team members will work with each other comes from your vision and strategy. When one of them needs help from the other, when one of them asks another to change how they approach a task, they should ask themselves how you would want them to work together. If they are not clear or if their answers differ, they should check with you.
When you have three or more layers in your organization, you may need to be more specific about working relationships two or more levels below you.
For example, you need to be clear about who in the company can get what services from the Director of Marketing and whether the Director of Marketing has authority to stop someone from marketing in an unusual way.
If you do not specify these working relationships, the outcome of any disagreement about how to work together will be determined by who has the stronger personality rather than by the needs of your strategy.
Your vision for your business is shaped by the role you want to play. In turn, strategy will be determined by your answers to the questions: What role do I want to play? How big do I want to become? The required structure for your business is based upon your vision and strategy.
To learn how to structure your business to align roles, establish accountability, and drive performance and productivity, download our free eBook Structure Your Business for Success.