Building a better business in ten steps

Step 5: Get your organisational structure right

Have you ever heard the saying ‘start by getting the right people on the bus, the wrong people off the bus, and the right people in the right seats’?  The bus is rarely discussed.  What if your business isn’t a bus?  Maybe it‘s a jet boat with two seats.  Maybe it needs to be a train with multiple carriages, a great driver and a conductor connecting all passengers.

Step 5 is getting your organisation structure right.  This should allow your revenue to increase without creating bottlenecks, overloading team members, and causing errors or mistakes.  Bottom line returns should then increase at a rate greater than the revenue increase as the business becomes more efficient and achieves economies of scale.

The organisation structure shows the departments in your business, who is responsible for what (whether they’re employees or external contractors) and how the hierarchy works.  This is called the 10 hats organisation structure.

The 10 hats, or departments, are:

1.Shareholder.

2.Director.

3.Leadership.

4.Product / Service Development.

5.Operations.

6.Marketing.

7.Sales.

8.Finance.

9.HR.

10.Admin / IT.

There should be only one leader of the business, and one leader for each of the 10 departments.  One person can wear multiple hats; but there can’t be more than one leader for each department.  For example, the leader of the Admin/IT department may also be the leader of the Finance department.  Make sure that there are ‘team members in training’ to start wearing some of the hats that the business owner is currently wearing. 

Each role should have a clear job description with no more than 10 key responsibilities.  Each key responsibility should have clear tasks and KPIs flowing from it.  Remember that nobody can manage more than five people effectively, so create teams within each department (each with a team leader).

Review your structure regularly and update the key responsibilities if they change.  In other words, keep your structure as a living and breathing document that your team understands. 

Check in with your team regularly to ensure that what they’re doing aligns with your structure.  Ask whether there have been any changes in the team member’s role at each performance review.  Then make sure they are the right person to be doing those new tasks or re-assign them to the correct person.

Valuing the opinions and contributions of your entire team is hugely important.  However, having a clear hierarchy is key to avoid bottle necks, make smart and consistent decisions, and manage risk as your business grows.  It also provides clarity for the team and an opportunity for advancement. 

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