THE OLD FAMILY TREE

By Paul Winters

Have you objectively analyzed your organizational structure recently? Has it been over three years? Have you grown 25% or more? Are you and your key people working harder and longer and you just don't seem to catch up?

If you answered yes to any of the above questions, it may be time to restructure. It is an often overlooked cure to many operational problems.

Remember the good old days, early in the Family Tree? If something needed to be done, the person who was either closest or best suited just did it. There was limited structure and that was fine---then.

As you grew that didn't work any more. Sheer increase in volume meant more people. Not everyone knew about every problem, and roles had to be assigned. Delegation, supervision and review were new issues you had to deal with.

Organizational structures evolved from the multitude of requirements for running businesses. Generally, the size of the company has little bearing on the issues confronting them. Smaller companies tend to ignore some issues due to the cost-to-benefit ratio.

Structures for larger companies are generally focused on functional responsibilities. Typical areas, or departments, are marketing/sales, human resources, management information systems, finance, engineering and manufacturing/distribution.

Due to sheer volume, large companies have people assigned to specific departments, and each individual assigned to a specific job. In smaller companies people tend to wear many hats in several functional areas.

The need for restructuring doesn't happen over night. It is sometimes difficult to recognize. Everyone is working hard, but you just know things aren't quite right.

Recognizing exactly when you reach that point is truly a judgment call. If you are starting to question the need, it's probably time.

When you have to do it, here are some common sense rules to guide you on your path:

1. Recognize up front that your employees will be sensitive to a restructuring. Right or wrong, people can be territorial about their jobs and don't like changes in their routine.

2. Recognize that your structure is evolving towards that used by larger companies. Pick a company whose success you admire and use their organizational structure as a bench mark to guide the development of yours.

3. Remember that the structure is a means of achieving your business mission and your objectives. It shouldn't be created to satisfy anyone's ego.

4. Have your employees prepare a listing of their duties and the amount of time per week and per month each duty consumes. You may require them to track their time for a representative period of time. This can also reveal activities that should be eliminated.

5. Assign each employee a primary function in the company, e.g., sales, accounting, etc. The determination of the assignment should be based on their specific strength, training and background.

6. If, in your judgment, employees have capacity beyond that needed for their primary functions, assign them additional responsibilities.

7. Continue assigning responsibilities up to 85% of their capacity. The balance provides capacity to react to emergencies and unexpected opportunities.

8. Attempt to keep the additional assignments within the same department. This avoids having multiple supervisors for an employee.

9. Now it is time for a reality check:

•Are all the duties assigned?

•Does the structure now support the business mission, objectives and goals?

•Does the structure make economic sense?

10. The final and most important step is to communicate the structure to your people. They must be absolutely aware of what you think their primary function is.

An effective and efficient organizational structure is an important strategic tool in the competitive marketplace. The ability to respond quickly to your customers' needs and to changing market conditions is a primary benefit of a good structure.

So remember shaking the Old Family Tree is a healthy exercise that you should periodically perform.