To build and grow a successful company, leaders must make sure all key business functions—from strategy, structure, and process to rewards and people—are humming along as one big integrated, interdependent system. Even one area of misalignment can jeopardize your business, leaving it at risk of toppling like a stack of badly placed hay bales.
Last month, we explored the importance of aligning the whole team around your company’s strategy—its mission, values, objectives, and goals. (Read the post here.)
Today, we’ll again use Jay R. Galbraith’s Star Model ™ as a framework to ensure your business is aligned and functioning smoothly, particularly regarding structure.
What is structure?
The structure of your business comes down to one key thing: identifying who is accountable for what. This can be demonstrated through organization structure (or chart), decision-making authority, and job descriptions.
More than just boxes, titles, or lists of responsibilities, the structure is an important strategic roadmap for your company. A well-thought-out, truly tactical structure operates in tandem with your business goals and, like a strong and healthy spine, provides ongoing support as your company grows.
When we partner with clients, we often find org-chart kinks and misalignments that, like a bulging disc in an aching back, cause undue pain and tension in the business. Ouch. A healthy company structure includes:
1. Ownership of metrics. Remember, “What doesn’t get measured doesn’t get done.” So, every team (and company) needs a point person to own, track, and communicate progress on each goal. Take the time to identify who has the responsibility and authority to affect and impact the metrics within each role or job. If more than one role is responsible for a certain metric, clarify what part of the metric each role owns.
At a feed mill, for example, the manager may “own” a metric on the mill’s profitability or margin. Mill operators, on the other hand, directly impact production, not profitability. Their key metric, which they own and drive towards, might be a reduction in unplanned downtime in the mill.
2. Decision-making authority. Clarify what decisions need to be made and by who. Make sure individuals are empowered to make decisions that drive the metrics they’re responsible for. Does each individual have the authority to make the decisions for which they are responsible?
3. Job descriptions. Typically, business leaders and managers view job descriptions as a list of tasks or responsibilities. Go further by ensuring the tasks or responsibilities directly align with the metrics and success of the role. Once you identify the metrics and decision-making authority, create job descriptions that integrate the behaviors and responsibilities to achieve those goals.
“Everyone is responsible”
How many times do you say or hear, “We work as a team” or “We’re all responsible for that.” It’s a nice idea—and a risky business strategy. Recently, we worked with the owner of several feed and farm supply stores who was concerned with the amount of overtime paid to a few key employees. Turns out two different managers were providing work direction and BOTH managers were assigning and approving OT to employees. Since neither manager truly “owned” the metric on effectively using resources or managing labor hours or spending, their behaviors and decisions around overtime were undermining the broader business goals.
Who’s on first?
Here’s another example. We frequently hear clients say, “Our location manager (LM) has FULL responsibility for their site.” As the org chart and job description show, the location manager handles everything from customer relationships to budgeting to scheduling. Great! But … are they really in charge?
In many cases, we find the general manager (GM) makes the final hiring decisions. Or, the GM, not the LM, disciplines employees when needed. Uh-oh. These kinds of discrepancies can cause “Who’s on first?” levels of confusion, friction, bottlenecks, and miscommunication.
The ensuing problems may include an unstable company culture with no obvious leader or point person; confused employees who may question the LM’s authority; frustrated managers who can’t truly set the tone (or the rules) for their site; and decision-making bottlenecks that undermine productivity and efficiency. Inevitably, leaders and owners get pulled into the day-to-day operations IN the business, rather than being able to focus ON the business.
As you can imagine, it’s a bit of a mess.
Get smart (and strategic)
We encourage clients to develop their structure—org chart, decision-making authority, and job descriptions—based on the broader business strategy, not just on daily work and tasks. This ensures roles and responsibilities are assigned based on people’s strengths and expertise—a must for keeping a company moving forward.
Worth noting: It’s not unusual to find that many people are responsible for various aspects of the business, but no ONE person is responsible for the broader vision of success. Red flag! Remember, when everyone is accountable, no one is accountable.
To avoid this problem, ask yourself these questions:
- What are the key goals and metrics for the business?
- What role is responsible for that goal or metric (or a portion of that goal or metric that they can control)?
- Does each role/job have metrics assigned to it? Do those roles have control over the things that impact the metrics? Are there too many metrics?
- What decisions does each role need to make to fully own the metrics? Do those decision-making authorities match what is currently happening in the business?
- What does the person in the role need to do to achieve those metrics? While answering this question will result in a list of tasks and responsibilities, they will be strategically aligned with your goals and metrics.
Answering these questions, and thoughtfully assessing (or, when needed, reassessing) your current org chart takes time, energy, and resources. But when the result is a company structure that’s stable, strategic, and aligned with your business goals, the effort is always worth it.
Did you find gaps or possible misalignments with your strategy and goals? Email Erin at erin@peoplesparkconsulting.com to talk about how these are showing up in your business.