For many years, I’ve begun each annum with my clients by helping them answer the Seven Questions, some simple keys to basic planning for the year. This year the questions have been picked up by my friend Jim Blasingame at the Small Business Advocate, with his column reprinted in the Memphis Commercial Appeal, and are scheduled as a feature in January’s Tips From the Top, the national newsletter of The Alternative Board®.
With our clients, I’ve begun to incorporate the Seven Questions into a one-page (actually one-sheet, since it is on two sides) form that considers a number of additional factors. One of the items, and perhaps the most important after SMART Goals in planning, is a functional organizational chart.
Many small companies fail to achieve their goals because they lack sufficient quality in human resources. Simply put, they don’t have the horsepower to get them to the objective. Goals are fine, but if they depend entirely on the owner to accomplish, then their probability of successful implementation decreases dramatically.
Our functional organizational chart doesn’t focus on the operational role or job description of the employees. Rather, it asks the owner to look at the level of decision making, autonomy and responsibility of each member of his or her team. There are five levels.
Owners: In some companies partners or other shareholders bear some of the responsibility for implementation. Owners can be presumed (most of the time) to have aligned interests in making the company successful. In a good partnership, each owner can depend on the others to handle some aspect of the business entirely.
Independent Decision Makers: These are employees who run some segment of the business, or perhaps all day-to-day operations, without having to ask permission for their actions. They can dramatically impact profitability with their decisions, and have the authority to create or change processes. Every company should have at least a Second In Command (SIC) who answers only to the owner, and is compensated based on success. If you have more than one Independent Decision Maker you have a much better chance of growing the business. If you have none, finding or developing one should be your top priority.
Dependent Decision Makers: These are the middle managers and supervisors, who make decisions that affect profitability, but do so in a structured environment. They can’t make up new systems without running them past those to whom they answer, but they can determine the proper course of action within their area and prescribed processes.
Independent Implementors: These are the employees who act without ongoing supervision. They don’t have much flexibility in what they do, but have to be trusted to do it on their own. Salesmen, project managers, route drivers and foremen might all be examples of Independent Implementors.
Dependent Implementors: These are your first level, task based employees. They are expected to accomplish regular or routine work, according to documented systems and with regular supervision. For most of my clients, this level is filled in with job categories like “warehousemen” or “customer service representatives” instead of individual names.
Dividing your employees according to their autonomy can be a eye-opening experience. Some of my clients realize that the people just below them on the company organizational chart are actually two or even three levels down in decision making capability. Nominal SICs turn out to be dependent on the owner for ongoing guidance and support. That gap is a strong argument for why they are having difficulty in reaching their annual goals.