Fourth in a 6-part blog series from Steve Lantz, Strategic Business Advisor
In this series, we are exploring five fundamental principles any manufacturer should master to successfully grow. Now that you understand the segments of your business and have agreed on a strategic plan that defines your short- and long-term objectives, it is time to make sure your organization is designed, or aligned, properly to achieve those goals.
When we talk about organizational design, or organizational alignment, our main goal is to make certain you have the right people, with the right skillsets, in the right positions, to ensure your company is prepared for fulfill the goals outlined in your strategic plan. Many owners and executive teams assume their business will simply adapt as needed, but organizations don’t scale naturally. Addressing your organizational design is a continual process that must be managed proactively. Successful business owners maintain a vision of where the company is going next, and what personnel moves or adjustments are needed to get there.
Discussing the design of your organization may not seem as fun or inspiring as mapping out your strategic plan. It involves analyzing the people on your team – their performance, strengths, weaknesses – and sometimes it involves difficult decisions. But this doesn’t need to be a disruptive process. I often find companies already have most of the pieces they need, they just aren’t always in the right places. Sometimes a few tweaks, or one or two key hires, is all that’s needed.
To help guide companies through this exercise, I have developed The Organizational Clean Sheet Framework. This exercise walks employers through three stages and nine steps to identify and address any gaps to align your organization with your high-level goals.
The Clean Sheet Process
Stage I: Document the current state of your organization. This step is all about looking at your company as it exists now. On a whiteboard or piece of paper, list all the job functions of your current staff, the names of the people who are currently in those roles, and to whom everyone reports. Look for anything that doesn’t make sense. Are you lacking structure as a company or within a specific department? Are there obvious skills gaps or personality conflicts causing people to be in roles that are misaligned with your goals? Or do you have multiple managers with conflicting interests overseeing the same people? By identifying these constraints, you can start to come up with a plan to address them.
- Step 1: Brainstorm all the functional requirements of your business as it currently exists.
- Step 2: Create a current organizational chart with the names of every employee, their function, and reporting structure.
- Step 3: Assess your reporting structure for any inconsistencies, redundancies, or other issues.
Stage II: Imagine your ideal organization. Now that you have a clear picture of what your company looks like currently, let’s wipe the sheet clean and envision what it SHOULD look like. In a perfect world, how should a company of your current size, in your current market, be structured to succeed? Then compare your ideal organizational chart with your current organizational chart and look for discrepancies. If any of your current employees aren’t fitting into your ideal organizational chart, or there are ideal roles that aren’t currently filled, you’ll need a plan to fill the gaps. Gaps can be filled through employee development or hiring. This is the time to determine how to best maximize the skills of your current staff and think about any key hires that need to be made. I often find employees welcome this exercise, especially if they are subjected to any of the misalignment factors you discovered in Stage I.
- Step 4: Create an ideal clean sheet organizational structure as if your business were newly formed.
- Step 5: Fill in the names of your current staff into the job functions of the ideal organizational structure.
- Step 6: Assess skillsets and opportunities to make adjustments with your current staff.
Stage III: Envision your future state, based on your strategy. Once you’ve aligned your current staff to address your immediate needs, now it’s time to look to the future. Imagine that you successfully achieve all the goals in your strategic plan – what will your organizational chart look like then? And what actions do you need to take to get there? Using your strategic plan as a guide, build a roadmap and timeline to bridge the gap between your ideal state and future state – to hire the people for the roles you will need, or to grow your current employees into those skillsets. Stage III should follow along the same timeline as your strategic plan. Your strategic growth plans will come together over time, and so should your organizational changes. Don’t think all the development and hiring must happen all at once. Grow your organization as your business grows. In any case, your organizational development plan should sit next to and support your strategic plan. We won’t go into much detail here on the subject, but Stage III is also a great time to work on succession planning.
- Step 7: Create your future organizational chart based on the goals in your strategic plan (what you will look like 5 years from now, if you double in size, if you make acquisitions, etc.)
- Step 8: Fill in your current employees into your future organizational chart. Identify everyone in three categories – direct fit for future role, requires development for future role, or open position.
- Step 9: For anyone who isn’t a direct fit, build a roadmap and timeline for current employee development or for hiring for future open positions.
When it comes to organizational design, the key takeaway is that in order to grow, the structure of your company’s workforce must align with your goals. Strategic plans don’t just come to fruition – it takes people to execute them. And by proactively managing your organization to ensure you have the right people in the right roles, you will ensure your company is prepared to achieve your objectives.
If you’d like more information on organizational design or guidance applying The Clean Sheet Process, we are here to help! Just send us a message.
In part five of this series, we’ll discuss the importance of making financial-based decisions and why to be effective long-term, leaders need to rely on more than just their gut.
