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How do you visualize the organizational structure that best leverages the strengths of your staff and puts you on a path for fast, profitable growth?
I recently met with the chief operating officer (COO) of a rapidly growing wealth management firm whose responsibilities spanned a wide variety of domains, including operations, project management, product management, and every technology function. The firm’s leadership had decided that it had outgrown its existing organizational structure, which was established years ago and had become a patchwork quilt. The question was how to determine and implement an organizational structure that would set the company on its desired future trajectory.
Here are a few guiding principles that I shared with the COO to help her see beyond the current reality and move towards what the company wants to be in two years. Those guiding principles can be used whether you are managing a 1,000-person organization, like the COO I met or overseeing a smaller firm. This framework has broad applicability and can be used for other business models including asset managers, technology companies, etc.
1.Strive for a flat organization
- Minimize the number of organization levels or layers from CEO down.
- Eliminate “micro-managers” (managers with fewer than four direct reports). You may make exceptions to this rule for newer managers or highly specialized teams where the manager is also a “doer,” but it should not happen often.
- Do away with “superheroes” (managers with more than 10 direct reports). I have seen exceptions to this, but it dilutes the manager’s ability to be a coach and develop people if they have more than 10 direct reports.
- Allow decisions to be more easily made and executed.
2. Build structure first, people second
- Build the organizational structure to support the needs of the company you aspire to be two years from now.
Do not build a structure around the people you currently have. Some of the people you have today may not be a fit for the team you need to reach your aspirations.
Define role and responsibilities
1. Define the roles and their associated responsibilities
- Define roles to support the needs of the company you aspire to be in two years.
- In a growing and evolving company, you need to define new roles and redefine existing roles. As the company grows and roles expand or new services are created, staff need to adjust to meet these newly discovered company goals.
- Very important – define the roles you need for the company you aspire to be without regard for the people you have today.
- Reality 1 – Some of the people you have in specific roles today may not be able to evolve into a redefined role description.
- Reality 2 – It’s not likely that an associate will be excellent at everything contained in a role and responsibility definition. The definition itself can be more aspirational.
2. Create transparency
- Publish role and responsibilities definitions for the entire company to view.
- Have managers discuss role and responsibility definitions one-on-one with associates.
- Develop a transparent career progression framework that clarifies the role hierarchy and the requirements that must be fulfilled to move from one role to the next.
3. Create alignment
- Annual performance goals should align with how an associate is doing according to the role and responsibilities definition they fall under (other performance goals should align with the goals of the company as a whole).
Feedback and personal development plans should focus on improving skills and knowledge to align more closely with the specific role and responsibilities.
Build your future-ready org chart
- 1. Fit
- Questions to ask yourself include:
- Where do existing people fit into the new structure?
- For what new roles are existing people a better fit? I’ve seen instances where current employees’ experiences or skillsets make them a better fit for an entirely new role.
- Are there existing personnel who don’t fit into the new structure and/or the role and responsibility definitions?
2. Pro tips
- If you don’t have the right people, don’t ”make do” — prioritize finding the people that represent an ideal fit.
Trust your instincts on whether an existing person could evolve into a new or redefined role. Solicit feedback from other leaders whose input you trust. Some of the best leaders and managers stay connected to a network of people that they think could be a fit for future roles as their company evolves.
This framework works. If you leverage it, though, it is very important to follow the sequence defined above. Many leaders have a hard time taking a step back and thinking past the organizational structure they have in place and adapting it to accommodate the people in that structure. But the organizational structure you have today is not something that is meant to last forever, nor will it serve you forever. Your structure should be refreshed from time to time, and you should evaluate the steps you need to take today to grow into the company you aspire to be in the future.
Going through this process is more art than science, but get it as close to right the first time. No one likes being part of a company that rolls out a new org chart every few months – it’s chaotic and unsettling. Many leaders underestimate the change management aspect and disruption involved with making organizational changes.
The hardest part in working through this process is the human element: grappling with the difficult realization that the people who may have helped you succeed in the past might not be the people that will help you be successful in the future. While it doesn’t mean that there isn’t a role for them, it may mean that their role is different from what it was previously.
