Organizational Plan

What is an Organizational Plan? It’s a detailed plan to clarify reporting relationships by building an organizational chart and creating job descriptions so work gets done efficiently and your business can sustain long-term growth.

Why is an Organizational Plan important? The opposite of organized could be either disorganized or unorganized and that is not a great way to describe any business. There are many different organizational models to choose from; it really does not matter which one you choose to follow but you must have one in place. The Organizational Plan defines your ‘chain of command’ or reporting lines. Most importantly the Organizational Plan assists to define individual roles, responsibilities, authorities and accountabilities.

The best time to create an Organizational Plan is before you need one; in other words create the OP before you start to hire and grow your team. The reality is most small businesses add team members in an ad hoc basis driven by a short term need and then later have to create an OP or change the one that has evolved without a lot of thought to prepare for long term scaling and growth.

As businesses grow through the Five Steps to Freedom, a lot of them will make it through the Creation and Disorder/Chaos steps without spending a lot of time thinking through the finer points of organizational structure. When these businesses reach the Control and Prosperity steps, they begin to feel the pain if they haven’t put a strong organizational plan in place. In business there is always a head which represents the business owner, shareholders, director, CEO, or President. This is often the same person during the early stages of a business. In every business there is also a body, which represents the rest of the organization. Often during the Creation, Chaos, and Control stages the rest of the organization is lacking in structure and is somewhat chaotic. From an organizational perspective, it resembles a body without a skeletal system. Without organizational structure there is a lot of duplication because there are not clean lines of delegation, authority, or responsibility.

There are a lot of organizational models that have been introduced over the years. You have everything from a Rigid Bureaucracy to the Loosely-Coupled Organic Network. In between are various modifications including a Bureaucracy with a Senior Management Team or with Project Teams and Task Forces or the Matrix Organization or even the Project Organization model. Someone, normally the owner, must be clearly in charge and they must develop subordinate leaders. As the organization grows, it’s important for the CEO to develop these subordinate leaders who can be molded into a senior leadership or management team over time. Model one, two, or three tend to work the best in most small businesses; your challenge is picking the right one for your business.

More than 25 years ago, Michael Gerber wrote a best-selling business book called The E-Myth: Why Most Businesses Don’t Work and What to Do About It. The E-Myth (or the “Entrepreneurial Myth”) is the mistaken belief that most businesses are started by entrepreneurs or people with tangible business skills. In fact, most are started by “specialists or technicians” who know nothing about running a business. Hence most of them fail. In this book, Michael Gerber dispels the myths surrounding starting your own business and shows how to apply the lessons of franchising to any business, whether or not it is a franchise. One of the many lessons of franchising is documenting the organizational infrastructure of a business. It is recommended you read this book to understand the nuts and bolts of growing your business in a predictable and organized fashion.

If you already have a team, you should probably enroll several key influential team members in the process to create a new OP. The reason for this is probably obvious but implementing an organizational structure in a business that’s been organized fairly loosely involves changes that can impact a lot of people very personally. There can be deep feelings tied to the decisions being made so it’s essential to involve the most influential stakeholders in the process.

There are two key concepts to apply to creating an organizational plan that include

1. Workflows. If you draw out how the work typically flows through a business, it naturally tends to flow from left to right. It begins with the Marketing and Sales functions which can include research and development, marketing, advertising, and sales. This is where the revenue gets generated. Next, the work flows to an Operations team. Here, procurement, manufacturing, distribution, and customer service produce the work. Finally, the work flows to the Finance team consisting of human resources, bookkeeping, accounting and administration. This is where the money gets collected, records are kept, and reports are produced. As you work through creating your OP, spend a lot of time to review and understand how the work flows best for you and this will greatly assist you to determine what your key subordinate leader positions should be.
2. Roles. The second concept in an Organizational Plan is to develop a position description that gets written for every role. This document clearly outlines the role, responsibilities, authorities and accountabilities and expectations for every role. This lets the whole team know who is responsible for what and who reports to whom. The position or job description should also include the skills, abilities, experiences and qualifications for that specific position.

Here are the steps you should follow to create the OP.

1. Make a list of the roles already functioning within the business.
2. Add to the list any new roles that should be recognized or created. These would cover things that should be done but are not being done at the moment.
3. Use the Org Chart Worksheet to organize the roles in the Org Chart columns according to the most natural dynamics for reporting, accountability, and coaching.
4. Fill in the names of those currently occupying each of the roles.
5. Decide if any of the names in the roles should be changed and reassign names in the Org Chart.
6. Draft a Job Description for each role using Job Description templates.
7. Discuss proposed Org Chart and Job Descriptions with each member of the team and make any necessary adjustments. This step is important! You don't want to roll out a new Org Chart with new titles, roles, and reporting relationships without getting buy-in from the team before you make it official. Interviewing team members allows you to get a sense of each member’s commitment and passion for what you’re proposing they do. This allows you to make adjustments to how they are organized and the titles used. This step takes some tact and diplomacy. You should explore the potential reassignments with the affected team members and look for any hidden issues or landmines that might cause a problem with the plan.
8. Make final adjustments to the plan as necessary.

With the Org Chart and Position Documentation completed you have a few more steps to complete to secure commitment to the new Organizational Plan according to the following steps. You should probably get professional Human Resources and potentially even Legal Counsel review as you work through this part of the process. You must be compliant with national and state or provincial labour laws and if you do not have this expertise on staff, you should consider outsourcing this work. This is where the old adage ‘an ounce of prevention’ comes into play.

1. Conduct a detailed review of each Job Description and get advice on how to classify each, either as employees or subcontractors.
2. Have your professional advisors develop Employee and/or Subcontractor Agreements.
3. Have your professional advisors develop Non-Disclosure and Non-Compete Agreements.
4. With these documents now ready to go, you should have each team member sign their Job Description and any other necessary Employee Agreements and Non-Disclosure and Non-Complete Agreements.

So that’s how you roll out an OP. If you would like to learn more about how an Organizational Plan can help you with your business, book a short phone call with me to chat by clicking on the button below.