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5 Signs Your Business Might Be Outgrowing Your Organization

October 4, 2017

 

If you’re like most business leaders, sales growth is one of your top priorities.  After all, we’re not in business to stand pat.  A mentor of mine once told me that a business is never static.  You’re either gaining ground or you’re losing ground.

 

It’s a lot of work to manage your business growth, and often organizational development can take a back seat.

 

It’s easy to see how this happens.  Many of your resources target growth levers in your business – innovation, sales channels, marketing, etc.  As you grow ask yourself, is your organization prepared?  Do they have the right skill sets?  Are the right people in the right positions?

 

Fortunately, there are some telltale signs that your business might be outpacing your organization.  If these signs describe your organization, read on to discover some specific steps to get your organization back in line.

What Business are at Risk …

All Businesses

 

It’s easy to see how a startup or small local business can be at risk.  After all, many of these businesses start with one or two employees covering all functions.  The proverbial Chief Cook and Bottle Washer is alive and well.

 

But even larger businesses can outgrow their organizations.  Consider the $25MM business that has grown to $40MM in the last three years.  Global penetration in two emerging markets and a new innovative product have yielded stellar results, even more than expected just two years earlier.

 

The global expansion and top line growth has put the company on the radar of regulators, competition, and potential suitors.  Is the business equipped to respond to the new pressures?  Specifically, are the people equipped to respond?

 

The Signs

 

Look for these five signs which indicate that your business might be outgrowing your organization. As you review these signs and answer the questions, take an honest assessment of your business.  Start a discussion with your team.  Ask a peer from another company to help.

 

A true evaluation of your organization will provide a forum for identifying gaps and employee development opportunities that will allow your team to grow with the business.

 

SIGN ONE:  Individuals are Wearing Many Hats

 

Wearing a lot of hats is normal for many employees.  Look for misalignments like the examples below.

 

Review each individual in your organization.  What functions do they cover on a daily basis?  Are the functions aligned?  Is your warehouse manager your chief mechanic for your production line?  Is your controller also your safety manager?  Do the multiple roles covered by one person ever conflict?

 

SIGN TWO:  You Don't Have a Current Organizational Chart

 

Do you have a formal organizational chart?  Can you go to your server and pull it up?  If so, when was the last time it was updated?  Does it fit your organization today?

 

SIGN THREE:  Employees are Struggling with Work-Life Balance

 

Are you starting to see your team working until 7:00 or 8:00 in the evening several times per week?  Is your office email chatter often in mid-day form throughout the evening?  Do your employees take time to go to their kids’ school functions, or is that something they used to do?

 

SIGN FOUR:  Your People at the Top are Making All the Decisions

 

Is your management team copied on all emails?  Do people look to you to make decisions that could, and should, be made by others?  In a meeting, when someone is asked a question does he or she wait for you to talk before answering?  Are your answers or opinions ever challenged?   Sometimes this issue is due to lack of delegation, but often it indicates a lack of self confidence with your employees.  Are they being stretched beyond their skill set?

 

SIGN FIVE:  You've Had Significant Business Changes without Organizational Changes

 

Has your business undergone changes in growth, markets, technology, or plant expansion?  If so, has your organization changed with the new environment?  Is your business activity driven by processes?  Are the tools in place being used to their fullest potential?

 

Steps Forward

 

If you identify any of the above signs in your business, follow these steps to review your organization.

 

Create a Clean Sheet Organizational Chart

 

Start with a clean sheet of paper and draw up the organization you believe best represents your business today.  Don't get too formal, just sketch it out on a piece of paper or a whiteboard.  Only enter functions and titles.  Not the exact functions your people are performing today, but what they would be doing if you were starting your business.  Leave out names, that comes later.

 

Create Simple Job Descriptions for Each Function

 

For each position, create a simple list of tasks that function should perform.  Just pick the top five tasks to keep it simple.  Again, use the ideal, not necessarily what is happening today.  These are not formal JDs, just a simple list of duties each function in your clean sheet org. chart should cover.

 

Challenge Your Current Organization with the Clean Sheet Organizational Chart

 

Go back to your clean sheet org. chart and enter the names of employees covering these functions.  You will likely enter the same name multiple times.  But that's OK.  Look for the people who are covering roles with little in common or report up through different functions.  Move some of the names around to see how you can get better alignment up through the organization.  Play with it a bit.  Challenge yourself.  Get creative.

 

Create a Future Organizational Chart

 

Imagine your business at 2X, 3X, or 5X what it is today.  Sketch an organizational chart for that business.  This chart likely will have a new layer of management.  Where would your people fit in this organization?  Where would you need to hire additional talent to fill the gaps?  How can you develop some of your current staff for those future roles?

 

Put time frames for all the open positions – 6 months, 1 year, 2 years, etc - to represent when you need to add these positions?  The future org. chart will provide a road map as you grow.  Put a note on your calendar to review this document each year, or every 6 months.

 

Sharing this future org. chart with your organization can be beneficial.  Let your employees know you are thinking about the future.  About their future.  Show them the opportunities.  Talk with them about their goals and aspirations.

 

Consider Outsourcing and Professional Help for Some Functions

 

As you review the functions in your organization, both now and in the future state, look for opportunities to outsource functions that require a specific skillset or add little value to your core activities.

 

IT managed services and safety training are good examples of outsource opportunities.  We all know how fast the IT world and OSHA regulations are changing. Let the experts keep you up to date.

 

Consider outsourcing an entire department like customer service, or warehousing and order fulfillment.  Look for opportunities to impact change.

 

 

Also look for areas that don’t add much value – mundane tasks that can be done by others.  Maybe there is a kitting function that takes up a lot of room on your production floor.  Hire out building/ground maintenance instead of having your chief mechanic fix the gutter or cut the grass.  Bring in your commodity suppliers and let them manage a part of your inventory.

 

Keep your people focused on the core areas of your business.  Let others do the rest.

 

Conduct Periodic Performance Reviews

 

While this might seem like motherhood and apple pie of good business management, you’d be surprised how many businesses or managers abdicate this fundamental obligation.  I’ve been in some large organizations that only pay lip service to employee development.  I’ve also been in others where it’s a fundamental business practice.  You want to be in the latter group.

 

Most businesses perform performance reviews at the end of each year as part of compensation planning.  I suggest changing this up a bit.  If developing your organization is your goal, separate the review process from compensation.  Bring more focus to employee development and career progression.

 

Going Forward

 

Your people are one of your greatest assets.  Just like you concentrate on optimizing other resources like inventory, production, and warehousing, reviewing and optimizing your organization should be a continual process.

 

As you go through these steps, consider involving an outside resource, either a trusted peer from another organization or someone with experience in various organizational structures.

 

Bottom line.  It’s crucial to address your organization as your business changes.  If not, your business can outpace your organization, leading to a frustrated workforce and inhibited growth.

 

 

 

So what signs have you seen in your organization?  And what did the steps reveal?  Do you see other signs that growth has impacted your organization?

 

Add a comment and let us know.

Steve Lantz is President of Lantz Group Management Consulting

steve@lantzmanagement.com

www.lantzmanagement.com

www.linkedin.com/company/lantzgroup

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