Three key components of small business structure
Motivational coach John Wooden once commented, “I worry that business leaders are more interested in material gain than they are in having the patience to build up a strong organization, and a strong organization starts with caring for their people.” I would further argue that leaders should take steps to design their organizations with their people’s needs in mind. If you Google “organizational structure,” you will get 20 different ways to structure a business, ranging from tax planning to organizational charts. For the purpose of this article, I will define an organizational structure as the operating system of any given business. The operating system defines process and procedure within the business.
The creation of an integral organizational structure allows the business to grow beyond any one individual while maintaining trust and goodwill among those who operate within the business. A great example of this is Alphabet, Google’s parent company. At over 100,000 employees, Alphabet continues to grow, adapt and create value without giving full credit to any one individual. Within Google, executives strive to capture and act on employees’ ideas and make sure that all departments are constantly working toward the company’s vision.
In my experience, that contrasts with most businesses, particularly small companies run by single entrepreneurs. Many small business owners start with an idea, some “know-how,” one or two employees and a handful of customers. All rules are typically governed by one or two people. Communication is ineffective or inefficient and often takes the form of one-off, undocumented meetings. While there may be a vision with the company, consistent action toward that vision is lacking. Often, the stability that most employees seek is difficult to find in a small business environment.
That need for stability goes beyond a regular paycheck: Employees feel safest when they are not held hostage by the whims of the business owner. Ultimately, everyone in the company should feel safe to share their ideas and concerns. Only when everyone within the organizations feels safe enough to give their all will the business fulfill its full potential.
Here are three key concepts to keep in mind when creating an organizational structure:
Create something that everyone must follow
This includes the owner/CEO. To develop trust in a system, everyone within that system needs to know that no one is above it. This especially holds true when disciplinary actions take place. When employees see that everyone, from top to bottom, is held to the same standard, they feel safe knowing their legs won’t be swept out from under them.
Ensure that lines of communication are clean and bidirectional
Human beings ultimately want to be heard. When leaders create formal space for ideas and feedback, employees have a chance to improve their environment and will feel more connected to the business. Formal, companywide directives should be shared with and heard by everyone. Often, if messages from leadership are ambiguous or only speak to a portion of the workforce, employees aren’t sure about their roles, which results in suboptimal performance.
Vision and values must be communicated regularly
At times it might seem like you’re overcommunicating, but every decision should take into account what the business stands for and its trajectory. The vision and goals should be top of mind for everyone in the company. To accomplish that, you have to talk about your values often, define and defend them, and then talk about them again.
To create an organizational structure that will house giants, you have to make sure that structure isn’t beholden to any one individual, that it makes room for two-way communication, and that it has a direction and a stance that is shared with everyone in the company. Leveraging these components in your small business will create stronger, more sustainable growth.
Featured in the “Austin Business Journal”
https://www.bizjournals.com/austin/news/2020/03/02/three-key-components-of-small-business-structure.html?iana=cco_landing_news
