How To Manage Your Company’s Growth With The Organization Chart

“Nothing is more exciting than growing a prosperous business, but nothing is more dangerous for a prosperous business than growth.”

– Steve Meisenheimer

Your company is growing and you need take your organization to the next level…but:

1. Can you afford all the new people you’ll need?

2. What should your new organization look like?

3. When should you add each new position?

4. How will you manage the new hires?

5. What education and skills should each of them have?

6. What contribution should you expect from each new hire?

7. What opportunities for advancement can you promise them?

Even for someone who has done it before, answering these questions can be taxing, if not overwhelming. You might agree, however, that these questions should be answered before you begin the process. There’s nothing like getting prepared so you feel prepared.

There is a tool in the manager’s tool belt that is perfectly designed to help – the organization chart. Most have heard of it, some have drawn one, but few have grasped the full force of what it can do.

The following seven steps will guide you through how to comfortably answer each of the above questions so you can grow your company with maximum confidence.

Step One – Draw a chart of what your organization looks like today. Do this using the following format. Put the titles, names, and compensation of the person performing that function in each box. The lines between the boxes represent who reports to whom. Then put the amount of annual sales your company does at the top of the chart. This gives you a visual representation of your company. For example:

$800,000 Annual Sales

 President      Sales Manager       Office Manager     Operations Manager

(Sarah-$50k) (Jeff-$35k) (John-$45k) (Kim-$33k)

Step Two – Go back to the most fundamental (yet often disregarded) statement in your company – your vision statement. What kind organization do you need to fulfill the vision, or purpose, of your company? You can look any distance into the future, but for this example, we will look five years out.

Step Three – Decide what staff you need to add to your organization, and what positions can be outsourced. Today, it is more common than ever to outsource even your accounting and sales force responsibilities. Whenever you can shift the “people burden” on another company to handle your company’s demands versus assuming the people burden yourself, it’s better to shift it to others. People, as wonderful as they are, will be the source of your greatest expense and trouble, so make it a policy to stay as lean as you can.

Step Four – Draw a chart of the organization you will need in five years to handle the growth and to be on track to meet your vision’s requirements. Your organization chart will have nameless boxes, but put the titles and the probable compensation you foresee in each box. At the top of this future organization chart, put the sales you think an organization of that size will handle just as you did at the top of your present chart.

Step Five – Considering your future organization, now draw what your organization will need to look like in two and a half years (half way to your five-year organization) for you to consider yourself on track to achieve your five-year target. It should look exactly like the five-year chart minus the new positions needed to handle the final two and a half years of growth. As before, put titles and probable compensation in each box and put the sales you will expect of this organization at the top of the chart.

Step Six – Put the dates you will need to fill each position in your two-and-a-half-year projection for you to hit your sales forecasts (in the case of sales and marketing) or, in the case of admin or operations, to handle the extra workload your new sales will create.

Step Seven – Draft up a very simple job description for each of the positions that you will need to fill in the next two and a half years. They should include the basic responsibilities, duties, education, skills, and compensation. Growth will require more of the same jobs you now have, but it will also require new roles and responsibilities that these job descriptions will help you to think through.

You now you have a specific two-and-a-half-year plan to show what your organization needs to evolve into in order for your company to be on track to achieve your long-term vision. Moreover, your five-year organization chart now looks more credible as a long-term planning tool with this short-term plan to see it realized.

The organization chart is complemented by your company’s budget. The budget will show you what happens to your company’s sales and profitability as you plan to add each new position.

Your org chart, and your experience, will help you plan for your organization’s growth and set your recruitment targets. For instance, if it takes four months to recruit and hire a salesperson or a manager, you will know when you need to start the process of filling that position to stay on course.

You might find someone in your company who can, and is willing to do the work of a new position if you pay them a little more. This saves you the time of recruiting and the full expense of hiring and staffing that position. This is most common with managers. You have probably established a mindset of expected manager-to-staff ratios. For example, every four crews need a manager, or something similar. Looking at your company on paper, in association with a budget, allows you to question these assumptions, and see what happens to the bottom line if a greater ratio is adopted, or you can split an anticipated position’s responsibilities among your existing staff.

Advancement is a serious motivator when recruiting top talent, so sharing your organization chart with your people and your candidates (perhaps without the compensation figures), allows them to see how you are planning to grow and what opportunity they might have to grow with you.

Through these steps, you can see that you have already addressed all the above questions. By charting your present and future organization, you reveal a gap that needs to be closed. Seeing the gap, drafting the job descriptions and compensation, placing each position on a hiring timeline, and running the plan through your budget drains the anxiety from the process.

As I noted earlier, there’s nothing like getting prepared so you feel prepared. And when there is a step-by-step plan for getting prepared, you have more confidence in your plans, more confidence in your management skills, and much more confidence that your company’s vision will someday be a reality.