Barriers to growth – How ineffective structure and systems can put a lid on your growth potential11/19/2015 Everyone knows that the management skills to run a small but successful, entrepreneurial company with a few employees is starkly different from those skills required to run larger companies with many more employees, locations, products, product lines etc. As the business grows, its overall management becomes exponentially more complex. The good news is that some people can successfully make the transition, and can learn how to delegate key day to day functions to an ever growing team that supports the business. What is often less clear, is how the increasing complexity of the business necessitates the need to develop, incorporate and implement more robust systems such as reporting structures, strategy communication tools, work processes/operating procedures, information technology, and financial controls, amongst others. Growing your topline sales and customer base without simultaneously building the structure and systems required to support your growing business is a recipe for failure.
As an example, when a business is small, it is not uncommon to have a very loose organizational structure. Essential everyone can speak directly to the boss to get the answers they need, as he/she makes all the major decisions, including who does what and how they get compensated. As the employee number increases, most people’s role in the company generally becomes comparatively narrower, and the boss starts to share decision making with key managers. It now becomes increasingly important that each individual has a clear understanding of what is expected of them, their role and how it fits within the larger team, how they will be evaluated and by whom. The boss can’t interact with everyone to the same degree anymore; hence the need for a more formalized organizational reporting and accountability structure, performance evaluation system and compensation structure. Also, as a company grows and individual employee roles change, responsibility gaps and overlaps enviably surface and need to be addressed before they become problematic. This requires systematic training systems in processes and procedures as employees’ responsibilities are adjusted to address the gaps. This means that processes and procedures need to be documented and up to date. The responsibility overlaps also need to be addressed as the business become more complex. This may require clearer definition of roles and accountabilities as the business moves towards a “Matrix” organizational structure across locations, business units, product lines and corporate functions. Managers need to have backup systems in place in case people get sick, voluntarily or involuntarily leave, go on vacation etc. to ensure the business operates without interruption. This requires the development and communication of company-wide, consistent policies that were perhaps “understood” when the team was a lot smaller. While there are many other specific systems and structures, other than those described above, that need to be put in place as the business grows, I believe the most important system is the strategy development, communication and execution system. When the business was small, and everyone actively interacted with the boss, the strategy was often understood, even if it wasn’t clearly articulated and documented through a formal strategic plan. As the business grows, it risks diverging from the strategic plan, perhaps fatally, unless there is a robust strategic planning and execution system in place. The boss needs to transform himself/herself to the Chief Strategy Officer through a dynamic strategic planning process that is clearly embedded, documented, articulated, understood and acted upon consistently and continually throughout the larger organization. Bosveld and Associate’s Business Performance Amplifier Program for small to mid-sized businesses, focuses on improving management practices that increase enterprise value, drive profit, accelerate growth and lower operational and financial risk. We also help a business prepare for a potential management or ownership transition and/or increase the marketability of the business for an eventual exit. We Discover opportunities that are highly relevant and specific to your business, and then help you formulate a prioritized Plan to Act on those discovered opportunities.
2 Comments
7/5/2016 04:20:18 am
Hi, the whole thing is going fine here and ofcourse every one is sharing facts, that's genuinely fine, keep up writing.
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5/23/2017 05:21:54 am
Running my own small business I can't agree with you more. It's tough times for everyone.
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