VOL. 128 | NO. 108 | Tuesday, June 4, 2013
Scaling Up the Organization
By VERNE HARNISH & MICHAEL SYNK
Remember the days when your startup team was crammed into a single office? Now you may have 150-plus employees and find it infinitely more difficult to know how to divide up into teams and set clear accountabilities. Worse, both customers and employees may seem confused about how to navigate your organization.
The first natural organizational split is by functional area. At Gazelles, we use a one-page Function Accountability Chart (FACe) that helps CEOs get clear about the accountabilities and metrics for each of the main functions in a business. But as you grow you also need to start aligning teams around product groups, industry segments, and geographical regions. Visualize functional groups running vertically and business units running horizontally.
The pressure to create these new business units will usually come from customers. They’ll complain that they don’t know who to call to get help – or that they get the runaround when they finally reach someone. Employees may not know from whom to take direction.
Unless you get the accountabilities straight you’ll waste a lot of time oscillating between centralizing and decentralizing various business units and shared functions.
The functional heads have to be more like coaches/advisers to the business unit leaders. The business unit leaders need start running their units as if they are mini-CEOs.
This transition is hardest for the traditional functional leaders – especially those who were around in startup phase. They have to go from telling to selling, as they lead their teams. And they need to spend time outside the organization garnering best practices and share what they’ve learned with the business unit leaders. Most importantly, they have to earn the respect of the business unit leaders because of their knowledge, not just their position. That way when they bring something new to the team it’ll be an easy sell, not a battle with business unit leaders.
Once you set up these groups, you’ll need to figure out which employees belong in each.
The key principle here is being clear on who decides whether an employee gets a raise or promoted. Do not leave this to the functional heads. For instance, say Tom is providing marketing support to several units. The functional head of marketing must see her role as trainer/coach to Tom while making it clear that his performance is based on feedback she gets from the heads of the business units he serves and not on what she thinks. This way he remains responsive to the business units.
Once you set up an org chart, you’ll know very soon if you’ve gotten it right. Customers will be happy, and everyone on your team will be clear on his or her role in serving customers. And when you notice a pattern of negative feedback from customers – it’s time to revise your org chart again.
Verne Harnish is the founder of Gazelles. Michael Synk is the founder of In-Synk and is the Gazelles coach in Memphis. Contact Michael at firstname.lastname@example.org.