March 15, 2011

Executive coach Gill Corkindale recently blogged on Harvard Business Review about the importance of organizational structure and the benefits a well-thought-out structure can bring to a business. While Corkindale focused on huge, international organizations, what she wrote got me thinking about how relevant the idea of restructuring can be to even the smallest business.

In the past few years, businesses of all kinds have been forced to restructure, whether to cut costs, become more efficient, or do more with fewer employees. But, Corkindale points out, most of this restructuring has been done “on the fly.” Companies make small changes here, tiny tweaks there… never (or rarely) giving a thought to the big picture.

Over time, however, those umpteen little changes start to affect the overall structure—and, in most cases, weaken the company. “When organizational strategy changes, structures, roles, and functions should be realigned with the new objectives,” Corkindale cautions. If not, things slip through the cracks and staff members end up working at cross-purposes.

Does this sound familiar? If you’re like most small business owners, in the past few years you’ve rethought your strategy, changed your goals, and reassessed your products and services. But has the structure of your organization kept pace? Even more than big companies, small ones are prone to ad hoc changes and workarounds that, while they may work for the short term, can eventually lead to big problems. 

So what can you do to remedy the problem, and how can you restructure your organization? Start at the top.

1.  Sit down and think about the changes your business has made in recent years. Jot those down. Maybe you’ve started selling globally, launched an e-commerce site, or partnered with another company.

2.  Create a list of each division or function within your company. (Even a three-person company has divisions or functions—customer service, accounting and sales being a few.)

3.  List the names of the people on your team who handle each function. In most cases, there will be some crossover.

4.  Call each person on your team in and have a discussion with them. What problems are they facing in their job? Are there bottlenecks, redundancies, or systems that are no longer serving their original purpose? Is one person doing the work of three—or are three people doing the same thing?

This step requires patience, guidance, and tact. You don’t want the meetings to dissolve into complaint sessions, but you do want honesty. Assure employees these discussions will remain confidential, and keep them on track.

5.  At the end of the meeting, ask each employee to think about solutions for the problems they brought up to you.

6.  Bring the team together. After you’ve given everyone some time to think, hold a group brainstorming session to generate ideas for restructuring. You may have ideas of your own, but at this point, you probably want to keep them to yourself. The goal here is to bring everyone together to share ideas, which should help get everyone on the same page. After everyone on your team has contributed, if you feel the time is right, only then bring up your thoughts.

7.  Put your spin on it. Mull over the options suggested. Depending on the size of your business, this may be the point where you pull in your key people to go over the possibilities. If you don’t have that many key people, the buck stops with you and you need to make the decision.

8.  Share the results. Depending on your business, you may need to repeat steps 6 and 7 a couple times to fine-tune your new plan. When that’s done, meet again with the team and share the results. Explain how the new structure will work and what you hope the benefits will be.

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